ABS-CBN and TV5 sign landmark deal

MANILA, Philippines (Update 2 11:10 a.m.) — Broadcast giant ABS-CBN and Pangilinan-led TV5 signed an agreeement that allows more airtime for the beleaguered broadcaster’s shows in the ‘Kapatid’ network. 

In an early Thursday morning disclosure, ABS-CBN Corp. said that the agreement will allow them to acquire 6.46 million primary common shares, equivalent to 34.99% of capital and voting stock of TV5 for P2.16 billion. 

This partnership between the ‘Kapatid’ and ‘Kapamilya’ network is one of the more noteworthy moves in the country’s media industry in the past five years. ABS-CBN’s operation has been struggling of late since the lawmakers from the former Duterte administration denied them a broadcasting franchise following repeated attacks on press freedom and media expression.

“This partnership is consistent with the strategic intention of ABS-CBN to evolve into a storytelling company whose goal is to reach as wide an audience as possible,” said Carlo Katigbak, president and chief executive officer of ABS-CBN Corp. 

Following the acquisition of shares, the equity of local media conglomerate MediaQuest Holdings, Inc., which operates TV5, will be trimmed to 64.79% of voting and capital stock. MediaQuest will still hold the controlling stock of TV5 despite the agreement. 

Manuel V. Pangilinan, chairman of MediaQuest, welcomed ABS-CBN’s investment into TV5.

“Our companies have always had these cherished values of providing top and quality programs in the service of the Filipino people and together we believe we can achieve this in greater measure and success,” Pangilinan said.

Pangilinan's MediaQuest is owned and controlled by the PLDT Beneficial Trust Fund.

That said, the deal will include a convertible note agreement, wherein ABS-CBN will invest in P1.84 billion in a convertible note issued by TV5. The note will allow ABS-CBN to acquire additional primary common shares after eight years of the note’s issuance.

Likewise, the convertible note allows ABS-CBN to increase their equity in TV’s stock to no more than 49.92%.

Proceeds from the deal, now totaling P4 billion with the convertible note in tow, will fund TV5’s capital and operating expenditures.

Luis Limlingan, head of sales at local brokerage Regina Capital, believes the move could level the industry's playing field.

"The deal could open opportunities for ABS to generate more revenue and form more polished synergies with TV5. On the industry front, the partnership should help level the playing field as the companies could leverage on each other's expertise against the ever changing technology driven business," he said in Viber message.

Commenting on the deal, Terry Ridon, convenor of local thinktank Infrawatch PH, agreed with Limlingan’s assessment that this move will level the playing field.

“It is also a leap forward for TV5, as it can now compete head-on with GMA for advertising revenue, talent and programming,” he said.

He reiterated that this deal is not a franchise issue since controlling stakes will not be transferred, as the disclosure likewise noted. For Ridon, this move already prompted some Congress lawmakers to push inquiries on the nature of the deal.

“More importantly, Congress should focus on more important public concerns, such as economic recovery and social programs, instead of wasting time inquiring on content sharing deals between media entities,” Ridon added.

Following the Thursday announcement, shares at ABS-CBN rose 5.44% at P12.02 apiece.