PLDT to offer direct-to-home satellite TV service next year

Telecommunications leader Philippine Long Distance Telephone Co. (PLDT) will start offering direct-to-home (DTH) satellite pay television services in local shores in partnership with US-based DTH giant Echostar Communications early to middle of next year, PLDT chairman Manuel Pangilinan told The STAR.

He said in a recent interview that PLDT and Echostar hope to finalize the terms of an $85-million joint venture agreement, including the numbers, before the end of this year.

At present, DTH services are exclusively offered in the Philippines by Dream Broadcasting owned by businessman Antonio "Tonyboy" Cojuangco, who also owns television network Associated Broadcasting Corp. (ABC-5).

PLDT’s entry into the DTH arena signals the company’s declining interest in the local cable television business, two businesses Pangilinan admits will definitely compete against each other.

He told The STAR that he has decided to focus on the DTH business and move away from cable since he will have more control over the former compared to the latter. PLDT will have a 60-percent controlling stake in the DTH joint venture while its interest in the Lopez-dominated Central CATV, the company that currently owns both Sky Cable and Home Cable, will dwindle down to around seven percent by next year.

PLDT earlier sold the assets of its cable TV company Home Cable to Central CATV in exchange for shares in the latter. As a result of the asset-for-share swap, PLDT became the owner of a 33.33-percent stake in Central CATV with the Lopez group controlling the remainder.

However, because a loan earlier extended by Lopez company ABS-CBN to Central CATV (to service interest payments and partly for operations) is convertible to equity and since Pangilinan no longer wants to put in money to pay part of the loan to keep his existing stake despite the right given to him, the Lopez group’s stake in Central will increase and that of PLDT will decline.

Charles Ergen, founder, chairman and CEO of Echostar, earlier this year visited Manila and had a talk with Pangilinan on the possibility of providing a "pervasive and cost effective DTH satellite pay television service in the Philippines on a joint venture basis."

Pangilinan said in an earlier interview with The STAR that he wants DTH to be bigger than cable TV (CATV) in the Philippines, and this he hopes to achieve by bringing down the price of DTH subscription down to the level of CATV.

If this happens, the DTH joint venture will eat into the market of the CATV business, especially that of Sky Cable and Home Cable which currently have a combined 70-to 80-percent share of the cable TV market.

As planned, Echostar will make available to PLDT more than 2,000 video and audio channels and video-on-demand services that it currently offers to its 11-million Americans subscribers.

Dream Broadcasting is currently positioned for the high-end market because of its relatively high price compared to CATV. Dream reportedly has around 70,000 subscribers compared to the local cable TV industry which has a nationwide subscriber base of around 1.5 million.

PLDT’s partner Echostar is also reportedly looking at a possible partnership with a DTH company in Indonesia owned by the Salim family which controls First Pacific which in turn owns a controlling 24.4-percent stake in PLDT.

Industry experts earlier said the only way that Echostar and PLDT can make DTH cost-effective and lucrative for the joint venture is to enter into a regional arrangement.