The shuttered television network ABS-CBN Corp. acquired 34.99 percent of TV5 in a deal that could reach P4 billion. But the Philippine Competition Commission (PCC) reacted swiftly and said it would conduct a review motu proprio.
In a disclosure, ABS-CBN said it would acquire 6.46 million primary common shares from TV5 for P2.16 billion. 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,” MediaQuest chairman Manuel V. Pangilinan said.
“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.
The PCC said in a statement, “While the PCC determines whether the thresholds under Bayanihan 2 have been met, it may also direct its Mergers and Acquisitions Office to conduct an initial assessment if the effects of the transactions involving TV5 and ABS-CBN, and Cignal and SkyCable, warrant a motu proprio review.”
It added that a merger review would determine if the transaction might “result in a substantial lessening of competition in the relevant markets.”
Under the agreement, the parties would also allow TV5 to issue a P1.84-billion convertible note, which will enable ABS-CBN, subject to obtaining applicable regulatory approvals, to acquire additional primary common shares from it after eight years from the issuance. ABS-CBN can increase its equity in TV5 but should not exceed 49.92 percent of the outstanding capital stock.
Content creation funded
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 pursuing the enhancements of 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 broad an audience as possible. In collaboration with TV5, we look forward to reaching viewers on owned platforms and through other broadcast partners, enriching the Philippine creative industry.
We hope the industry evolves from highly competitive to increasingly collaborative, which benefits all stakeholders in the long run,” ABS-CBN president and CEO Carlo Katigbak said.