GMA7-TV5 deal talks in make-or-break period

MANILA, Philippines (UPDATED) – The much-anticipated deal between rival networks TV5 and GMA-7 is in a make-or-break period.

According to GMA Network Chairman and CEO Felipe L. Gozon, the business deal with TV5 chair Manuel V. Pangilinan will either push through this 2012 or not at all. “It will either terminate or go through within this year,” he said on Tuesday, July 31.

Gozon led the bell ringing ceremony at the Philippine Stock Exchange floor at the Ayala trading floor to mark the media network’s 5th listing anniversary. In his speech to the exchange, he said GMA-7 “must prepare for new and better opportunities” ahead.

Pricing has long been a sticking point for the deal, but without elaborating Gozon suggested there were other details to iron out. “From [Pangilinan’s] standpoint maybe that [the deal is moving positively] is correct. But from my standpoint, I am [on a] wait-and-see [mode]. As you know in any negotiation there are outstanding issues to resolved, because if there were not, then we would have signed yesterday.”

Gozon said that he and the families behind GMA were ready to continue running the company should the deal fall through.

“We are not peddling GMA for sale. Somebody wanted to buy and we attended to it. That’s all. There is no plan B, no plan C, no plan D [if Pangilinan doesn’t buy it],” said Gozon.

Broadband investments

Gozon says that with technological advancements of today, “TV is in a constant state of flux.”

Thus, if a deal with Pangilinan’s group does not push through, Gozon admitted that GMA-7 would have to begin investing in broadband given the trend towards online and traditional broadcast converging.

As it stands, GMA-7 is the only one among the 3 major television networks without major broadband and cable assets. Industry leader ABS-CBN Corp. has been aggressively investing in broadband through its Sky Cable unit, while TV5 has access to the massive telecommunications and broadband assets of Pangilinan-led Philippine Long Distance Telephone Co (PLDT).

“At the moment we don’t have telecoms and we don’t intend to go into that because that requires a tremendous amount of investment. Besides it’s too late for us to do that now. So we will just make our part of the convergence as strong as possible because they also need us like horse and carriage.”

Gozon pointed out that GMA is strong in terms of content, which also plays a vital role in the modern media landscape. “In my opinion of all this technological digitization, good quality content is what will be needed by everybody when the convergence happens and all that.”

“It’s like having a highway and you need motor vehicles to pass through the highway or else the highway will be useless. And it’s the content that drives the utilization of the highways, the platform. It has to be good quality content because there will be many choices and you are going to compete in a wider field. There are so many things to choose from because of the multiplication of the platforms,” added the network chairman.

Positive prospects for 2012

Given the prospects of increased ad spending in anticipation of the 2013 elections, Gozon was confident about the network’s prospects for the year.

He described the 2nd quarter as “so-so” and said their was a “shortfall” in the first quarter but he expected the second half of the year to deliver profits. “Beginning June we have been exceeding our targets,” he added.

Gozon projected that net income after tax would each P2.8-3 billion for the full year. – Rappler.com