PSE suspends trading of ABS-CBN shares

Shares of ABS-CBN Corp. and its Philippine deposit receipts (Pdrs) issued by ABS-CBN holdings Corp. were halted for trading on Monday after the house of representatives denied last week its application for the renewal of its franchise.

The nonrenewal of the media company’s franchise means that its free television and radio stations, its primary source of income, would remain off the air.

The trading suspension on ABSCBN shares and PDRS, which began at 9 a.m. on Monday, was contained in a notice issued by the Philippine Stock Exchange (PSE).

“In view of the foregoing resolution adopted by the Committee on Legislative Franchises on the nonrenewal of the Company’s franchise, and pursuant to existing rules, applicable laws and regulations in order to maintain a fair, efficient and orderly trading market, the exchange will implement a trading suspension,” it read. Shares of ABS-CBN was last traded on Friday at P14.78 apiece, already down from the previous day's P15.18 apiece.

The company’s shares were also halted for trading on May 6, when the National Telecommunications Commission (NTC) ordered the shutdown of its free TV and radio stations for failing to renew its franchise. ABSCBN shares were then trading at P17 to P17.50 apiece.

The legislative franchise will allow them to use frequencies for television and radio broadcasts, which until today is the main revenue source for the company that also drives its other businesses. The company operates 21 radio stations in key Philippine cities.

In contrast, GMA Network Inc. was one of the most actively traded companies for the day. Its share price rose 10 percent, or P0.62 to P6.65, bucking the general downward

trend of the market. The main index was down 24.81 points to close at 6,172.57.

“We are deeply hurt that the Committee on Legislative Franchises has denied the franchise application of ABS-CBN. We believe that we have been rendering service that is meaningful and valuable to the Filipino public. Nevertheless, we would like to thank the Committee for allowing us a chance to air our side on all the issues raised against us,” company President and CEO Carlo Katigbak said in a statement released shortly after Congress thumbed down its franchise renewal application last Friday.

The company still has other businesses, such as cable and directto-home television distribution and telecommunications services overseas, movie production, audio recording and distribution, video and audio post-production and film distribution. Most of its revenues, however, are from advertisements on its free-to-air TV broadcast.

‘Fault of owners’

SPEAKER Alan Peter Cayetano on Monday said the owners of the ABSCBN are responsible for the TV network's shutdown and not the Duterte administration.

Cayetano issued the statement after the House Committee on Legislative Franchises denied the franchise application of the ABS-CBN Corp. last Friday.

“As to the oligarchs, like the owners of ABS-CBN, whose historical institutional DNA is programmed to protect and grow their fortunes by controlling and abusing the system, they also deprive the country of billions in much needed funds by skirting and bending the law. Many times in connivance with the political elite,” Cayetano said in his Facebook post.

“Unlike terrorists, oligarchs are able to fully use our legal system to victimize the people. They field de campanilla attorneys who expertly twist the law to suit their commercial interests. Yes, their methods for avoiding taxes in the billions of pesos may appear ‘legal,’ but how can you argue that putting that much money in the pockets of one family, instead of having it benefit the millions of Filipinos who desperately need it, is in any way right or moral?”

Cayetano noted that GMA Network paid P3.13 billion in taxes from 2017 to 2019, as compared to ABSCBN’S P563 million for the same period. This, he said, makes it “crystal clear” that something has gone “terribly wrong” with the system.

“We can argue about whether or not the journalists of ABS-CBN had any political bias, but can anyone who is familiar with Philippine history and politics have the same doubts when it comes to the network’s owners? Or that they leveraged the inf luence of the network to gain access to favored government contracts?”

Right to criticize

CAYETANO said Congress respects the right of the members of the media and every Filipino to criticize the government.

“For those who continue to push the freedom of the press card, Congress is not stifling the right of any journalist, host, commentator, talent, or employee of ABS-CBN—OR any Filipino for that matter—from criticizing the government. We simply put an end to the privilege of one family in using a public resource to protect and promote their private interests,” said Cayetano.

