TV5 Network Inc. and ABS-CBN Corp. officially signed their landmark P4-billion investment agreement that would boost their content creation and pave the way for the return of the Lopez-led broadcasting giant to free-to-air television.
ABS-CBN on Thursday disclosed that it will acquire 6.46 million primary common shares from TV5 for P2.16 billion — representing 34.99 percent of the total voting and outstanding capital stock of the Pangilinan-led network.
MediaQuest Holdings, Inc., which operates TV5, will remain the controlling shareholder with a 64.79 percent stake after the transaction.
“We welcome the entry and investment of ABS-CBN in TV5, as ABS-CBN has always been the leading developer and provider of Filipino-related entertainment content not only in the Philippines but overseas as well,” said MediaQuest chairman Manuel V. Pangilinan.
“Our companies have always had these cherished values of providing top and quality programs in the service of the Filipino people, and together we believe we can achieve this in greater measure and success,” he added.
Under the agreement, the parties would also allow TV5 to issue a P1.84-billion convertible note that ABS-CBN could use, subject to obtaining applicable regulatory approvals, to acquire additional primary common shares from TV5 after eight years from the note’s issuance. This means ABS-CBN can increase its equity in TV5, but it should not exceed 49.92 percent of the outstanding capital stock.
Funding content creation
The proceeds of the subscription in the primary common shares and the convertible note in the total amount of P4 billion will fund the capital expenditures and operating expenses of TV5 in its pursuit to enhance its content and programming and public service offerings.
The transaction is expected to be completed within August, and closing is subject to the fulfillment of certain closing conditions.
“This partnership is consistent with the strategic intention of ABS-CBN to evolve into a storytelling company whose goal is to reach as wide an audience as possible,” said ABS-CBN president and CEO Carlo Katigbak. “In partnership with TV5, we look forward to reaching viewers both on owned platforms and through other broadcast partners, thereby enriching the Philippine creative industry.”
“We hope the industry evolves from being highly competitive to increasingly collaborative, which benefits all stakeholders in the long run,” Katigbak added.
Marcoleta butts in
In an interview over state-run Radyo Pilipinas on Wednesday, SAGIP Party List Representative Rodante Marcoleta said he wants the Philippine Competition Commission (PCC) and the National Telecommunications Commission (NTC) to investigate the deal between ABS-CBN and TV5 to make sure there are no legal impediments.
“This should be assessed by the PCC. The Bureau of Internal Revenue should also make sure that ABS-CBN has resolved its tax issues. If the two companies want to pursue this, we might have to call the NTC as well,” he said, adding that the partnership could eventually lead to a monopoly or consolidation of market power which would be detrimental to consumers.