ABS-CBN Corp. on Thursday announced the acquisition of a 35 percent stake in TV5 Network Inc. that would help the Pangilinan-led broadcasting network grow and strengthen its free to air network while further expanding the audience reach of the Lopez-led company.
ABS-CBN and TV5 executed on August 11 the investment agreement that will allow the Lopez-led company to acquire 34.9 percent stake in TV5 for P2.16 billion.
After the transaction, the MediaQuest Group will remain to be the controlling shareholder of TV5 with 64.79 percent share.
The two companies also executed a convertible note agreement to which ABS-CBN will invest in a convertible note with a face value of P1.84 billon to be issued by TV5.
The convertible note will allow ABS-CBN, subject to obtaining applicable regulatory approvals, to acquire additional primary common shares of TV5 after 8 years to no more than 49.92 percent.
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 .
“This transaction is clearly transformational for both companies and is envisaged to significantly enhance significantly TV5’s capability to deliver
content and coverage to the Filipino public in the areas of entertainment, news, sports and public services,” ABS-CBN said.
The transaction is expected to be completed within August 2022, and closing is subject to fulfillment of certain closing conditions.
ABS-CBN will use the proceeds from the sale of SkyCable Corp. to Cignal Cable Corp. to finance its investment in TV5. Cignal will initially acquire 38.88 percent of SkyCable for P2.8 billion.
Cignal also entered a debt instrument agreement with SkyCable worth P4.38 billion which would allow Cignal to acquire the remaining 61.12 percent share in the Lopez-led cable company after eight years.
“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,” Manuel V. Pangilinan, chairman of Mediaquest Holdings said.
Mark Lopez, chairman ABS CBN said this partnership is an 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. We look forward to be of greater service to the public as we come together in taking TV5 to the next level,” he added.
Carlo Katigbak, president and chief executive of ABS-CBN added, that this partnership is consistent with the strategic intention of the company to evolve into a storytelling company whose goal is to reach as wide an audience as possible.
The landmark deal comes after activities between the two groups have increased with more Kapamilya programs onboarded on TV5’s Kapatid Network.
AlphaPrimus Advisors and Picazo Buyco Tan Fider & Santos advised the MediaQuest group on this transaction while the law firms of Romulo Mabanta and Quiason Makalintal advised ABS-CBN.
Meanwhile, Terry Ridon, convenor of Infrawatch PH said the ABS-CBN and TV5 deal is “not a franchise issue as this involves no transfer of controlling stakes requiring congressional approval.”
“More importantly, Congress should focus on more important public concerns, such as economic recovery and social programs, instead of wasting time inquiring on content sharing deals between media entities,” he said.
Ridon also said that there may be no basis for the Philippine Competition Commission to strike the deal, as this does not involve a transaction which will reduce or limit competition.
” In fact, when ABS-CBN lost its franchise in 2020, it ceased to be the dominant player in the broadcast segment, and TV5 has not yet attained dominant status in the same sector,” he said.
“However, given the size of the transaction and the entities involved, they may opt to undertake voluntary review with the PH Competition Commission. This is not compulsory, as the transaction does not meet the current P50 billion threshold for compulsory review,” Ridon added.