In reinventing itself as a telecommunications and media player, the
Philippine Long Distance Telephone company (PLDT) has raised
advertisers' hopes that it will also reshape the broadcast scene with
its proposed purchase of GMA Network.
PLDT's bid for the country's second largest radio and broadcast station
is now in due diligence, with the report due out in May. But even though
analysts have questioned the hefty 8.5 billion peso (USdollars 170
million) price tag GMA has asked for a two-thirds stake, media chiefs
are optimistic that PLDT will pay up.
To a large extent, PLDT needs GMA as much as GMA needs PLDT to mount a
credible challenge against publicly-listed ABS-CBN, the market
leader.
Since deregulation of the telecoms sector, PLDT's earnings have been
ravaged by competitors like Globe Telecoms. In February, the company
reported that net profits for 2000 had plummeted by 64 per cent to 1.1
billion pesos compared to 1999's 3.09 billion pesos. It blamed the drop
on higher expenses to promote its mobile phone business and a drive to
improve the group's facilities.
Which makes its push into media as part of its convergence strategy an
especially urgent task.
The company had been shopping around for a broadcaster for some
time.
Late last year it even looked at the government's financially-ailing RPN
network, before turning its attention to GMA.
If the purchase pushes ahead, GMA will represent the vital piece in
First Pacific's drive to reinvent PLDT, a strategy it embarked on after
the Hong Kong conglomerate acquired a 32 per cent stake in the company.
Executives at Mediaquest Holdings, the PLDT subsidiary behind the
proposed purchase, freely admit that GMA will plug "a big hole" in the
company's convergence strategy. According to MindShare business manager
Onel Querijero: "Ownership of a TV station is the last remaining piece
as far as the PLDT acquisition team is concerned."
Its acquisition target is a media group of seven wholly-owned
subsidiaries in film, music, post production and new media.
With GMA on-board, the PLDT media empire will encompass free-to-air
television, cable television (following its acquisition of Home Cable
Television), and internet data centres on top of its telecom service
offerings.
In the bigger picture, the purchase and overhaul of GMA will have
far-reaching competitive implications for Philippine broadcasting,
dominated for much of the past decade by ABS-CBN. The influential Lopez
family has transformed ABS-CBN into a broadcasting colossus since
regaining control of the station back in the early 1990s.
Through acquisitions and partnerships, ABS-CBN has grown to include 26
television broadcasting stations and 10 affiliate stations plus 22 owned
and affiliated radio stations. It broadcasts English language programmes
through its UHF network, Studio 23, and news 24 hours a day through the
ABS-CBN News Channel. ABS-CBN's overwhelming success can be traced to
giving Filipino audiences what they want.
"We love smut," says one media director of local programming tastes.
The broadcaster's diet of locally-produced and imported soap operas,
music specials, comedies and celebrity-laden chat and variety shows, has
proven irresistible, helping it gain an unassailable lead over its
rivals.
In contrast, GMA has taken the high road, which media directors link to
the strongly Christian beliefs of its owners. The station is proud of
programming concepts like its "worry-free kid TV" to assure parents of
suitable kiddy fare. GMA's news and current affairs programmes have
pulled in awards over the years, including the George Foster Peabody
Award, but not the audience numbers to edge ABS-CBN off the charts, say
media chiefs.
Latest available figures from ACNielsen show ABS-CBN programmes
dominating both day and evening segments and news and current affairs
programmes.
This programming mix, plus an extensive nationwide network of local and
affiliate stations have given ABS-CBN a reach of more than 95 per cent
of the country's television-owning households. Its chokehold on the
sprawling Metro Manila market is 99 per cent, according to media
directors. This compares with GMA's nation-wide reach of 78 per
cent.
Media chiefs complain that this clout has translated into an almost
monopolistic hold on advertisers, who have accused the station of being
inflexible, especially in introducing unpopular measures like last
year's pre-season buy.
Clearly, there are expectations that GMA will improve and provide an
effective alternative to ABS-CBN.
The first order of the day is for GMA to energise programming and expand
distribution beyond its strongholds of Metro Manila, Cebu and Davao, say
media chiefs. Funding had previously been an issue, but apparently this
is not the case today. The network has reportedly secured two billion
pesos worth of loans from 13 banks to finance the expansion of its
nation-wide television coverage.
At the same time, market sources say PLDT is itself putting together a
war chest of one billion pesos for equipment and programming
improvements.
According to Campaigns & Grey's vice-president for media, Rina
Bartolome: "GMA is a long way behind ABS-CBN. The additional funds will
greatly improve its programming and production."
Whether it can do this and more depends greatly on the route PLDT has
mapped for GMA and its part in bringing the company's convergence
strategy to life.
