PLDT buying Dream Satellite; price set at $22M
PHILIPPINE Long Distance Telephone Co. (PLDT) is buying Philippine Multi-Media System Inc., operator of Dream Satellite TV, from Antonio Cojuangco for $22 million, or about P1.23 billion, Inquirer sources said.
The sources said Cojuangco, former controlling shareholder and president of PLDT, had accepted the PLDT offer because he needs the money to support his other investments, especially television company Associated Broadcasting Corp., which operates Channel 5.
“Both parties have agreed on the valuation,” a source said. “It is just a matter of preparing the documents and affixing their signatures.”
Another source said Cojuangco’s group had agreed to a much lower price than it had originally asked, after PLDT agreed to absorb the debts of Philippine Multi-Media System.
Cojuangco’s asking price was $56 million, said an informed source. PLDT offered $25 million, and later $22 million after factoring in the debts, mainly of Dream Satellite, that would be absorbed.
PLDT president Napoleon Nazareno said they were “still in the final stages of negotiations.” The deal was not done yet, he said.
Philippine Multi-Media System holds a franchise to operate a direct-to-home programming service.
Acquisition of Dream Satellite would enable a joint venture between PLDT and America’s largest direct-TV provider, Echostar Communications Inc., to finally take off.
PLDT and Echostar are planning to invest $85 million in pay TV operations in the Philippines through satellite receivers, not the traditional cable system that is prone to piracy and signal theft.
PLDT and Echostar have an existing venture under ePLDT. Parlance Systems Inc., a subsidiary of ePLDT, has been providing inbound and outbound call center services to subscribers of Echostar in the US since 2002.
Discussions on their investment in a direct broadcast satellite business started as early as 2000 but getting a franchise was one of the issues that impeded the venture.
Cesar Reyes, chairman and chief executive officer of the Philippine Multi-Media System and former PLDT official, said in late August that valuation was stalling the negotiations between PLDT and Philippine Multi-Media System.
The Inquirer tried to reach him Tuesday for comment on the reported developments, but Reyes was not answering his mobile phone.
Philippine Multi-Media System uses PLDT’s Mabuhay Satellite to broadcast content to more than 100,000 subscribers nationwide.
Reyes said Dream Satellite was now the second largest pay TV company in the country. The largest is Beyond Cable Holdings Inc.
PLDT owns one-third of Beyond Cable, a joint venture with the Lopez group. It has proposed swapping its Beyond Cable interests for the controlling stake in the Lopez group’s phone company Bayan Telecommunications Philippines Inc., or BayanTel.
A source said PLDT chairman Manuel Pangilinan’s plan “is to bring down the rate of Dream by offering more programs. He can do that with Echostar, which has more than 200 channels.”
Dream Satellite is considered more expensive than the traditional cable providers.
Sources said that if talks with Dream failed, PLDT would open negotiations with other direct-to-home providers such as Pacific Cable Inc. and GV Broadcasting.
Under the plan, the joint venture between PLDT and Echostar will provide clients with home antennas. It will also supply more than 2,000 video and audio channels.
[source: inQMoney article by Clarissa S. Batino]
