ABS-CBN, MediaQuest Scrap Landmark Deal Amid Pressure

ABS-CBN Corporation and MediaQuest Holdings Inc., the operator of TV5 Network Inc., have scrapped an investment deal that was more than a year in the making – and just three weeks after it was signed – amid intense scrutiny from politicians and regulators.

In separate stock exchange disclosures on Thursday, Sept 1, ABS-CBN and MediaQuest said they have “mutually agreed” to terminate the agreement that would have given the latter a chance to fully return to free TV. The idea was ABS-CBN will buy a 34.99 percent equity stake in TV5 for P2.16 billion.

A secondary agreement, which would have seen the Manny Pangilinan-led Cignal Cable acquire 38.8 percent of the Lopez family’s SkyCable, was also dropped.

Neither party specified a reason for the sudden termination, but this comes just a week after they announced that they have paused closing preparations in order to “address the issues which have been raised by certain legislators and the National Telecommunications Commission (NTC).”

That suspension announcement came on the same day of a joint House panel hearing on the deal, which was called on the urging of Sagip party-list Rep. Rodante Marcoleta, a known critic of ABS-CBN.

At the hearing, NTC Commissioner Gamaliel Cordoba insisted both media companies needed to obtain “clearances” before they can greenlight the deal.

But Albay Rep. Edcel Lagman countered this, saying there was “absolutely nothing wrong” with the agreement.

“I don't think [the] NTC has the power [to] amend or impose restrictions on legislative franchise. This is a derogation of legislative franchise. We can't allow [the] NTC to make a mockery of [the] franchise[s] issued by Congress,” he said.

The antitrust regulator, the Philippine Competition Commission (PCC), also acknowledged the two entities weren’t required to notify them of the deal, given it does not meet the P50-billion threshold allowed by the Bayanihan 2 law.

“ABS-CBN does not need to notify us as a matter of obligation,” said Johannes Bernabe, PCC officer-in-charge. “But they can voluntarily…If not, we can exercise our motu proprio review.”

The Kapisanan ng mga Brodkaster ng Pilipinas (KBP) called the partnership an “antidote to monopoly.”

“It’s GMA (Network) that is dominating everything now, and this is the answer to that and the impact – there will be healthier competition,” KBP president Herman Basbaño told One News in an interview on Aug. 11.

In today’s disclosures, “the parties confirmed that they have not implemented any of the transactions covered by the Investment Agreement and the Convertible Note Agreement”.

ABS-CBN shares plunged as much as 12 percent when trading resumed after an hourlong suspension.