PLDT offers to acquire Dream Satellite TV

Businessman Antonio ‘Tonyboy’ Cojuangco is in serious talks with the Philippine Long Distance Telephone Co. (PLDT) which has offered to acquire the former’s Dream Satellite TV company, The STAR learned.

Cojuangco offers the country’s only direct-to-home (DTH) satellite television service through Philippine Multi-Media System Inc. (PMSI). He also owns TV network Associated Broadcasting Corp. (ABC-5).

Highly placed STAR sources revealed that PLDT and Cojuangco’s group have commissioned the services of Standard Chartered to do the due diligence studies on the possibility of Cojuangco folding in his Dream Satellite into the new DTH joint venture company being put up by PLDT and US DTH giant Echostar Communications.

It is not immediately known whether Cojuangco will be paid in cash if he decides to fold in his company, or whether he will receive share in the new joint venture.

The two parties have reportedly agreed to be bound by the findings of Standard Chartered’s report.

Sources revealed that PLDT chairman Manuel V. Pangilinan wants to make sure he has control of the market for DTH service in the country before he puts up his planned DTH joint venture with Echostar.

If Cojuangco decides to fold in his Dream Satellite into Pangilinan’s new DTH company, sources added that PLDT will immediately have the necessary agreements with content providers in place, as well as the needed licenses and initial infrastructure.

Because DTH will also directly compete with cable TV, currently dominated by the Lopezes, highly placed sources revealed that the planned DTH joint venture has also put a strain on the relationship between PLDT and the Lopez group.

This strained relations would make it difficult for the new DTH company to acquire content from the Lopez group which is a large content provider in the country since it owns ABS-CBN.

Pangilinan earlier admitted to The STAR that this is indeed a problem which he will have to resolve "with great difficulty."

PLDT plans to start offering DTH satellite pay TV services in local shores in partnership with Echostar early to middle of next year and hopes to finalize with Echostar the terms of the $85-million joint venture agreement, including the numbers, before the end of this year.

PLDT’s planned entry into the DTH arena follows the company’s declining interest in the local cable television business, two businesses Pangilinan admits will definitely compete against each other. PLDT used to own Home Cable until it sold the latter’s PLDT offers... From B-1

assets to Lopez-owned Central CATV which owns Sky Cable. In exchange, PLDT received shares in Central CATV and now owns 33.33 percent of the latter. The Lopez group controls the remainder.

Pangilinan said he has decided to focus on the DTH business and move away from cable since he will have more control over the former compared to the latter. PLDT will have a 60-percent controlling stake in the DTH joint venture while its interest in Central CATV will dwindle down to around seven percent by next year when a loan extended by Lopez company ABS-CBN Broadcasting to Central is converted into equity.

The PLDT group was earlier given an option to pay part of the loan extended by ABS-CBN so that the former can maintain its 33.33-percent stake in Central but Pangilinan said he no longer wants to put in additional funds into the cable business.

Pangilinan also offered to give up his remaining stake in Central CATV in exchange for assets of Lopez-owned Bayan Telecommunications (Bayantel) but the Lopez group reportedly refused since PLDT’s interest in Central is already negligible and will not be worth giving up BayanTel.

Charles Ergen, founder, chairman and CEO of Echostar earlier this year visited Manila and agreed to form a joint venture with PLDT that will provide a "pervasive and cost effective DTH satellite pay television service in the Philippines."

Pangilinan said he wants DTH to be bigger than cable TV (CATV) in the Philippines, and this he hopes to achieve by bringing down the price of DTH subscription down to the level of CATV.

If this happens, the DTH joint venture will eat into the market of the CATV business, especially that of Sky Cable and Home Cable which currently have a combined 70- percent to 80-percent share of the cable TV market.

As planned, Echostar will make available to PLDT more than 2,000 video and audio channels and video-on-demand services that it currently offers to its 11 million Americans subscribers.

Dream Broadcasting is currently positioned for the high-end market because of its relatively high price compared to CATV. Dream reportedly has around 70,000 subscribers compared to the local cable TV industry which has a nationwide subscriber base of around 1.5 million.

PLDT’s partner Echostar is also reportedly looking at a possible partnership with a DTH company in Indonesia owned by the Salim family which controls First Pacific which in turn owns a controlling 24.4-percent stake in PLDT.

Industry experts earlier said that the only way that Echostar and PLDT can make DTH cost-effective and lucrative for the joint venture is to enter into a regional arrangement.