PCC TO LOOK INTO TRANSACTION: Networks suspend tie-up talks

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ABS-CBN Corp. and TV5 Network Inc. yesterday agreed to suspend the closing of a P2.16-billion landmark deal to address issues raised by Congress and the telecom regulator, National Telecommunication Commission (NTC), ABS-CBN said in a statement.

The two firms agreed to a pause in their closing preparations for ABS-CBN’s proposed investment for a minority interest in TV5 to “give the space for both media organizations to respond to the issues, and accommodate any relevant changes to the terms,” ABS-CBN said.

At last week’s congressional inquiry on the purchase agreement, lawmakers said TV5 may have violated its legislative franchise for allowing ABS-CBN to air its shows and content through its network.

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ABS-CBN and TV5 said they believe an agreement between the two media companies will have a favorable impact on Philippine media, and on free-to-air television–which remains the most affordable and extensive source of entertainment and public service to Filipinos.

At the House, Johannes Bernabe, officer-in-charge of Philippine Competition Commission (PCC) told the joint hearing of the committees on legislative franchises and on trade and industry the partnership is exempt from notifying the body as the transaction does not meet the P50 billion threshold set by the Bayanihan to Recover as One Act which is in effect until September 15.

While the PCC notification thresholds will revert to appropriately lower levels that reflect the relative size and performance of the economy after September 15, Bernabe said the law’s effect is not retroactive and will not apply to the transaction.

While there are issues that the PCC has to address in the event a motu proprio review of the deal is made, Bernabe said the PCC “cannot answer these questions now (because) it would be premature.”

Bernabe said said the two parties have the option to rectify the infirmities and “can come forward to offer a remedy to their anti-competitive impact of the transaction.”

Since ABS-CBN’s acquisition of share represents only 34.99 percent of stock in TV5 for P2.16 billion, Bernabe said the deal also does not meet the requirement that at least 35 percent of the stocks to merit a review. Also part of the deal is Cignal Cable Corp.’s acquisition of 38.88 percent of Sky Cable Corp. for P2.862 billion.

Bernabe said the PCC en banc has ordered its mergers and acquisitions office to look into the facts of the deal before the body decides if a motu proprio review will be made to ensure the transaction does not substantially lessen or restrict competition in the market.

Bernabe said based on publicly available data, GMA Network Inc. is the new dominant player in the TV market so PCC’s review, if it will push through, will include examination of overlaps or if the partnership will result in competitive constraint of the merged players versus GMA.

Ealier yesterday, Albay Rep. Edcel Lagman wrote Speaker Martin Romualdez, saying “the looming House investigation may result in derogation of press freedom and free speech, the bedrock of democratic governments.”

“One television network presently dominates the industry. With the recent infusion of TV5, the playing field approximates leveling. There is absolutely nothing wrong with that arrangement. What is definitely errant is when authorities trample on the freedom of expression and of the press,” Lagman said. (With Wendell Vigilia)

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