Globe Telecom eyes ABS-CBN

Globe Telecom has reportedly expressed interest in acquiring a stake in ABS-CBN Broadcasting Corp. in a bid to support its convergence strategy.

This makes Globe the second telecommunications company to signify an interest in ABS-CBN. The STAR earlier reported that the Philippine Long Distance Telephone Co. (PLDT) and its wireless subsidiary Smart Communications have made an offer to purchase a stake in the broadcasting network.

An ABS-CBN official said there has been no formal offer from Globe or the Ayala Group but disclosed that "feelers" have been sent.

According to a company official, ABS-CBN is not looking for nor does it need new investors at the moment. "But of course, we would listen to any group that wants to make an offer," the official said.

"The reason why telcos are looking for partners in the broadcast industry is because of the limited growth of their cellular business. They need value added services where broadcast content providers play a major role. ABS-CBN is already established in the international market and one value added service it can provide is in the area of remittance. Thus, telcos prefer broadcast organization with foreign presence," the official added.

In another development, PLDT chairman Manuel Pangilinan told The STAR that he will not make a bid for Radio Philippines Network (RPN 9), which the government has lined up for disposition this year. Pangilinan was identified as one of the groups that have expressed interest in the government-owned station.

According to sources, Globe has already started due diligence investigation on ABS-CBN. But Globe officials said the company is not interested in ABS-CBN, and even if it is, it cannot make the acquisition because the Constitution requires that entities in mass media be wholly Filipino-owned.

But industry experts said that even if Globe is partly owned by Singapore Telecom, it is still a Filipino company being at least 60 percent Filipino-owned. Therefore, there is no prohibition against Globe investing in ABS-CBN. The same rule will apply to PLDT, which is partly owned by Japan’s NTT.

The same sources added that it is also possible that the Ayala group, one of the controlling interests in Globe, will make the pitch for ABS-CBN using a different entity other than Globe.

PLDT earlier made an offer to acquire a stake in ABS-CBN, following its failed bid to get inside GMA Network which had decided recently to push through with a planned initial public offering (IPO) early next year to raise the additional funds it need for expansion.

The IPO was supposed to be scheduled this year but was deferred reportedly due to concerns raised by some of the majority owners of GMA 7, particularly the group of GMA chairman and president Felipe Gozon, that there is no assurance that the likes of Manny Pangilinan (PLDT chairman) will not use the IPO to gain control of the station.

Gozon owns 30 percent of GMA 7 while the Duavits owns 35 percent. The remaining 35 percent is owned by the Jimenez family which according to reports is being wooed by Pangilinan to sell its stake to PLDT. If Pangilinan is able to dominate the IPO and at the same time convince the Jimenez family to join him, then the PLDT group may be able to gain control of the network.

Gozon reportedly changed his mind and decided to proceed with the IPO next year after being assured that the shares to be sold during the IPO will be widely dispersed so that no single entity will be able to control it.

With GMA 7 out of the picture, Pangilinan has reportedly set his sights on ABS-CBN.

There have been reports that Pangilinan will make a bid for RPN 9 or IBC 13 when these are placed on the auction block by government, but when asked by The STAR about this, he said that he will not make a bid for these stations.

ABS-CBN earlier reported a P141 million loss during the first quarter of 2005, its first loss in several years. The first quarter performance was a sharp reversal form a net profit of P124 million in the same period last year.

But ABS-CBN chairman Eugenio Lopez III has expressed confidence that they can turn around the situation for the company.