GMA-7 sues TV5, Malaysian media company for "unlawful blocktime agreement"

Earlier this afternoon, December 3, GMA-7 filed a suit against TV5,Malaysian company Media Prima Berhad (MPB), andMPB Primedia for "allegedly entering into an unlawful blocktime agreement."


Since August, ABC-5 has been known as TV5, which now offers24/7 programming and operates a brand new transmitter. Management explainedthat ABC-5 had entered into a "major blocktime agreement" with MPB PrimediaInc., a Philippine corporation backed by Media Prima Berhad of Malaysia.

During the TV5 press launch, TV5 CEO Christopher Sy pointedout that "ABC-5 is still owned by Tonyboy Cojuangco. Prime Media has simplyentered into a blocktime agreement but we do not have any equity in thisstation."

Little did everyone know that by that time, GMA-7 had already filed a complaintregarding the "unconstitutionality" of having Malaysian investors beinginvolved in the "programming content and airtime sales" of TV5.

Mr. Dick Perez, GMA-7 vice-president for legal affairs, told PEP (PhilippineEntertainment Portal) that they already filed complaints last August but ittook them some time to gather data regarding this matter.

Why did they file the suit just now—three months after TV5was launched publicly?

"We only did what we had to do, which is to file a complaint in administrativeagencies such as the National Telecommunications Commission and the NationalBureau of Investigation. A few months later, we decided to elevate it to thecourts," explains Mr. Perez in a phone interview with PEP earlier tonight, December 3.

Article XVI, Section 3, of the 1987 Philippine Constitution states:"The ownership and management of mass media shall be limited to citizens of thePhilippines, or to corporations, cooperatives or associations, wholly-owned andmanaged by such citizens."

For this reason, GMA-7 is asking the Quezon City Regional Trial Court tonullify the blocktime agreement between MPB Primedia and TV5. They argue thatthis agreement violates the 1987 Philippine Constitution, which restrictsownership and management of mass media to Filipino citizens or corporations.

GMA-7 is also claiming a total of P11 million for damages, includingattorney's fees and litigation expenses, from TV5, MPB, and MPB Primedia tocompensate for the loss of revenues due to unfair competition.

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PEP asked TV5's media relations head Pat Marcelo-Magbanuafor their reaction to this development but she replied through a text message:"We haven't received a copy of the complaint so we're not yet in a position tomake a comment. As soon as we have a reply, we will let you know."

Here is the statement from GMA-7 (published in full):

"GMA Network, Citynet, and ZOE Broadcasting have filed alawsuit against ABC-5, Malaysian company Media Prima Berhad (MPB), and MPBPrimedia for allegedly entering into an unlawful blocktime agreement.

"GMA Network is asking the Quezon City Regional Trial Courtto nullify the blocktime agreement between MPB Primedia and ABC-5 as theagreement violated the 1987 Philippine Constitution, which restricts ownershipand management of mass media to Filipino citizens or corporations.

"The said blocktime agreement allowed MPB Primedia to controland manage ABC-5's programming content and airtime sales.

"GMA Network said that while MPB Primedia's Articles ofIncorporation indicates that it is Filipino-owned, it is in truth a subsidiaryof Malaysian company Media Prima Berhad. The Verification or ReservationRequest of Primedia on file with the Securities and Exchange Commission (SEC)indicates that the acronym 'MPB' in its corporate name stands for 'Media PrimaBerhad' which is the same name of the Malaysian company.

"This was later confirmed when MPB stated in its own websitethat it 'has set up a subsidiary, MPB Primedia, Inc. that will soon enter intoa blocktime agreement with the ABC5 network, one of the television networks inthe Philippines.'

"GMA also said that according to the report of Merril Lynchof Singapore on March 25, 2008, the acquisition of ABC-5's airtime forms partof the investment strategy of the Malaysian corporation, Media Prima Berhad, toestablish a company in the Philippines, which will be owned by MPB at seventypercent. This Philippine company was identified in the report as Primedia.

"MPB Primedia has an authorized capital stock ofP5,600,000. Twenty-five percent (25 percent) of Primedia's authorized capital stockwas subscribed by its incorporators and directors. Out of the 25 percent subscribedcapital, only P350,150 has been paid.

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"The transfer of control and management of ABC-5'sprogramming content and airtime sales to MPB Primedia constitutes interventionby a foreign company and/or its dummy in the management and/or operation of a100 percent nationalized business activity which violates the Constitution and theAnti-Dummy law.

"As mandated by the Constitution, mass media, which includestelevision and radio broadcast, is a completely nationalized business activity.The Anti-Dummy Law (Commonwealth Act No. 108, as amended) punishes the evasionof nationalization laws and prohibits non-Filipino citizens from intervening inthe management, operation, administration, or control of any nationalizedactivity.

"It being contrary to the Constitution and the Anti-Dummylaw, GMA Network said that the blocktime agreement entered into between ABC-5and MPB Primedia is void.

"GMA Network likewise said that the blocktime agreementbetween ABC-5 and MPB Primedia results in unfair competition against localbroadcasting networks. GMA said that while it continues its operations withinthe bounds of law, ABC-5, MPB and Primedia employed illegal methods to evaderestrictions on mass media ownership, which have deprived GMA and other local networksof the fair chance to engage in the broadcast business.

"Since its re-launch in 2008, TV5 has ascended to the numberthree post in TV ratings.

"Apart from asking the court to declare the blocktimeagreement between ABC-5 and MPB Primedia null and void, GMA Network is alsoclaiming a total of P11 million for damages, including attorney's fees andlitigation expenses, from ABC-5, MPB, and MPB Primedia to compensate for theloss of revenues due to unfair competition."


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