NTC sets probe of Sky-Home Cable merger

The National Telecommunications Commission (NTC) is set to investigate whether or not SkyCable and Home Cable secured the required permits from government before they merged operations under the holding company Beyond Cable.

This, as the regulatory agency revealed that it is considering the issuance of rules prohibiting the creation of monopolies in the cable television industry.

NTC Commissioner Armi Jane Borje told The STAR that under the law, SkyCable and Home Cable need to secure the approval of the commission before they can merge.

"We have to find out whether the new company created is financially, technically, and legally capable," Borje said.

SkyCable and Home Cable earlier merged operations while the owners — Central CATV Inc. owned by the Lopez group and Home Cable Holdings Inc. of the PLDT group — consolidated their holdings in the said cable television companies.

The Lopez group owns 66.67 percent of Beyond Cable while the PLDT group accounts for the rest. Another Lopez-owned cable TV company, Pilipino Cable Corp., is now owned by Beyond Cable.

Together, SkyCable and Home Cable account for more than 70 percent of the market, with a total subscriber base of more than 200,000.

The STAR earlier reported that Sky Cable is currently in talks with the owners of Home Cable to acquire the latter’s stake in Beyond Cable. Reliable sources said no money will be involved in the transaction, considering the financial dilemma the Lopez group is currently in, but may involve some share swap arrangement.

SkyCable is also still in talks with the country’s third biggest cable TV company — Destiny Cable — although sources revealed that the negotiations have bogged down due to disagreements on pricing.

Borje said in an interview that any merger or acquisition or change of ownership requires the approval of the NTC. "We need to find out if public service will be affected," she emphasized, adding that these types of services are impressed with public interest.

The NTC chief told The STAR that the commission is also looking at a situation where a merger will create a monopoly in the cable TV business. She said it is the policy of the state not to promote monopolies. Other than that, the country has no anti-trust laws.

Meanwhile, SkyCable and Home Cable reported that they continue to negotiate with their respective creditors on the restructuring of P2.517 billion in secured and unsecured debts

The two companies are likewise seeking creditors’ consent to the pending consolidation of both entities under Beyond Cable Holdings Inc. as envisioned in the master consolidation agreement signed by Benpres, Lopez Inc., ABS-CBN, PLDT, and Mediaquest Holdings Inc. last July 18, 2001.

They also reported that they have jointly appointed Buenaventura Echauz and Partners as financial advisor for the restructuring, replacing a consortium of local firms earlier appointed for the role.

Beyond Cable submitted a debt restructuring proposal to bank creditors in December 2002. The proposal asked for an additional two-year grace period, payment rescheduling, and reduction on interest rates.

Meantime, they said that operations continue consolidation and cost saving efforts to improve cash flow and overall financial viability of the business.

Key initiatives include reduction of programming costs by streamlining channels between Sky and Home/Sun brands, renegotiating contracts to leverage on larger economies of scale, and moving from flat rates fees to cost per subscriber (CPS) fees.

They also reported a 22-percent reduction in manpower (from 2,165 in April 2001) through voluntary retirement, retrenchment and closure of offices and departments; office co-location and other overhead cost savings measures; and improvement on overall collections through cleansing efforts on delinquent subscribers.

Beyond Cable has also initiated discussions with its shareholders for additional equity infusion to fund the debt restructuring and to provide working capital.