PLDT has second thoughts on satellite TV biz

Telecommunications giant Philippine Long Distance Telephone Co. (PLDT) is having second thoughts about going into the satellite television business, The STAR sources revealed.

PLDT earlier revealed that it is entering into an $85-million joint venture with America’s largest direct TV provider Echostar Communications for a satellite TV venture. Since the partners need a local franchise to go into this kind of business, PLDT offered to acquire Philippine Multi-Media System Inc., operator of Dream Satellite TV, from Antonio "Tonyboy" Cojuangco reportedly for $22 million, or about P1.23 billion. Cojuangco, however, was asking for $56 million.

Sources told The STAR that PLDT chairman Manuel Pangilinan has realized that even the reduced price of $22 million is too much for Dream. The $22-million figure was arrived at after factoring in the debts of Dream.

Even the deal with Echostar is reportedly facing difficulties due to certain technology-related issues that have to be settled first, the sources added.

Cojuangco reportedly needs the money to support his other investments, particularly Associated Broadcasting Corp. which operates Channel 5.

Pangilinan was earlier hoping to finalize a deal with both Echostar and Dream so that he can begin commercial operations of the direct TV business by next year.

Philippine Multi-Media System holds a franchise to operate a direct-to-home programming service. Sources said that if talks with Dream fail, PLDT would open negotiations with other direct-to-home providers such as Pacific Cable Inc. and GV Broadcasting, which can provide PLDT with the direct TV franchise it needs.

PLDT and Echostar are planning to invest $85 million in pay TV operations in the Philippines through satellite receivers, not the traditional cable system that is prone to piracy and signal theft. Discussions on their investment in a direct broadcast satellite business started as early as 2000 but getting a franchise was one of the issues that impeded the venture.

Cesar Reyes, chairman and chief executive officer of Philippine Multi-Media System and a former PLDT official, said in late August that valuation was stalling the negotiations between PLDT and Philippine Multi-Media System.

Philippine Multi-Media System uses PLDT’s Mabuhay Satellite to broadcast content to more than 100,000 subscribers nationwide. And according to The STAR sources, part of Dream’s debts are owed to Mabuhay.

PLDT used to own Home Cable until it sold the latter’s assets to Central CATV which also owns Sky Cable, the biggest cable TV company in the country. In exchange for the sale of Home Cable’s assets, PLDT received shares in Central CATV. Sky Cable and Home Cable, which account for a combined 70- to 80-percent share of the cable TV market, are now both owned by Central CATV, which is 66.67 percent owned by the Lopez group and 33.33 percent by the PLDT group.

Pangilinan earlier offered to sell its stake in Central CATV to the Lopez group in exchange for Bayan Telecommunications (BayanTel), but the Lopez group refused.

The PLDT top executive earlier told The STAR that he wanted out of the cable TV business because he had no control over it. Pangilinan said he believes he has better chances of making direct TV a hit in the Philippines.