ABS-CBN shares surge ahead of House panel vote on network's franchise

MANILA, Philippines —Investors turned optimistic on the likelihood broadcast network ABS-CBN Corp. would secure a new franchise as a committee wraps up its hearings this week, although any contrary decision can result in price collapse.

Shares in ABS-CBN jumped 4.68% or 70 centavos to finish at P15.66 apiece, the highest close since June 9 this year. 

During the trading day, more than 1.4 million company shares, valued at P22.1 million, changed hands, also the biggest turnover since June 9.

“I think with the lawmakers targeting to finish deliberations today, some investors viewed this as a positive signal that ABS may be getting a franchise,” Beatrice Lopez, equity analyst at Regina Capital, said in a text message.

Trading of ABS-CBN shares ended before members of a joint panel at the House of Representatives resumed hearings bills seeking the renewal of the Lopez-led media company’s legislative 25-year license that expired last May 4. 

The network’s free TV and radio channels had since been shut down by the Duterte administration since May 5, followed by that of its SkyCable Direct service, an ABS-CBN affiliate that airs the network’s shows to paying customers, last week.

Regina Reyes, head of ABS-CBN’s news division, told the House hearing on Monday around 69 million people lost access to information and entertainment from the network due to the shutdown.

Over the weekend, Palawan Rep. Franz Alvarez, who co-chairs the joint congressional panel with Bulacan Rep. Jonathan Sy-Alvarado, hinted that a committee “voting” on ABS-CBN’s franchise application may finally happen this week after 12 hearings culminating Monday.

For Regina Capital’s Lopez, an unfavorable decision by Congress, which is populated by President Rodrigo Duterte’s allies, could send ABS-CBN shares into a tailspin. Duterte, who presidential spokesperson Harry Roque had said is “neutral” on ABS-CBN franchise issue, had previously attacked the Lopez-led network since getting elected in 2016.

“Although, of course this is just speculation at this point and prices may reverse if the franchise is not granted,” Lopez said.

Should the franchise bill hurdle the committee level, the measure would go to the plenary for second and third readings, after which it would go to the Senate for its own deliberations. 

ABS-CBN also has a pending petition before the Supreme Court to invalidate the halt order from the National Telecommunications Commission last May 5, but the pleading is not expected to be tackled until July 12.

The uptick on ABS-CBN’s share price on Monday bucked a generally bearish market sentiment. The benchmark Philippine Stock Exchange index ended its first trading day this week down 44.25 points or 0.69% at 6,328.41. 

Most sub-indices ended in red, save for services that rose 1.33% from last Friday, and mining and oil that went up 2.87%.

“Lack of leads made investors focus on other pertinent issues such as the worldwide surge in COVID-19 cases and the upcoming inflation report” on Tuesday, said Luis Limlingan, managing director at Regina Capital, said in a separate market commentary.