Philippines pay-TV sector in consolidation mode

(Business World via NewsEdge) Further consolidation in the local pay-TV industry is imminent as Philippine Long Distance Telephone Co. and Beyond Cable Holdings are now practically racing against each other in completing individual partnership deals.

Beyond Cable, which operates the SkyCable and Home Cable pay-TV brands, is in talks with Dream Satellite TV, a DTH satellite cable provider owned by businessman Antonio "Tonyboy" Cojuangco under his Philippine Multimedia Systems Inc.

Beyond Cable, which has about 450,000 subscribers nationwide, accounts for almost two-thirds of the Metro Manila market, while Dream has about 70,000 subscribers nationwide, bulk of which are spread out in the provinces.

"There's still nothing conclusive yet in our talks with Dream. [And] while we are exploring ways of working together, we haven't agreed on anything concrete at this point," SkyCable COO Carlo Katigbak said.

PLDT, on the other hand, is keen on wading into the DTH cable market for fresh revenues. The company is now pushing discussions with US-based EchoStar Communications and GV Broadcasting Systems for a potential joint venture and acquisition, respectively.

Particularly, it is eyeing to offer digital mobile broadcast TV, a combination of TV and mobile phone service. PLDT, through subsidiaries such as Smart Communications Inc., is looking at offering various media content such as sports, breaking news, and other entertainment events.

PLDT chairman Manuel Pangilinan said the present industry was "rather unprofitable" and wanted to effect a turnaround, similar to what his First Pacific Co. Ltd. had done in the once-losing telecom company.

PLDT is not entirely a newcomer in the business. MediaQuest Holdings Inc., a 100%-owned subsidiary of the PLDT Beneficial Trust Fund, holds a 33.5% minority interest in SkyCable.

As it stands now, two of the industry's obstacles to profitability are rising cases of cable theft - involving illegal taps into others' cable networks - and "overbuilding," where two or three cable companies operate in the same area, resulting in a costly price war and excessive churn as subscribers transfer from one provider to another.

Although the industry is now heading to more consolidation, SkyCable's Katigbak said a real "pay-TV monopoly" would not happen.

"With or without a joint venture, however, I don't believe there will ever be a real pay-TV monopoly in the Philippines. PLDT will have a new DTH business together with EchoStar by the end of this year, and in Metro Manila, we compete with at least two well-funded cable TV companies," he said.

It is estimated that there are some 700 cable companies operating throughout the country today. 

This early, even competing companies are open to the idea of consolidation.

"A cable television industry merger, if implemented properly and equitably, would result in major benefits for both the local industry providers as well as the consumers," Solid Group Inc. president and CEO David Lim said.

A holding company, Solid Group owns 100% stake in myDestiny, which offers both broadband Internet access and cable channels.


"Of course, competing against a much larger merged cable television competitor would be difficult. But for Global Destiny, the business focus will remain the same. We strive to provide customers with competitive and entertaining programming while keeping our operating costs significantly lower than the bigger competitors," Lim added.

Specifically, he said consolidation in the currently fragmented market could result in significant efficiencies, through combining everyone's operations into one single cable network - with savings in overhead costs, pole rentals, electricity consumption and network maintenance costs.

On top of these, he said the local industry could also achieve a "strong common negotiation point" with multinational program providers in lowering dollar-denominated programming cost, hence reducing subscription costs.

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