January 4, 2020

ABS-CBN’s Franchise Renewal: Will Lopezes make ultimate sacrifice to save thousands of jobs?

Most of us are already familiar and have a working understanding of the ABS-CBN franchise renewal issue, but to give you a refresher, here’s the basic issue.

Every free-to-air TV or radio station is required to secure a congressional franchise in the form of a Republic Act, a franchise that usually lasts for 25 years[1]. A new franchise (READ: A New Republic Act) is needed to operate after those 25 years.

ABS-CBN received its franchise on 30 March 1995 via RA No. 7966[2], so it needs to get a new one before RA No. 7966 expires 25 years later on 30 March 2020.

And that’s the problem.

Why need a franchise?

The Constitution guarantees Press Freedom, but it doesn’t guarantee access to broadcast frequencies. While anyone has the right to engage in journalism, not everyone has the right to have sole use of any broadcast frequency, as Physics sets limitations on the latter.

In the case of TV, there are at most 12 available VHF channels (Channels 2, 3, to 13) and at most 38 in the UHF band (Channels 14 to 51)[3].
Reporters without Borders recognized this reality when it wrote (emphasis supplied):
“Licensing became necessary as broadcast frequencies constitute a scarce resource… In Metro Manila for example, the frequency is limited to 23 physical spots for TV channels, 32 spots for AM radio channels, and 25 FM spots – and they are all taken at the moment.”
The TV firm ABS-CBN, by virtue of Press Freedom, has the right to create and distribute content, but broadcasting through the Channel 2 Frequency is a privilege. ABS-CBN’s dominion over Channel 2 means some other TV operator failed to get it, and this privilege was granted to ABS-CBN only by an Act of Congress.

Imagine this:
If ABS-CBN as a Filipino entity has the inalienable right to broadcast via a frequency, then the equal protection clause of the constitution[4] means every other Filipino should enjoy the same right. Applying this to Metro Manila, how can 23 physical TV spots be distributed among Metro Manila’s over 10 million residents?
That’s clearly impossible, hence the need for the government to decide who among aspiring broadcasters are in the best position to serve Public Interest, i.e., who among them is most deserving of receiving a franchise, i.e., a privilege.

Suffice it to say, the ABS-CBN Franchise Renewal Issue arises not from Free Speech or Press Freedom as defined in the Constitution, but from Public Services as defined in the Public Services Law[5].

Will ABS-CBN’s Franchise be renewed?

Two bills were filed in September 2014: one by Baguio Rep. Nicasio Aliping, and another by Isabela Rep. Giorgidi Aggabao[6]. Inquirer reported that both failed to pass because then-President Aquino’s House allies “felt [ABS-CBN’s] criticisms against the President were too personal and offensive and went to the point of nitpicking[7].”

After failing to renew their franchise under the 16th Congress (2013-2016), ABS-CBN hoped to get it in the 17th Congress (2016-2019). Nueva Ecija Rep. Micaela Violago attempted this through her House Bill No. 4349 filed[8] in November 2016, but it failed to pass.

We’re at the 18th Congress (2019-2022) and it’s make-or-break for the Lopez-owned ABS-CBN, as its franchise expires in just a few months.

Unfortunately, an immensely popular president[9] is against it.

In as late as 30 December 2019, President Rodrigo Duterte told the Lopezes:
“Itong ABS, mag-expire ang contract ninyo. Mag-renew kayo, ewan ko lang kung may mangyari diyan. Kung ako sa inyo ipagbili niyo na ‘yan[10]. (ABS-CBN’s contract is about to expire. I don’t know if you’ll get renewed. I’d sell it off if I were you.)”
Duterte has vocally opposed ABS-CBN’s renewal citing, among others, its failure to run his paid political advertisements during the 2016 presidential race, even threatening to file estafa (swindling) charges against the company[11].

Oh, and do you remember what ABS-CBN aired on the night before election day?

This, and it was paid for by opposition Senator Antonio Trillanes:

A glimmer of hope?

Senator Ralph Recto’s August 2019 SB No. 981[12] , Nueva Ecija Rep. Micaela Violago’s refiled HB No. 676[13] and Laguna Rep. (and former ABS-CBN employee) Sol Aragones’ HB No. 3947[14] all aim to renew ABS-CBN’s expiring franchise. 

The three bills, however, are still pending as of 04 January 2020, or less than three months from the current franchise expiry on 30 March 2020.

