Blogger Rey Joseph “RJ” Nieto, who is better known by his pen name “Thinking Pinoy,” said if the Supreme Court (SC) grants Solicitor General Jose Calida’s quo warranto petition asking to revoke the franchise of network giant ABS-CBN, other TV networks will also be affected.
“I’ve read a significant part of the SolGen Petition and I found out that if the Supreme Court grants the entire Quo Warranto Petition vs ABS-CBN, GMA and TV5 will also be severely hit. 😳,” Nieto wrote on his Facebook page.
Nieto, an ardent supporter of President Rodrigo Duterte, noted that the petition includes a direct attack on the nature of Philippine Depositary Receipts (PDRs).
He said, “GMA-7 issues PDRs and TV5’s parent and sister companies in the MVP group also issues PDRs.”
In his petition, Calida cited the use of PDRs of ABS-CBN as one of the grounds to revoke the network’s franchise.
He said issuing PDRs to foreigners for a fee violates the constitutional ban on foreign ownership.
ABS-CBN has maintained that it did not violate any law.
The Lopez-led firm stressed it “complies with all pertinent laws governing its franchise and has secured all necessary government and regulatory approvals for its business operations.”
ABS-CBN further noted that it was looking forward to answering allegations before franchise renewal hearings in Congress.
In an interview at the Senate on Thursday, Senator Sherwin Gatchalian agreed with the network, saying issuing PDRs does not mean yielding ownership to foreign entities.
“Ang PDR hindi ownership. There is no ownership in the PDR parang ang ginawa nila (ABS-CBN), nag-issue sila ng isang instrument para ma-enjoy mo yung kita ng isang kumpanya pero hindi ibig-sabihin na ikaw ang may-ari ng kumpanya,” Gatchalian explained.
“In my interpretation, it’s not a violation of ownership. From my knowledge of financial instruments, halimbawa, profitable ang isang company, isang foreigner gusto mag-enjoy ng profits niya, PDR ang ibibigay mo sa kanya pero hindi ibig sabihin ikaw may-ari ng kumpanya kasi wala kang share, it’s a PDR, it’s not a share, it’s a depository receipt, it’s an instrument to enjoy the financial benefit,” he added.
The Senator said, “a lot of companies are doing that.”
“GMA-7 is doing that. Other media outlets are doing that. Meralco is doing that. Meralco is a utility, punto ko lang it’s a normal instrument,” Gatchalian noted.
In his long tweet, he said: “The holding company of ABS-CBN issued depositary receipts or PDRs to increase its capitalization. PDRs are not shares of ownership. PDRs are merely an instrument for the investors (buyers) to grow their money through dividends and selling their PDRs.
“PDRs are not the same as shares of stock where holders have the ownership of the company. It is the ownership that is not allowed by the constitution. Clearly, SEC allowed the issuance of these PDRs since there is no form of ownership attributed to the PDRs,” he went on.
He added, “Unfortunately, Calida is not a financial market professional, hence he has no idea how PDRs work. If he only consulted with SEC or PSE or a stockbroker prior to filing that quo warranto, he could have saved the government and this country from spending its resources and save himself from shame.”
The holding company of ABSCBN issued depositary receipts or PDRs to increase its capitalization. PDRs are not shares of ownership. PDRs are merely an instrument for the investors (buyers) to grow their money through dividends and selling their PDRs. PDRs are not the same as
— Y●L● 🇵🇭 (@YOLOinthePH) February 13, 2020
To date, there are at least 11 pending bills seeking franchise renewal for ABS-CBN.
However, the House committee on legislative franchises has yet to act on them.
The ABS-CBN’s 25-year franchise expires on March 30.