BROADCAST giant TV5 abruptly
terminated its talks for a partnership with the Lopez-owned ABS-CBN after its
executives learned that the congressional committee scrutinizing the proposal
would be zeroing in on exposing the multi-media conglomerate's allegedly
blatant violation of the constitutional ban on foreign investments in media.
While previous administrations looked
the other way when confronted with this colossal anomaly, officials of PLDT —
which owns TV5 through its multi-media arm, MediaQuest Holdings — were
reportedly wary that the congressional hearings would train a strong spotlight
on it, drawing the attention the new President Ferdinand Marcos Jr.'s whose
stand on it cannot as yet be determined.
Indeed, it's a demonstration of a
foreign conglomerate's vast control of a people's consciousness and of
government regulatory bodies that TV5 as well as its sister companies in media
— BusinessWorld, Philippine Star and partly, the Philippine Daily Inquirer —
have been operating even if these are owned through corporate layers by PLDT
Inc. This telecom giant is owned 25.6 percent by the Indonesian-controlled
First Pacific Co. (according to its 2021 annual report) and 10.6 percent by the
Japanese NTT Docomo (according to the PLDT's general information sheet
submitted to the Securities and Exchange Commission last month).
 |
| (photo credit to Manila Times) |
First Pacific and NTT Docomo were
recently able to legalize their investments in PLDT because of the passage of a
law in March this year that in effect excludes telecoms from the list of
industries in which the Constitution allows only 40 percent of capital to be
owned by foreigners.
This was done through the really
preposterous maneuver of redefining telecoms not as "public
utilities" — as the Constitution referred to restricted industries — but
"public services."
However, the constitutional
requirement for 100 percent Filipino ownership of mass media remains, and only
through the tedious process of amending or totally rewriting the Constitution
can the ban be lifted.
Rappler
The Securities and Exchange
Commission in fact ruled in the Rappler case that the ban on foreign ownership
and control is absolute, that not a single peso nor the slightest control in a
media firm can be made by a foreign entity. The SEC even emphasized that Presidential
Decree 1018 had also declared that "the ownership and management of mass
media be limited to citizens of the Philippines or to corporations wholly owned
and managed by such citizens.
TV5 and its sister media firms are
100 percent-owned by a firm called MediaQuest which was funded with P14.5
billion in 2012 by PLDT Inc.'s pension fund called Beneficial Trust Fund (BTF).
The fund is controlled by a five-man board of trustees, three of which are PLDT
executives, and all five appointed by its board of directors.
Out of PLDT's 13-man board, nine are
designated by the foreign First Pacific Co. and NTT Docomo. Control by these
two foreign firms is therefore transmitted first through the Beneficial Trust
Fund to MediaQuest and then to the media firms, a clear violation of the
Constitution if the corporate veil is pierced.
For instance, Ray Espinosa, chairman
of Philippine Star, is certainly Filipino. But he doesn't represent himself
since he has only token shares in Philstar, as required for him to be on the board.
He is in Philippine Star's board because he ultimately represents First
Pacific, where he is an associate director.
Salim
First Pacific is tightly controlled
by the Indonesian tycoon Anthoni Salim, who owns 45 percent of its shares, with
the rest widely distributed in the Hong Kong stock market. Manuel V. Pangilinan
is Salim's prime executive, whose PR though has very successfully portrayed him
as the First Pacific's Philippine conglomerate's main stockholder, with media
even calling it the MVP Group. Pangilinan actually owns only 1.6 percent of the
holding firm, and roughly the same tiny percentages in its companies.
Pangilinan has a mere 0.13 percent shares of PLDT.
BTF's funds, however, were not enough
to fund the huge requirements of Salim's media enterprises, since its capital
in MediaQuest had eaten up 80 percent of its assets.
