PLDT, US firm to offer satellite pay TV in RP
By Mary Ann Ll. Reyes
The Philippine Star 05/12/2005

Telecommunications giant Philippine Long Distance Telephone Co. (PLDT) and America’s biggest direct-to-home (DTH) satellite TV operator Echostar Communications are finalizing plans to set up a "pervasive and cost-effective" satellite pay TV service in the Philippines on a joint venture basis at a cost of about $85 million.

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 American subscribers.

PLDT and Echostar want to price their planned DTH satellite television offering at par with that of cable television (CATV), a move that may provide the final blow to the fledgling CATV industry in the country.

PLDT group chairman Manuel V. Pangilinan told The STAR that together with Echostar they are currently working on the numbers and are hopeful to be able to launch the newest DTH offering before the end of the year.

He also expressed optimism that DTH will be bigger than CATV in the Philippines. Cable television currently has around a million subscribers here while businessman Antonio Cojuangco’s Dream Broadcasting, presently the only DTH company in the Philippines, has around 70,000 subscribers (although some say the figure is much lower). Lack of funding has prevented Dream from expanding, insiders say, adding that this is partly due to the huge amounts still being spent by Cojuangco for ABC 5 which he earlier acquired.

The CATV subscriber base would have been bigger had it not been for the continuing cable TV piracy, which if totally abated could easily increase the number of cable TV subscribers by 50 to 100 percent. Aside from cable TV signal piracy, the increasing cost of foreign program acquisition has also affected the bottom line of many cable TV companies, including industry leaders SkyCable and Home Cable which earlier successfully entered into a debt restructuring agreement with its creditors.

PLDT used to own Home Cable, the country’s second largest CATV company, until it sold the assets to Lopez-owned Sky Cable in exchange for shares in Sky Cable’s parent company. As a result, PLDT now holds minority shareholdings (around 33 percent) in Central CATV which owns Sky Cable. Both the Sky Cable and Home Cable brands are now being offered by Central CATV.

PLDT’s shareholdings in Central CATV are expected to be reduced further (some say even lower than 10 percent) next year when a loan provided by ABS-CBN Broadcasting to Central CATV is converted into equity. PLDT was given the option to match a portion of the loan, but Pangilinan has said that PLDT is no longer interested in shelling out additional funds for the cable TV business. As a result, the Lopez group will end up owning as much as 90 percent of the consolidated Sky-Home Cable, which currently accounts for 70 to 80 percent of the market.

Asked why PLDT let go of its cable TV company and opted instead to set up a DTH company, Pangilinan told The STAR that "in Home we are just a minority while in this new joint venture, we are the majority and, therefore, we have more control." PLDT will own 60 percent of the DTH joint venture while Echostar will own the remaining 40 percent.

PLDT and America’s biggest DTH satellite TV operator Echostar are now finalizing plans to set up a "pervasive and cost-effective satellite pay tv service in the Philippines on a joint venture basis, which Pangilinan said will cost around $85 million. As planned, Echostar will make available to PLDT more than 2000 video and audio channels and video-on-demand services that it currently offers to its 11 million Americans subscribers.

There were earlier reports that PLDT was looking at establishing another subsidiary that will provide content for his new satellite TV venture. This will involve acquiring an existing broadcasting network which PLDT officials say is the best way to produce shows for this DTH business, although outsourcing the content is another option.

Pangilinan was earlier reportedly in talks with Zoe Broadcasting Network which owns and operates Channel 11 but it is highly doubted whether a deal can still be clinched between PLDT and Zoe, especially after the latter entered into a co-production and blocktime agreement with Citynet, a GMA subsidiary. Under the agreement, Citynet will provide tv programs and shows for Channel 11 while Zoe will provide Channel 11’s daily airtime.

Let's wait & see!