MANILA, Philippines — Network giants ABS-CBN Corp. and TV5 Network Inc. have decided to abort their P4-billion deal for the airing of ABS-CBN shows on TV5 – a development that some quarters warned could discourage free enterprise in the Philippines.
In a disclosure to the Philippine Stock Exchange, ABS-CBN said that it would no longer pursue its minority investment in TV5. It cited no reason for the sudden pullout from the transaction.
The Lopez-led network and Manuel V. Pangilinan’s TV5 signed a memorandum of agreement to formalize the termination of ABS-CBN’s proposed acquisition of 34.99-percent stake in TV5.
The P2.16-billion investment deal would have paved the way for ABS-CBN to return to free TV, a platform that it has missed out since losing its legislative franchise in 2020. ABS-CBN and TV5 also revoked the P1.84-billion convertible note that was supposed to be issued by the Pangilinan-led network.
Likewise, the two parties called off the sale and purchase agreement that would have resulted in Pangilinan’s Cignal Cable Corp. buying 38.88-percent equity in ABS-CBN’s SkyCable Corp. for P2.86 billion.
The P4.39-billion debt instrument that was supposed to be issued by the Lopez Group to Cignal Cable was also called off.
Both camps also decided to terminate the P250-million convertible note to be acquired by Cignal Cable from SkyCable.
ABS-CBN said none of the transactions covered in the agreements have materialized since the disclosure of the deals to the public on Aug. 11.
After confirming the fallout with TV5, ABS-CBN and holding firm ABS-CBN Holding Corp. asked the local bourse for a one-hour trading halt to give investors time to review the developments. ABS-CBN shares yesterday declined by 15 percent to P9.14.
Infrawatch PH convenor Terry Ridon said the development was detrimental to free enterprise in the Philippines. He expressed fears that investors may be forced to align their politics with those in power just to operate freely.
SAGIP party-list Rep. Rodante Marcoleta, who led the drive in Congress to deny ABS-CBN of its franchise renewal in 2020, had demanded that the Philippine Competition Commission (PCC) and the National Telecommunications Commission (NTC) check the agreement between ABS-CBN and TV5 for possible violations.
Ridon said the P4-billion investment that was supposed to be poured by ABS-CBN on TV5 was below the P50 billion PCC threshold for mandatory review.
“This is an unfortunate development and it bodes ill for the future of business, governance and talent in the Philippines, as it shows how extraneous factors can terminate initiatives that could have raised our standards of public service, culture and innovation,” Ridon told The STAR.
“This also serves as a warning to businesses: that free enterprise will only be free if businesses align with the politics of those in power,” he added.
Ridon said the country requires an economic climate conducive to business, particularly in the period of pandemic recovery. He warned that prospective investors who witnessed government pressure on business deals might just decide to stay away.
“This is not the governance climate that the country needs today, particularly at this time of great economic difficulty. With this development, investors looking at the Philippines as a prospective investment destination might as well bring their funds to other emerging economies with a better governance outlook,” Ridon said.
Regina Capital head of sales Luis Limlingan said that the termination of ABS-CBN’s investment in TV5 added to the uncertainties troubling the market.
“The market has been anemic this week, so I think a lot of the price action is influenced by what is happening geopolitically,” Limlingan said.