MediaQuest's media investments in
fact hasn't been generating profits in the tight, competitive media market, so
PLDT had to report huge actuarial losses on these: P6.8 billion, P11 billion
and P5.1 billion for 2012, 2013 and 2014, respectively. As a result, the value
of the pension plan's assets — which determines its capability to meet pension
payments — was drastically reduced to P6 billion, or one-fourth of its P24 billion
value in 2011. Salim could no longer raise funds from his employees' BTF to
fund his media empire.*
MediaQuest's rapid expansion as a
media conglomerate was due to PLDT's massive infusion of capital, disguised as
Philippine Depositary Receipts (PDRs). That is, PLDT gave MediaQuest additional
capital, a violation of the constitutional ban as PLDT is 36-percent owned by
foreigners. These were disguised though as PDRs issued by MediaQuest.
A PDR represents the holder's right
to the dividend income of a share in a company but without the formal ownership
of it. Thus, a foreigner owning a PDR in a media firm isn't — technically at
least — violating the constitutional ban on foreign participation in a media
firm.
However, the SEC decision on the
Rappler case declared: "The Commission's definition of 'control' is
neither limited to stock ownership nor to management in the board, but rather
embraces a broad range of schemes that grant influence over corporate
policy." Indeed, except for its chairman (currently Ray Espinosa, a First
Pacific executive), the BTF's board members are obscure PLDT executives
obviously put there to comply with the legal requirements for a pension fund.
From 2012 to September 2013, PLDT
subsidiary ePLDT invested P9.6 billion in MediaQuest's PDRs, which was then
used to fund Cignal TV, the direct-to-home satellite television service. The
massive infusion of funds explains why Cignal TV has in just a few years become
the largest in the industry.
In March 2013 and then March 2014,
ePLDT bought another P2.45 billion MediaQuest PDRs, in order to fund its
subsidiary Hastings Holdings, the holding company for First Pacific's newspaper
investments in the country. This was reportedly used to partly pay the P4
billion that the Belmonte family asked for its Philippine Star shares in 2012.
PLDT took another tack in funding its
TV5 network, especially since the broadcast company was in dire need of more
money since it hadn't been able to get a significant share of the advertising
market from the two major networks, ABS-CBN and GMA7.
Advertising
PLDT and its subsidiary, Smart
Communications, gave advanced payments for its advertising placements, which it
committed to total P868 million in 2013 and a further P758 million in 2014. It
is not clear how much the total placements amounted to although these could
have reached P1 billion annually from 2010 to 2014 — a credible figure given
PLDT and Smart's P8 billion annual advertising budget. PLDT actually entered
into a contract with TV5 for these advertising placements starting in 2010 for
a five-year term. The contract has been renewed for another five years, to
continue up to 2021.
However, by having the BTF as an
investor in the media empire, Salim isn't risking his own nor his
conglomerate's funds in companies in the media sector, but the employees'
pension money. More importantly, by having BTF as the stockholder in his media
firms, Salim thinks he is skirting the constitutional ban on foreign
investments in local media enterprises, since BTF is technically a Filipino
entity as its beneficiaries are Filipinos who constitute the overwhelming
majority of PLDT's staff.
The incontrovertible reality though
is that the controlling entity of these media conglomerates is a foreigner, the
Indonesian Salim, which the Constitution bans. He can rely on the executives he
appoints in PLDT, in BTF, and in his main media holding firm MediaQuest to
follow his orders.
Salim's media enterprises, combined
with his telecom industries, make up a powerful political and opinion-forming
force, which is the reason the framers of our Constitution totally banned
foreigners from these sectors. A foreigner in fact now has in place a perfect
machine for controlling a population's views and way of thinking. He has a
content generator made up of his news enterprises in print, broadcast and the
Internet. In addition, he has a content disseminator consisting of his
cellphone firm, Smart Communications, the biggest in the country, and his
direct-to-home satellite television service Cignal TV and his cable news
network.
Never in our post-war history has
there been a foreigner with such a media empire, and in all media platforms.
This is a fact largely hidden by the Salim group's tremendous control of media
— including journalists working in his competitors' firms. It would have been
exposed if Congress had continued its investigation of the deal being worked
out by TV5 and ABS-CBN.
The
Manila Times
Sept. 5, 2022
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