MANILA, Philippines (UPDATED) - The much-discussed merger between the 2nd and 3rd largest television stations, GMA-7 and TV-5 may be completed before the end of the year, according to TV5 chair Manuel Pangilinan.
At the sidelines of a PLDT annual stockholders meeting on June 14, Pangilinan said, "I would say certainly within the year we should be able to create an agreement but… that agreement will be subject to a number of conditions… for closing."
There are a number of issues that need to be addressed for this deal to push through: an agreement on price, share size, and other deal details between the camps of GMA Network Inc. and Pangilinan-led TV5; and a go-signal from the government, which regulates the media industry.
On the first issue, Pangilinan said, "We are in discussions with GMA-7… Nothing has been finalized...Discussions are moving positively. There is a desire to come to terms."
He also highlighted that there are "positive vibes" between the two camps. "There are still a lot of issues to be discussed—due diligence, warranties, etc.—but you could sense that there are positive vibes on both sides,” he said.
When asked how much the deal price would be, he replied, "we have a price already, there is a range. It’s below P100 billion.”
Pangilinan said discussions started before his trip to the U.S. He was among the businessmen who joined President Aquino's recent overseas trip. Pangilinan was also in San Francisco to launch TV5 International.
Government nod
He also stressed that government's nod is needed to close the transaction. “To close, conditions precedent must be satisfied, there are conditions required on their side, on our side."
"After that, we have to give them money and they will give us the shares. On the approval of the government, we don’t know how long that will take or it they will approve it,” he said.
Fears of industry monopoly may be raised, but Pangilinan shrugged it off and said, "there are many TV stations."
Roller-coaster
The recent reports on a GMA7-TV5 deal first erupted in December 2011. Officials from both camps have since made vague, even contrasting, statements. At one point, a GMA owner was quoted naming a spectacular deal price of P200 billion.
GMA-7, the trade name of GMA Network Inc, is controlled by the Duavit, Gozon and Jimenez families. Network chair Felipe Gozon and president Gilberto Duavit have separately confirmed in the past that valuation remains the sticky issue.
Pangilinan had said he has always been interested in GMA-7. Before his group acquired TV5 in 2009, he offered to acquire a controlling stake in GMA-7, but finances and timing of the offers got in the way.
The rumors on this 3rd effort to forge an agreement have largely been beneficial to the GMA-7 camp. Despite its net income plummeting 39% in 2011, then another 27% drop in the first quarter 2012, the Pangilinan-buy-in talks have boosted the share price of GMA-7, which is a listed firm in the Philippine Stock Exchange.
With a higher share price, GMA-7 stockholders can command a higher deal price, in effect, making the transaction more expensive for Pangilinan's group.
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