PLDT revives bid to acquire majority stake in GMA-7

More than two years after it pulled out of an agreement to buy a majority stake in GMA Broadcasting Corp., telecommunications giant Philippine Long Distance Telephone Co. (PLDT) has renewed its interest in the country’s second biggest television company and is planning to make a new offer, this time through its wireless subsidiary Smart Communications, Inc.

Highly placed sources told The STAR yesterday that Smart will be making an offer to acquire a majority stake in GMA-7 that will be very hard for the owners to refuse. GMA is owned by the Jimenezes (35 percent), Duavits (35 percent) and Gozons (30 percent). The same sources revealed that Smart wants to close a deal before May this year.

"With the huge revenues Smart is expected to make this year, financing the acquisition of GMA 7 will not even make a dent on its finances," the source said.

It will be recalled that on Feb. 8, 2001, PLDT signed an agreement with GMA Network to acquire a 66 percent stake in the broadcasting network for P8.5 billion. Later in the year, however, PLDT had to withdraw from the memorandum of understanding due to concerns raised by its creditors over some $1.3 billion in loans that will mature in 2002 to 2004. Despite due diligence investigations, PLDT and GMA did not arrive at a purchase agreement.

At that time, PLDT dangled the promise that it was merely "deferring" acquisition and that it would resume negotiations when the economy improves.

The plan in 2001 was for Mediaquest Holdings Inc. to be PLDT’s vehicle in the acquisition of GMA PLDT may and in the execution of PLDT’s convergence strategy. Mediaquest, a PLDT subsidiary, owns Home Cable Inc., through Unilink Communications Corp. It also holds a controlling interest in Nation Broadcasting Corp. or NBC which operates a network of 30 radio stations. Convergence basically meant that PLDT will have control of both content (which will be produced by GMA) and the means of transporting this content.

But even after the whole deal was set aside in 2001, PLDT insiders said say that Pangilinan never really abandoned his wish for the telecom company to own a television network.

On the part of the owners of GMA, company insiders told The STAR that GMA chairman Felipe Gozon has always said that they are willing to sell at the right price. But GMA is expected to increase is asking price from the P8.5 billion agreed upon in 2001 considering the profits it made last year.

GMA earlier announced that it plans to go public and to list its shares in the stock exchange this year to raise funds for its expansion program. GMA, sources, however said another major reason is that some of the company’s loans are falling due soon.

New capital infusion for GMA is also deemed necessary, especially with its rival in the industry already armed with enough ammunition for the tough TV war looming ahead. Associated Broadcasting Corp. (ABC 5) was recently acquired by a group led by former PLDT chairman Antonio "Tonyboy" Cojuangco and sources close to Cojuangco revealed that the latter is willing to spend to make ABC 5 a major player in the ratings game.