“Which is why I stand with the decision of the committee. While my belief in the right of the people—including those who work in the media—to freely express their opinions in whatever platform and manner remains strong, so is my conviction that private interests should be kept at the same armslength distance as government from controlling the media.”

Cayetano also maintained his position that the denial of the franchise renewal is not an issue of press freedom, but part of the government’s effort to reclaim the country’s patrimony from the oligarchs.

‘Repeal archaic law’

TO insulate press freedom from partisan politics, Albay Rep. Edcel Lagman, said the Radio Control Act of 1931 must be repealed. According to Lagman, the 89-year-old law provides that radio stations, now including television stations, must secure from Congress a legislative franchise prior to operation.

“While the 1987 Constitution does not require mass media enterprises to secure such franchise, the Radio Control Act imposes the requirement,” he said.

“The recent controversial and arbitrary rejection of ABS-CBN’S bid for a franchise renewal justifies the repeal of the anachronistic Radio Control Act. The authority to grant certificates of public convenience and necessity to mass media enterprises, without the need for a prior legislative franchise, must be maintained with the NTC under regulatory parameters which would ensure protection to press freedom.”

The lawmaker said mass media companies are not within the ambit of Section 11 of Article XII of the Constitution because this provision covers public utilities at least 60 percent of whose capital is owned by Filipinos.

“Mass media are not public utilities and are 100 percent Filipino owned and managed,” he said.

“There is no law or jurisprudence which categorically classifies television and radio networks as public utilities considering that the services of the latter, by nature, are for hire or compensation unlike mass media whose broadcasts are essentially free to the viewing public and subsidized by advertisements,” he added.

Also, Lagman said the pertinent constitutional provision on mass media is Section 11 of Article XVI which does not require any legislative franchise for the operation of television and radio networks.

He said even the Public Telecommunications Policy Act of the Philippines which distinguishes a public telecommunications entity from a broadcasting network, only requires a legislative franchise for a telecommunication entity under Section 16 thereof which provides: “No person shall commence or conduct the business of being a public telecommunications entity without first obtaining a franchise.”

Also, he said the law defines “franchise” as a privilege conferred upon a telecommunications entity by Congress, authorizing that entity to engage in a certain type of telecommunications service.”

“What exactly is the reason or rationale for imposing a prior congressional franchise? There seems to be no valid reason for it except to impose added burden and expenses on the part of the applicant.”

‘NTC should have filed raps’

MEANWHILE, the head of the Senate Public Services committee, the counterpart of the House franchise panel, said that instead of Congress just throwing out the entire franchise and closing down a business that employs thousands, “if there was indeed violation [by ABS-CBN] of some kind, the NTC should have filed a case against them.”

Senator Grace Poe admitted she was “saddened by the outright denial of the franchise application amid alleged violations of the network,” which she said could have been dealt with in another forum or the proper agencies.

For instance, Poe recalled that Dito Telecommunity Corp., formerly called Mislatel, was given a franchise by Congress and allowed to operate “despite its violations.”

“When it [Mislatel] acquired that franchise, part of the franchise agreement states that you should be in operation for a certain period. Mislatel was dormant for the longest time and yet Congress moved past that and granted them the franchise,” Poe said, adding that when the resolution on the franchise reached the Senate, the lawmakers saw the need of the telecommunications industry for a third player and gave Mislatel a chance but with certain safeguards.

Poe stressed that “there are parameters but you should also be flexible in the name of public service, what can serve the most number of people, what interest will be upheld. if it will be just for personal vendetta or personal opinions about it, i don’t think it would be fair.”

Senate president Vicente Sotto iii, asked if Senators have an option to salvage ABS-CBN, replied: “None.”

“it is out of our hands,” Sotto told Businessmirror. “A private bill is not salvageable if the House of Representatives denies approval.”