GMA may get 55% market share if ABS-CBN shuts down

MANILA, Philippines – The Philippine Competition Commission (PCC) warned of a less competitive market environment should media giant ABS-CBN shut down – a situation which may negatively impact Filipino consumers.

During the Senate hearing on ABS-CBN's franchise renewal on Monday, February 24, PCC Commissioner Johannes Benjamin Bernabe said rival network GMA would gobble up around 40% to 55% of the total market share if the Lopez-led ABS-CBN goes off air.

Preliminary PCC data showed that 89% of the total TV market is controlled by the big 4: ABS-CBN, GMA, TV5, and Nine Media.

ABS-CBN controls somewhere between 31% and 44%, while GMA has around 34% to 46%. The number varies depending on the media research company the networks use. ABS-CBN subscribes to Kantar Media, while GMA uses data of AGB Nielsen.

Bernabe said an estimated 15% of ABS-CBN viewers would gravitate toward GMA in the event of a shutdown.

"In other jurisdictions, an increase of market share of at least 10% raises a red flag in terms of competition concerns," he said.

Why is this important? The PCC advocates for more players in the market because consumers would have options.

Moreover, Bernabe said having more choices would lead to lower costs for other dependent industries like advertising and manufacturing. 

"The more players you have in the market, the more they try to outdo one another. Innovation is always good for consumers who will have the better quality of service," Bernabe said.

Has the network's case affected the business environment? Through a quo warranto petition, Solicitor General Jose Calida wants ABS-CBN's franchise canceled on the basis of the network using Philippine Depositary Receipts (PDRs) to raise capital. Its corporate structure and pay-per-view services are also being questioned.

Securities and Exchange Commissioner Ephyro Amatong said other companies issuing PDRs may need to find other ways to raise money, should the Supreme Court rule against it.

PDRs are financial instruments where foreigners may invest in media companies, but do not hold rights to own shares or have voting rights. Foreigners gain through dividends.

It is unlawful for any foreigner to own media shares in the Philippine Constitution.

Since President Rodrigo Duterte's term started in 2016, the media giant's stock price has plummeted by over 70%. From around P60 apiece, ABS-CBN shares are now trading at the P16 to P20 range in the Philippine Stock Exchange. (READ: TIMELINE: Duterte against ABS-CBN's franchise renewal)

Meanwhile, ABS-CBN chief executive officer Carlo Katigbak said advertisers and other dependent industries will also be hurt if the network shuts down.

Socioeconomic Planning Secretary Ernesto Pernia earlier said in an Inquirer article that investor confidence may be affected by what is happening to the network.

However, Finance Secretary Carlos Dominguez III sees a boost in perception if allegations against ABS-CBN are proven true by the government. – Rappler.com

STORIES FROM THE FEBRUARY 24 SENATE HEARING: 

 

Ralf Rivas

A sociologist by heart, a journalist by profession. Ralf is Rappler's business reporter, covering macroeconomy, government finance, companies, and agriculture.

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