Pangilinan thrust tests policy on multimedia ownership
The collapse of the bid by Manuel V. Pangilinan (MVP), chair of Philippine Long Distance Co., to take over the giant media network GMA 7 blocked the expansion of the PLDT group into the politically strategic media or information sector.
The crash of the negotiations over a controlling stake in the “Kapuso” network left seismic reverberations across the Philippine corporate world, with far-reaching implications for the curbing of monopolistic, if not oligopolistic, trends in the country, and for the freedom and plurality of information in the media.
It also exposed the dynamic of the development of a super oligarchy headed by Pangilinan.
According to information available to the public, the talks fell through because of disagreements over the mode of payment and regulatory “risk taking” issues (known only to insiders).
Whatever the reasons behind the failed talks, what seems clear is that the predatory ambitions of Pangilinan have suffered a crippling setback that may have halted the momentum of his monopolistic drive to control a broad range of companies in an economy historically notorious for concentration of wealth among a few oligarchs.
This article does not inquire into causes of the failure (leaving this effort to investigative business reporters). Rather, it focuses on the impact of this development on the media and the content of news filtered by media for the public.
To begin with, it has to be emphasized that the group of companies headed by Pangilinan has octopus-like tentacles that have a grip on many Philippine businesses. Its reach is unmatched by big-name companies such as those owned by the Lopezes; the Ayala-Zobels; the taipans of the great shopping malls; Lucio Tan of Philippine Airlines and Philippine National Bank/Allied Bank, and Eduardo “Danding” Cojuangco of San Miguel Corp.
As far as the media are affected by takeovers, it should be of concern to the public to know how independent media are, or how vulnerable they are to takeover bids from business groups (not from the government).
Pangilinan saw the value of this strategic platform in initiating negotiations to allow MediaQuest Holdings Inc., a wholly owned subsidiary of the PLDT Beneficial Trust Fund, to acquire GMA 7.
After the talks fell through, Pangilinan said he did not expect the failure to adversely affect the PLDT group’s “strategy of evolving from a traditional telecommunications company into a multimedia service company.”
The collapse thwarted this objective.
But this strategy of targeting media control drives Pangilinan’s expansion outlook. He said: “The PLDT Group continues to believe that owning, producing and providing content across multiple platforms is an important component of its platform for growth and as such intends to pursue its media strategy by building MediaQuest’s investments in TV5, the country’s third largest free-to-air television network audience share, and Cignal TV, the leading provider of direct-to-home satellite services.”
After the collapse of the negotiations, it is true that GMA 7 is still there, competing head-to-head with the Lopez-owned ABS-CBN. Had the takeover bid succeeded, a monopoly situation would nevertheless not develop since GMA 7 would still be facing off with ABS-CBN. But the ownership of GMA 7 would shift from the Gozon and Duavit families to Pangilinan’s group of companies.
Although the Pangilinan group’s buying spree has apparently been derailed, he has already established a foothold in mainstream media. Pangilinan earlier acquired TV5 from Associated Broadcasting Co. (ABC) and planned to merge it with GMA 7.
He used MediaQuest Holdings as the vehicle in the bid to acquire GMA 7. According to Doris Dumlao, business reporter of the Inquirer, the move to acquire GMA 7 is seen as giving Pangilinan’s group a leading market position in the broadcast industry.
Pangilinan is also managing director of PLDT’s controlling stockholder, the Hong Kong-based First Pacific Co. Ltd.
In 2009, according to a series of reports in the Inquirer, the Pangilinan conglomerate established its foothold in three mainstream print media—Philippine Star, BusinessWorld and the Inquirer—into which MediaQuest bought minority shares.
The Inquirer and the Star together have a combined circulation that holds a commanding majority in readership nationwide. No business group in the Philippines has ever acquired such holdings as the PLDT group through MediaQuest in the democratic regime after the l986 Edsa People Power Revolution.
Sensing the danger to press freedom posed by business sector penetration of ownership of a newspaper, sources in the BusinessWorld told reporters that the former publisher and founder of the paper, Raul Locsin, had put in place a “poison pill” to prevent any hostile takeover of the company.
The pill is the 70-percent ownership of the company by the BusinessWorld Employees Retirement Fund. This is how jealous Locsin was of the independence of his paper. Under a trust agreement, the acquiring party needs to get the approval of all regular employees to accept the purchase offer. One dissenting vote breaks the deal.
According to an Inquirer report, MediaQuest also holds controlling interest in National Broadcasting Corp., which operates a network of radio stations, and a minority in Central CATV, a cable TV company trading under the name of Sky Cable.
The embedding of Pangilinan’s group in the print media tests a policy set by then President Fidel Ramos banning any media organization from multimedia ownership to prevent monopoly by media giants.
That is to say, owners of radio-TV stations cannot publish newspapers. (To be continued.)