MANILA, Philippines – Media giants ABS-CBN and TV5 officially signed a multibillion-peso investment deal after over a year of negotiations, effectively consolidating both companies’ content and resources.

In a disclosure to the Philippine Stock Exchange on Thursday, August 11, ABS-CBN said it is acquiring close to 6.5 million primary common shares in TV5, representing 34.99% of the total voting and outstanding capital stock of TV5, for P2.16 billion.

After the consummation of this subscription, the equity of MediaQuest, operator and owner of TV5, will be reduced to 64.79% of the voting and outstanding capital stock. MediaQuest will remain as the controlling shareholder of TV5.

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ABS-CBN and TV5 will also execute a convertible note agreement to which the former will invest in a convertible note with a face value of P1.8 billion to be issued by the latter. This will give ABS-CBN the option to acquire more shares of TV5 eight years from the issuance of the convertible note, but it can increase its equity in TV5 to no more than 49.92%.

“The proceeds of the subscription in the primary common shares and the convertible note in the total amount of P4 billion will fund the capital expenditures and operating expenses of TV5 in pursuing the enhancements of its content and programming and public service offerings,” ABS-CBN said.

Manuel V. Pangilinan, chairman of Mediaquest Holdings said: “We welcome the entry and investment of ABS-CBN in TV5, as ABS-CBN has always been the leading developer and provider of Filipino-related entertainment content not only in the Philippines but overseas as well. 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.”

ABS-CBN chairman Mark Lopez said: “We are excited with this partnership as we see the opportunity to help TV5 grow and strengthen its free to air network. For ABS, it presents a fantastic platform for us to achieve synergies in production content and talent management as well as maximizing our
content delivery.”

Both companies will use TV5 as the broadcast platform, as Congress had denied ABS-CBN a franchise during the Duterte administration. (READ: TIMELINE: NTC distributes ABS-CBN frequencies)

Prior to this deal, the Lopez-owned ABS-CBN used block time leasing deals to air its popular shows on the Pangilinan-led network TV5.

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Cignal invests in SkyCable

Apart from the ABS-CBN and TV5 deal, Pangilinan’s Cignal Cable Corporation is acquiring a 38.88% stake into the Lopezes’ Sky Cable Corporation for P2.86 billion.

Simultaneously with the execution of the sale and purchase agreement, the companies also executed a debt instruments agreement, where Sky Vision Corporation, a stakeholder of SkyCable, agreed to issue an exchangeable debt instrument to Cignal Cable with a face value of P4.39 billion. The debt instrument gives Cignal Cable the option to acquire additional SkyCable shares equivalent to 61.12% of the outstanding capital stock of SkyCable eight years from its issuance.

“The proceeds of the sale of the sale shares, the convertible note, and the issuance of the debt instrument in the total amount of P7.5 billion will be used to repay certain obligations of ABS-CBN and Sky Vision and to fund the investment of ABS-CBN in TV5,” PLDT said.

Under the debt instruments agreement, Cignal Cable will also acquire a convertible note issued by SkyCable with a face value of P250 million and convertible into primary shares of SkyCable representing about 1.84% of outstanding capital stock.

“The investment of Sky Cable by Cignal Cable is expected to benefit the former’s existing customer base consisting of over 300,000 cable subscribers and close to 350,000 broadband subscribers as of the end of June 2022,” PLDT said.

Founded in 1990, SkyCable is said to be valued by as much as P18 billion.

In 2020, Manny Pangilinan sought to acquire SkyCable, but eventually dropped his bid over concerns of the antitrust body overturning the deal.

Pangilinan is chairman of telco giant PLDT, which has a direct-to-home satellite arm Cignal TV – a rival of SkyCable’s Sky Direct. SkyCable also offers fiber internet services.

Financials

As of the first quarter of 2022, ABS-CBN suffered losses of P1.4 billion, while revenues improved by 18.6% to P4.65 billion, driven by political advertisements during the May elections. 

For the entire 2021, the Kapamilya network saw losses of P5.67 billion, an improvement from P13.53 billion in 2020.

With SkyCable being unable to provide direct-to-home (DTH) service following the lapse of its franchise, the company continued to focus on growing its broadband subscriber base. SkyCable’s revenues amounted to P2.1 billion during the first quarter, despite the absence of DTH services. 

For the entire 2021, SkyCable’s revenues reached P8.4 billion.

Pangilinan’s TV5 has yet to become profitable since its acquisition by the tycoon in 2010 from Antonio Cojuangco.

In a Philippine Star report in 2021, Pangilinan said that “it is doing well” and may take profits by 2024. – Rappler.com