ABS-CBN Corp. —controlled by tycoon Oscar Lopez —has agreed to buy a stake in rival television network TV5 as the company, which once dominated the Philippine media industry until the government forced it off the airwaves two years ago, seeks to revive its business.
Under the deal, ABS-CBN agreed to pay Mediaquest—a unit of Philippine telecommunications giant PLDT's trust fund—2.2 billion pesos ($39.5 million) to acquire the 35% stake in TV5, according to a regulatory filing on Thursday.
The deal comes two years after ABS-CBN lost its free-to-air franchise. The Philippine Congress started reviewing the company's application to renew ABS-CBN's franchise for another 25 years in December 2019, but had not reached a decision by the time the license expired in May the following year. While ABS-CBN has been broadcasting its shows through digital channels and some of its content is also being aired by TV5, it remains in the red, posting a net loss of 5.6 billion pesos in 2021.
ABS-CBN said it will also invest 1.8 billion pesos in convertible notes being issued by TV5. Proceeds from the share sale and note issue will be used by the free-to-air channel to fund capital expenditures and boost content offerings.
"This partnership is consistent with the strategic intention of ABS-CBN to evolve into a storytelling company whose goal is to reach as wide an audience as possible," Carlo Katigbak, president and CEO of ABS-CBN said in a statement.
To partially fund the deal, ABS-CBN separately agreed to sell 39% of its cable television unit SkyCable to MediaQuest unit Cignal Cable Corp. for 2.9 billion pesos, Mediaquest parent PLDT said in a regulatory filing . At the same time, Cignal Cable will invest 4.4 billion pesos in a debt instrument that gives Cignal Cable an option to buy the rest of SkyCable after eight years.
ABS-CBN's alliance with TV5 and its parent PLDT—which is led by tycoon Manuel Pangilinan—comes as billionaire Manuel Villar prepares to launch his media company using the former frequencies previously assigned to ABS-CBN. Villar's Advanced Media Broadcasting System aims to start broadcasting this year, initially in the Metro Manila area.
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