irst of all, I am biased because I do own ABS-CBN stocks. I bought them dirt cheap two years ago as soon as Congress denied their application for a renewal of their free-to-air broadcast franchise.
In the stockmarket world, we call them “basura” stocks—stocks nobody wants to buy at the time. Bargain hunters trawl the trading floor (and I use that only symbolically now, because we have NO MORE trading floor) for these unwanted public floats. Stocks in the gutter have no other way to go but up, if you can just wait around long enough.
So when news broke out that the Lopez media machine was deep in negotiations with Manny Pangilinan’s TV5 brand, it caused quite a stir. I’ve heard one implausible speculation after another. Rumor was hot that there’s a MERGER afoot which, of course, is impossible.
In a merger of two companies, only one survives, The other is laid to rest. TV5 is not going to lay down and die. Its TV franchise is non-transferrable, it dies with it. So I don’t see what ABS-CBN stands to gain from merging with a company whose franchise will die precisely because of the merger. Therefore, there will be no merger.
ABS-CBN will not allow itself to die, either. How will it mount another attempt in the future to recover its franchise (or, actually, to obtain a new one) if it loses its legal personality and ceases to be a juridical person in the meantime?
The next speculation was a “bulk blocktime sale” where ABS-CBN would buy large chunks of broadcast traffic—presumably in the primetime segments. They would then use the bulk-purchased airtime to distribute content which they would produce in their own idle production center in Mother Ignatia Street, or in those large live audience studios they had just recently completed in Bulacan before the bad news came.
The limitation here is the “single blocktimer rule” which is kind of similar to what banks call “single borrower limit.” For TV franchisees, they are not allowed to sell more than 40% of total daily airtime to just one outsourcer.
TV5 doesn’t air 24 hours—only 19, from 5:00 AM till 12 midnight. That means it can only outsource up to 7.6 hours, whereas ABS-CBN’s flagship programs in the entertainment category alone (noontime variety, mini-series or so-called “soaps” and a bunch of reality shows, like Pinoy Big Brother, etc.) would eat up ten hours already. That alone exceeds the 40% limit. But any less time would make the whole package unviable.
What really made ABS-CBN content sellable to advertisers are its news and public affairs programs, TV Patrol and Teleradyo, which if combined with the entertainment components would clock about 14 hours. To stay under the 40% cutoff, ABS-CBN has to slow down the earth’s rotation to make one “day” last 35 hours!
So the only remaining option is joint venture—and it has to be a joint CAPITAL venture, not a joint production venture. Early announcements that TV5 would provide the platform while ABS-CBN would supply the content is a production joint venture—it WILL run afoul of the outsourcing limit.
But if ABS-CBN were to acquire a significant block of capital shares of TV5, then programs that it produces—no matter if exceeding 40% aggregate daily airtime—would NOT be considered “outsourced” material. They are being produced by a “co-owner” of the mother studio so it would not fall under the category of a blocktime sale.
I have doubts. Owning shares of stock of a corporation does NOT make you an “owner” of that corporation--only a contributor to its capital and trust funds. From the standpoint of corporate identity, only TV5’s parent company MediaQuest, which is an investment holding company of PLDT, assumes the personality of “franchisee.” Only programs it produces are not considered outsourced—there is no personality called “co-franchisee.” Everything else, including all content brought on board by ABS-CBN would STILL be blocktime material, no two ways about it.
So that privilege speech of Cong. Rodante Marcoleta bitterly complaining about why it seems the “merger” would be allowed to push through despite alleged violations by ABS-CBN was all a waste of time.
First of all, ABS-CBN’s chief nemesis, President Duterte is no longer in Malacañan. He can no longer lean on BIR or the SEC to give ABS-CBN a hard time. So, WHAT violations?
If you ask me, I would quote that famous saying, “there is no stopping a determined assassin.” If ABS-CBN and TV5 have this deal wrapped up as fait accompli, I would presume they have made provisions for neutralizing any pushback from regulators, chief of which is the National Telecommunications Commission.
But think about it. Congress denied ABS-CBN’s franchise because stopping them from airing is the permanent sanction for those alleged violations. So what the legislature meant to do was disallow broadcast by directly making it unlawful to try—THAT is the meaning of a franchise. It’s a document that makes lawful an activity that is otherwise disallowed. If ABS-CBN can do broadcast under the mantle of TV5’s franchise, it is “nesting” within the license of another media company—allowing it to INDIRECTLY do what it could otherwise not do DIRECTLY.
That is the same evil sought to be eliminated by the campaign of the Land Transportation Franchising and Regulatory Board (LTFRB) against independently-owned single (or even multiple) taxi units painted in the company color scheme of a legal taxi fleet, but not actually owned by the fleet operator. They are pretending to be units of the franchisee but they are mere “kabit” units.
Will that not be a violation of equal protection under the law? No, because taxis and TV stations do not belong to the same class. They are apples and oranges. But the principle transgressed by the leniency is about the same.
Fortunately for both ABS-CBN and TV5, Marcoleta did not even seem to have thrown five or ten manhours into studying THAT angle.*
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