ABS-CBN: 'We did not violate the law'

Metro Manila (CNN Philippines, February 10) — ABS-CBN denounced the petition filed by Solicitor General Jose Calida to cancel the network's franchise, which it said is part of a concerted effort to shut the network down.

The Lopez-owned network said Calida's plea to revoke its existing franchise is "without merit," with the public TV channel insisting that all its business strategies are above board.

"The Office of the Solicitor General’s filing of a quo warranto case against ABS-CBN on alleged violations of its franchise appears to be an effort to shut down ABS-CBN to the serious prejudice of millions of Filipinos who rely on the network for news, entertainment and public service," the channel said in a statement.

"ABS-CBN complies with all pertinent laws governing its franchise and has secured all necessary government and regulatory approvals for its business operations," it added.

Calida, government's top lawyer, ran to the high court with a "very urgent" motion on Monday requesting to cancel ABS-CBN's legislative franchise weeks before it lapses. Calida claimed that the network committed violations in the terms set by Congress when it approved ABS-CBN's franchise in 1995.

Charged are ABS-CBN Corporation and its subsidiary, ABS-CBN Convergence Inc. for "highly abusive practices" that went unnoticed for years. For one, Calida said the network allowed foreign investors through Philippine Deposit Receipts or PDRs, which meant giving control and voting rights to them even if the Constitution prohibits this.

PDRS are financial instruments that foreign entities can buy for financial returns in a local company. It is different from shares of stock, as these do not entitle its holder to ownership and voting rights.

Calida added that the network launched its TV Plus subscription service and the KBO Channel without approval from the National Telecommunications Commission.

According to the petition, among the problematic shows aired without permit were pay-per-view boxing matches, a Holy Week special, and concerts.

"As of February 2019, despite the absence of any permit from NTC and guidelines on conditional access, the KBO Channel inveigled 1.2 million unique TV plus consumers to register in the service," the petition alleged.

The petition went on to say a quo warranto was "specifically available as a remedy if it is thought that a corporation has offended against its corporate charter or misused its franchise."

The petition cites there has been no previous cases of the revocation of a franchise of a television or radio company.

"This case presents issues that the court can resolve to serve as precedent. it is an opportunity that the court must seize to draw the line in future cases," it said.

In its response, the network said all its broadcast offerings went through the necessary government regulatory approvals before going on air. The PDRs in question were also approved by the Securities and Exchange Commission and the Philippine Stock Exchange before it was offered to the public and used to raise additional funding for the company.

It added that the petition was "ill-timed," as Congress is about to start discussing bills that will renew the media firm's authority to remain in broadcast.

ABS-CBN produces news, public affairs, and entertainment shows on a daily basis.

President Rodrigo Duterte has personally vowed to put the channel and its subsidiaries out of business, even telling its executives to just sell the company. He earlier also publicly spoke about his ire against ABS-CBN for not airing his political ads during the May 2016 elections, where he eventually won. However, Calida insisted that the case is not motivated by politics.

Duterte to ABS-CBN: Next year, you're out

Presidential Spokesperson Salvador Panelo also denied that the quo warranto case was meant to clamp down on Duterte's critics, as well as on freedom of the press. "The Solicitor General is constitutionally bound to institute any action against any transgressors of law. If a franchise holder is violating its franchise, then it is his duty to file a quo warranto," he said in a press briefing.

Panelo also denied that Duterte's gripe versus the network had anything to do with the case. Media groups have taken the case as a sign of the government's "desperation" to muzzle media outlets critical of the administration, to the detriment of about 11,000 talents and employees of the TV giant.

"This proves without a doubt that this government is hellbent on using all its powers to shut down the broadcast network whose franchise renewal, now pending in Congress, President Rodrigo Duterte has personally vowed to block. So much so that it would risk trampling on Congress' authority to legislate franchises," the National Union of Journalists of the Philippines said in a statement.

"We must not allow the vindictiveness of one man, no matter how powerful, to run roughshod over the constitutionally guaranteed freedoms of the press and of expression, and the people's right to know," it added.

Human Rights Watch Philippines also condemned the legal maneuver, saying it had "all the indications of political harassment." "This is clearly an attempt by the Duterte government to intimidate or control ABS-CBN, which has aired and published critical reporting on the government, including its deadly 'war on drugs,'" said Carlos Conde, researcher for the group's Asia Division.

Shares at ABS-CBN Corporation slipped 1.76 percent by market close on Monday. ABS-CBN Holdings Corporation, which issued the PDRs in question, saw its stock price fall 3.75 percent.