ANALYSIS: Media - Philippines prepares for new media giant. PLDT's bid for GMA will see media competition spiral, says Sharon Desker Shaw

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.

Sign In

Trouble signing in?

Reset Password: Click here

Contact Customer Support at

Customerservice@campaignasia.com