PLDT, Echostar of US tie up for DTH satellite TV venture

An ambitious direct-to-home (DTH) satellite television venture via a three-way partnership among telecommunications giant Philippine Long Distance Telephone Co. (PLDT), US DTH leader Echostar Communications, and local DTH licensee GV Broadcasting may finally see light before the end of the year.

PLDT chairman Manuel V. Pangilinan said in an interview that they, together with Echostar and GV, will hopefully start operations of a new DTH company before yearend.

Investments for this new venture is estimated at around $85 million, of which 40 percent will be the exposure of Echostar, and the rest to be shared by PLDT and GV, the latter getting a very small portion of the 60 percent.

Pangilinan disclosed that part of Echostar’s investment will be the set-top boxes which will be installed in the homes of DTH subscribers. It is not yet known what particular vehicle will be used by Echostar for its DTH investments in the Philippines.

On the one hand, PLDT’s equity will be partly in cash and partly in the form of the use of its transponders (owned by PLDT’s Mabuhay Satellite).

Philippine Multi-Media System Inc. (PMMSI), owned by businessman Antonio ‘Tonyboy’ Cojuangco and currently the lone DTH satellite TV service provider in the country, also uses PLDT’s Mabuhay Satellite to broadcast content to its subscribers nationwide.

GV’s investment in the three-way partnership, meanwhile, will be its DTH license. "We will ensure that we keep the 40-percent foreign ownership limit. As for the remaining 60 percent, a small minority will go to GV shareholders," Pangilinan said.

It will also learned that PLDT may have to pay off some of the loans of GV as part of the deal to acquire GV. If PLDT acquires GV, the country’s biggest telecommunications company will in effect own 60 percent of the new DTH venture directly and indirectly.

PLDT’s top executive earlier said that he wants his new DTH venture 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 not lower.

PMMSI’s Dream Broadcasting is currently positioned for the high-end market because of its relatively high price compared to CATV.

According to Pangilinan, Dream has around 70,000 subscribers, but Dream officials maintain that the number is closer to 100,000. The local cable TV industry, on the other hand, has a nationwide subscriber base of around 1.5 million, of which around 260,000 is in Metro Manila, divided between Sky Cable and Home Cable (200,000), and Destiny Cable (around 60,000).

Earlier, The STAR reported that the Lopez group and Cojuangco are in the midst of serious negotiations to fold in the latter’s satellite television business under the umbrella of Central CATV which owns and operates Sky and Home.

Highly placed sources told The STAR that as planned, Central CATV will acquire PMMSI under a share-swap arrangement whereby Cojuangco will receive shares in Central CATV. How much PMMSI will be valued under the arrangement has not been disclosed but Cojuangco earlier placed a price tag of $56 million for the company when the PLDT group offered to acquire it.

The negotiations with PLDT, however, collapsed after Pangilinan said he was only willing to pay $22 million for PMMSI since he was only in effect acquiring the company’s franchise to operate a satellite tv business.

The assets of Home Cable were earlier acquired by Central CATV from the PLDT group in exchange for the latter acquiring shares in Central CATV. The Home Cable brand however is no longer in use and the product now goes under the name of Sky Cable silver, and the original Sky Cable offering under Sky Cable gold.

Sources told The STAR that PLDT’s shareholdings in Central CATV have been reduced to less than 10 percent from 33.33 percent after a loan earlier extended by ABS-CBN Broadcasting to Sky Cable was converted into equity. This means that the Lopezes, who also own ABS-CBN, now control around 90 percent of Central CATV.

Observers note that a merger of Sky Cable and Dream Broadcasting would be beneficial for both parties as Sky Cable would be able to expand to areas which can only be reached via satellite while Dream will have access to the resources of the Lopez group and the goodwill of the Sky Cable brand.

"There will be no cannibalization of the market since Sky addresses a different market than that of Dream," a source pointed out.

A partnership between Sky Cable and Dream Broadcasting is also touted as a "broadcasting dream" as the Lopez group owns ABS-CBN Broadcasting which operates free tv channels 2 and 23 while Cojuangco owns Associated Broadcasting Corp.(ABC-5).

Aside from DTH, PLDT is also looking at the possibility of offering IPTV or television via Internet Protocol. "We now have to reassess what our approach will be regarding video and determine how best to deliver video programming," Pangilinan said, as PLDT moves towards triple play, or offering voice, data, and video.

PLDT has also expressed interest in acquiring RPN 9, one of the assets which the government plans to put up for sale within the year.