The politics of franchises

It was not surprising that the Duterte administration awarded the broadcast frequencies of ABS-CBN to political ally Manny Villar and the Quiboloy religious group. The frequencies were vacant for a year after they refused to renew the franchise of ABS-CBN.

On-air frequencies, broadcast or telco, are public resources. Because these are limited, the state must allocate their use. And because frequencies belong to the public, allocating them must promote maximum public benefit. That’s the theory.

In our country, awarding franchises is a not-so-secret feeding trough for members of Congress. Getting a franchise is an expensive process even if the state grants it for free.

In some other countries, they bid out the award of such franchises, with the money going to the National Treasury. That is how it should be since frequencies are scarce commodities that have an economic value for businesses.

That’s what they should have done when they forced ABS-CBN to vacate their frequencies. Manny Villar and Quiboloy should have paid good money for the privilege of using those frequencies.

As it happens, private parties who get frequencies for free from the state are also able to sell the right to use them afterwards. That’s rent-seeking.

Indeed, there is one other thing that must be done in the public interest.

With digital broadcasting, as many as 10 television channels can utilize the space that previously only accommodated one analog channel. If the new administration has national interest in mind, it should auction seven to 10 channels instead of just one.

Of course I am dreaming. Franchise holders will insist on their right to have all 10 channels for the one analog channel they hold or applied for. Politicians will not want the system changed.

For now, don’t cry for ABS-CBN. If you ask them, they will tell you they have migrated to an all digital business model that requires no franchise and no frequency. If a new administration gives them one, that is gravy.

Going digital is how the world is moving right now. In the US, fewer and fewer households are hooked on cable or still getting programs through old fashioned on-air analog television channels. Netflix and other streaming services are where they are now.

ABS-CBN had been forced to go to the future, ready or not. They now produce content aired on Netflix, Viu, foreign broadcast networks and blocktimed on ABC 5 and A2Z among others.

What ABS-CBN has in its favor is its ability to make content that sells here and abroad. Content is king in today’s digital media environment, and this is a strength none of those who now have franchises and frequencies have. Even GMA7’s capability is limited.

This is something my friend Manny V will find out soon enough. The pragmatic businessman that Manny is, I am not ruling out the possibility that he will seek a blocktime arrangement with ABS-CBN for content.

What happened to ABS-CBN under the Duterte administration forced the network to get out of its comfort zone of traditional broadcasting and get into the future of entertainment. For as long as they can hope to recover the good old days of a free TV franchise, the resolve to get to the future won’t be as strong.

It may also be good for local talent because it will force ABS-CBN to go international in a big way and have its own BTS. There is no turning back now.

They have a talent roster that is very loyal. Talents have been taking personal sacrifices to help the network get by these days. There is also the strong Lopez family commitment to recover at all cost.

It doesn’t mean the next administration shouldn’t review its case and the way the awarding of franchises has been politicized. We have to do things right.

I am not blaming Manny Villar. He was doing things according to present rules. It may seem unfair to use his massive political clout, but that’s how things are done.

I have known Manny way back in our freshman year at UP in 1966. Manny and I were in the same ROTC platoon. We were classmates in some basic subjects during our first two years.

I have kept in touch with Manny through the years. I consider him a friend and I enjoy our conversations about everything from business to politics. His daughter and mine were contemporaries at Ateneo.

I admire the guts and strategic thinking that enabled  Manny to become the billionaire that he is today. How he meshed politics, business, and family leaves you breathless.

The thing is… you also get a feeling he pushed his weight too much.

For example, he has also quietly dominated the water sector by securing joint ventures with local water districts that are regulated by LWUA, an agency attached to DPWH, which was headed by his son. With about a hundred water districts now, he is fast emerging as the national water king as well.

Then, members of Congress should not be interested financially in the granting of franchises during their term of office. His daughter Camille is a member of the Lower House and she voted not to grant ABS-CBN a new franchise. Then they get the ABS frequencies. Parang blatant conflict of interest.

The scuttlebutt is that Manny wants the ABS frequency to help his son who is now running for senator when he runs for president six years from now. But a frequency is just a frequency, and it will be of little use without the expertise to use it effectively.

Knowing Manny, I imagine he thinks he can easily buy talent, even from among the unemployed folks at ABS-CBN. From my years in the business and with ABS-CBN, I can tell him that it will take more than six years to develop a team that works as well as ABS-CBN has all these years.

For now, that’s how the cookie crumbles. We can dream of better days, with better politicians in power. In  reality, we are stuck with the crumbs we have because we vote for them every time.

Boo Chanco’s email address is [email protected]. Follow him on Twitter @boochanco.