ABS-CBN impact on economy tackled in Senate hearing

ABS-CBN News

Posted at Feb 24 2020 02:19 PM

MANILA -- Senators investigating ABS-CBN Corp's compliance with its franchise examined the economic fallout should it fail to secure a fresh license to operate.

Senator Sonny Angara said that as a "large pillar" of Philippine broadcasting, many industries like advertising depend on ABS-CBN.

Angara asked Securities and Exchange Commission Supervising Commissioner Ephyro Luis Amatong what would happen to companies who issue Philippine Depository Receipts or PDRs should the Supreme Court rule that the ones issued by ABS-CBN violated the law.

"It is not only ABS that made use of the PDR vehicle. There are other media outlets, depending on the grounds, how the court will rule, other companies that have foreign investors in nationalized (industries) may also be affected," Amatong said.

Pressed by Angara if an adverse ruling on PDRs would have a "big effect," Amatong said: "That is correct, your honor."

A PDR is an investment instrument that entitles the holder to dividends but does not give him or her ownership or voting rights. The Solicitor General raised ABS-CBN's PDRs in his petition to nullify the network's franchise that will expire in March.

"Ang ABS-CBN ay isang malaking korporasyon, isang malaking pillar ng kanilang industriya. Kung titingnan mo ang ekonomiya, madaming dependent sa kanila," Angara said.

(ABS-CBN is a large corporation, a large pillar of their industry. If you look at the economy, many are dependent on them.)

On top of 11,000 employees, 6,000 third parties including security guards and janitors could be affected by an ABS-CBN shutdown, said its President and CEO Carlo Katigbak.

ABS-CBN and GMA Network are the two dominant broadcasters in the country, each claiming up to 44 percent and 46 percent, respectively, of audience share using different metrics, according to Johannes Bernabe a member of the Philippine Competition Commission.

Should ABS-CBN fail to renew its franchise and its share moves to GMA, this will raise a "red flag" for the competition monitor, Bernabe said. Even a 10-percent jump in share is enough to raise a "red flag," he told senators.

An ABS-CBN exit will also deprive consumers of choice, he said, adding, "Choice also offers innovation. The more players you have in the market, the more they try to outdo one another. Innovation always redounds to the benefit of the consumer."