Despite Duterte’s opposition, some of his allies, including Deputy Speakers Vilma Santos, Rose Marie Arenas, Aurelio Gonzales, and Johnny Pimentel, strongly backed ABS-CBN’s franchise renewal[15]. Meanwhile, House Speaker Alan Peter Cayetano departed from his historically Duterte Diehard Supporter (DDS) stance and instead said he would be “fair” on this issue[16].

Assuming that one of the house bills (or maybe a consolidated version) somehow passes on the third reading, ABS-CBN still won’t be out the woods because the counterpart Senate Bill (Recto’s SB No. 981) will still have to pass by a simple majority (13 votes).

What makes this problematic is the fact that the Senate is chock full of administration allies and senators who may hold grudges against the company.

ABS-CBN’s problem with 23 Senators

Let’s list down some senators who may find it difficult to OK the proposal.

[Sen. #1 to #6] Six senators are from the President’s PDP-Laban (Manny Pacquiao, Juan Miguel Zubiri, Bato dela Rosa, Bong Go, Koko Pimentel, and Francis Tolentino) and people generally expect them to vote along party lines.

[Sen. #7] Sen. Nancy Binay (UNA) may view ABS-CBN as among the media companies that helped destroy her father Jejomar Binay’s political prospects.

[Sen. #8] Sen. Bong Revilla (Lakas) may view ABS-CBN as among those who helped put him under detention.

[Sen. #9 to #12] Senators Dick Gordon (VNP), Ping Lacson (Ind), Joel Villanueva (CIBAC), and Win Gatchalian (NPC) are generally mum on the issue, but they’re up for re-election for a second term in 2022, so will they risk incurring the wrath of the heavily pro-Duterte electorate?

[Sen. #13] Sen. Imee Marcos may be unlikely to vote in favor of it, and the political reason is pretty obvious.

Note that Senator Leila de Lima is in detention for drug charges so she can’t vote on the bill, so only 23 senators will decide on it.

That is, at least 13 out of the 23 senators face significant political disincentives to vote for renewal. Assuming that ABS-CBN gets the vote of the remaining ten senators, it will have to convince three among the fourteen listed above.

What are the chances that SB No. 981 will pass? Well...

Duterte the Gatekeeper

Now, let’s assume that the bill hurdles Congress and arrives at Malacañang.

Earlier last year, Presidential Communications Sec. Martin Andanar opined[18] that the President is unlikely to veto the bill, but he based this solely on his observation that the president never categorically said “Hindi ko ie-extend ang franchise (I will not extend the franchise).”

But just because Duterte didn’t say so doesn’t mean he won’t, and the president’s statements in the past couple of weeks suggest that he may exercise veto power.

If that happens, Congress will have to override the veto by a two-thirds vote with each House voting separately[19]. That is, two-thirds (around 200 solons) of the House and another two-thirds (16 senators) of the Senate is needed to override the President’s veto.

That will be tough because six PDP-Laban senators are averse to openly humiliating the president, so it’s just a matter of getting two more senators to vote against a veto override (Marcos, Revilla, and Binay, are strong candidates).

ABS-CBN’s franchise renewal saga will be an excruciatingly steep climb for the Lopezes.

Options for the Lopezes

Faced with the imminent threat of closure on 30 March 2020, Duterte openly advised the Lopezes to sell ABS-CBN, but it appears that the Lopezes are averse to that prospect.

There are a few alternative options that I can think of: 

1: Acquire another company that has an existing broadcast franchise

PRO: Assuming there’s a willing seller, the problem will merely be a matter of adjusting the broadcast frequency and it will be business as usual.

CON: The VHF frequency (Channels 2 to 13) is already tightly packed, so ABS-CBN will likely broadcast on the UHF spectrum (Channels 14 to 51). Unfortunately, UHF may have poorer signal quality in far-flung areas, i.e., ABS-CBN may reach a smaller chunk of the population, which will likely hurt advertising revenues and aggregate influence on public opinion.

2: Syndicate content to other networks

PRO: ABS-CBN can just sell airing rights to its shows to other networks, or maybe buy block time[20] in, say, Manny Pangilinan’s TV5.

CON: ABS-CBN won’t be able to broadcast political content, which it has historically used to great effect. That’d be like pulling ABS-CBN’s widely-feared political fangs off.

3: Forget free-to-air TV and go fully online

PRO: Online means no franchise needed, and ABS-CBN already has the streaming platform iWant[21].

CON: Philippine Internet is slow and currently has lower coverage than TV. Meanwhile, iWant’s user interface is still very crude and superior competitors like Netflix, HBO Go, and Amazon Prime make iWant look like a high school project.

Arguably, all of these options will diminish ABS-CBN’s influence, and that’s a problem for the Lopezes.

