Albay 2nd district Rep. Edcel Lagman has "corrected" the claim that the recent deal between the shuttered ABS-CBN and TV5 violated the latter network's franchise.
"There is no franchise issue," Lagman, an independent minority solon, said in a letter to House Speaker Martin Romualdez on Aug. 22, 2022.
Lagman said he wrote the letter to House leader "on behalf of my constituents and concerned citizens about the looming House investigation which may result in the derogation of press freedom and free speech--the bedrock of democratic governments".
He said he was referring to the ABS-CBN and TV5 deal that "has generated baseless innuendos which must be clarfied and corrected".
Earlier, Lagman's House of Representatives colleague, SAGIP Party-list Rep. Rodante Marcoleta, assailed the alleged "merger" and claimed that it violated TV5's own franchise.
ABS-CBN, also known as the "Kapamilya" network, is currently off the air after failing to secure a new franchise from the House in mid-2020.
"Section 10 of TV5's renewed franchise under R.A. (Republic Act) No.11320 is not violated by the transaction because there is no sale, lease, transfer, or grant of the usufruct or assignment of TV5's franchise to ABS-CBN," Lagman said.
"Moreover, there is no merger or transfer of controlling interest in TV5," noted the former House minority leader.
He described the deal between the two local networks as "an investment agreement wherein ABS-CBN invests in TV5 by putting in P2.61 billion in exchange for 34.99 percent of TV5's voting stock; and an additional P1.84 billion in Convertible Notes which can be exchanged for additional voting shares only after eight years, and will increase ABS-CBN's stake in TV5 to only 49.92 percent or less than a controlling absolute majority, and this is still inchoate and subject to requisite approvals".
The Bicolano further argued that the deal "is not a merger where one entity absorbs another or two entities fuse to form a new one as defined by the 'Philippine Competition Act' or R.A. No. 10667".
"TV5 and ABS-CBN remain separate and independent entities," Lagman stressed.
"Neither does 'acquisition' obtain as defined in Section 4 of the 'Philippine Competition Act' because ABS-CBN does not acquire control of TV5," he further said.
The House Committee on Legislative Franchises will host a briefing about the ABS-CBN and TV5 deal Wednesday afternoon, Aug. 24.