Will people lose jobs?

Understandably, many ABS-CBN employees feel threatened as they face the prospect of losing their jobs if and when ABS-CBN shuts down, and some of its employees like singer Yeng Constantino have openly encouraged the President to reconsider his stance[22].

If Duterte agrees then good. If Duterte refuses then everything’s up to Gabby Lopez.

Regardless of the President’s justification for his aversion to franchise renewal, the reality is that Gabby Lopez is faced with two basic options that the President himself laid out: (1) hold on to ABS-CBN as it faces potential closure and hope for a last-minute miracle, or (2) sell it to somebody else.

Will Gabby Lopez consider Duterte’s stance as fait accompli[23] and sell his prized possession if only to save thousands of jobs, or will he bring thousands of his employees along with him as his company goes down?

Let’s see. [ThinkingPinoy/RJ Nieto]

For reactions, email tp(at)thinkingpinoy.net.


[1] Media Ownership Monitor Philippines – Reporters without Borders. How to get a media license. http://bit.ly/2Qq7EFz

[2] Congress of the Philippines. An Act Granting the ABS-CBN Broadcasting Corporation a Franchise to Construct, Install, Operate and Maintain Television and Radio Broadcasting Stations in the Philippines, and for other purposes. RA No. 7966. 30 March 1995. http://bit.ly/2QKK1WX

[3] Government of the Philippines - Department of Information and Communication Technology. Framework of the Digital Terrestrial Television Broadcasting (DTTB) Migration Plan. October 2017. page iii. http://bit.ly/35m61N5

[4] 1987 Constitution, Art. III, Sec. 1: “No person shall be deprived of life, liberty, or property without due process of law, nor shall any person be denied the equal protection of the laws.” http://bit.ly/2QNkXhU

[5] Commonwealth Act 146. Public Service Law (as amended, and as modified particularly by PD No. 1, Integrated Reorganization Plan and EO 546). http://bit.ly/2ZN1kL4

[6] Inquirer. ABS-CBN in a bind over franchise renewal. http://bit.ly/35lL05o

[7] Ibid.

[8] Eagle News. Bill on ABS-CBN franchise renewal fails to pass House committee before Congress adjournment. 13 June 2019. http://bit.ly/37tTLLY

[9] Pulse Asia. Performance and Trust Ratings of Top National officials. December 2019. http://bit.ly/37ypE61

[10] Philippine News Agency. Duterte tells ABS-CBN owners to sell network. 30 December 2019. http://bit.ly/2rT0tvT

[11] Philippine Star. Duterte to file multiple syndicated estafa vs ABS-CBN. 19 May 2017. http://bit.ly/35gF25G.

[12] Senator Ralph Recto. Renewing the Franchise granted to ABS-CBN Broadcasting Corporation. Senate Bill No. 981. http://bit.ly/2QIRDcC

[13] CNN Philippines. Bill renewing ABS-CBN franchise refiled in House. 24 July 2019. http://bit.ly/36nLOIj

[14] Laguna Rep. Sol Aragones. An Act Renewing the Franchise granted to ABS-CBN Corporation (formerly ABS-CBN Broadcasting Corporation) under Republic Act No. 7966. House Bill No. 3947. August 2019. http://bit.ly/2QLhu3G

[15] Philippine Star. Duterte allies, House leaders back ABS-CBN franchise renewal. 04 January 2020. http://bit.ly/39zVnFU

[16] Philippine Star. Cayetano: 'Congress will be fair' on ABS-CBN franchise renewal. 04 December 2019. http://bit.ly/39CgnvJ

[17] Thinking Pinoy. Dear Karen “Higher Intelligent (sic)” Davila. 24 July 2016. http://bit.ly/2FlLVIs

[18] People’s Journal. Duterte will not veto ABS-CBN franchise bill – Andanar. 22 July 2019. http://bit.ly/37EeBZ1

[19] 1987 Constitution Art. VI Sec. 27. http://bit.ly/2ZO2BBy

[20] Philippine Star. TV5 open to blocktime deal with ABS-CBN — MVP. 31 December 2019. http://bit.ly/2FvYjWt

[21] ABS-CBN. ABS-CBN to launch new streaming service iWant. 04 October 2018. http://bit.ly/35jx8IR

[22] Pep. Yeng Constantino appeals to President Duterte to reconsider his stand on ABS-CBN franchise renewal. 17 December 2019. http://bit.ly/2ZODIWB

[23] Merriam-Webster defines the French phrase “fait accompli” as a thing accomplished and presumably irreversible. http://bit.ly/2Fj74Tp


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