An Indonesian tycoon’s media empire in the Philippines exposed

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Part II

My column on Monday talked about the so-called SWS Mobile “Survey” as being anomalous since it is not really a survey, but involves the same permanent panel of about 750 people whose views are extracted for each survey run. That’s not all, however. I also reported that the technical operators of this project are media firms that belong to the biggest conglomerate of public utilities in the country, owned by an Indonesian tycoon, Anthoni Salim.

I had received feedback from people who couldn’t believe such media firms could be controlled by a foreigner, since the Constitution bars foreigners from owning a single share in a media enterprise: “The ownership and management of mass media shall be limited to citizens of the Philippines.” (Article 16, Section 11)

The reality established by indisputable facts, though, is that the Indonesian Salim has practically skirted our laws and the Constitution to control a local media conglomerate, just as he has in the case of his telecom, power and water companies in the country, in which foreign ownership is limited to 40 percent.


Indeed, that we have lost our sense of nationalism and the respect for the rule of law has been clearly demonstrated by the Filipinos’ nonchalance over an Indonesian tycoon’s control of a media empire.

Salim, through intermediary firms, controls 18 percent of the Philippine Daily Inquirer, 77 percent of BusinessWorld and 51 percent of the Philippine Star.

Salim is the country’s first multi-media mogul having control not only of print media outfits but two television and radio networks, TV5 and AksyonTV, which includes more than two dozen radio stations all over the country, the nation’s largest satellite-to-home Cignal TV, and even an internet-only news site, interaksyon.com.

With his takeover of the Philippine Star in 2014, Salim has become the biggest media mogul in the country, dwarfing the Prieto-Delgado clan of the Inquirer, Emilio Yap’s heirs in the Manila Bulletin, the Lopezes of ABS-CBN, and the three families owning GMA-7.
salim20160413Indonesian tycoon Salim’s media empire in the Philippines
How has Salim been able to defy the Constitutional ban on foreigners in media? Through PLDT, of which he is the biggest controlling stockholder and as such, wields the power to determine who make up the telecom giant’s management. His control of PLDT itself is now on flimsy grounds because of the 2012 Supreme Court ruling that the firm violated the 40 percent limit on foreign ownership. The Court, strangely though, has not implemented this ruling.

With Salim’s First Pacific Co.’s 25.6 percent stake in PLDT, the 20 percent shares held by two Japanese NTT subsidiaries, and 28 percent by other foreign stockholders (mostly via the stock market), foreign ownership of the country’s biggest telecom totals 74 percent – a situation which, to use the Supreme Court’s words in its decision on the issue, “makes a mockery of our Constitution.”

PLDT’s management controls the pension trust fund, called the Beneficial Trust Fund (BTF), for its 20,000 employees. When BTF started buying into the media sector, its chairman was the same person who had been serving as adviser to Salim and his top executive Manuel V. Pangilinan since they came into the country in 1984 – Albert del Rosario, President Benigno S. Aquino’s foreign secretary since 2010 until he resigned a few months ago.

By 2012, BTF had invested P14.5 billion — or 80 percent of P18.4 billion of its cash assets at the time — in a company called MediaQuest, the holding firm for Salim’s media companies.

MediaQuest is the investing company for the two broadcast enterprises. The first is ABC Development Corp., which owns VHF TV5, its flagship, and the AM Radyo5 broadcast enterprise. The second is Nation Broadcasting Corp, which operates 10 UHF “Aksyon TV” stations and 15 FM radio outfits based in the country’s major cities outside metropolitan Manila.

It is also MediaQuest which owns an investing company, Satventures, which, in turn, owns Cignal TV, now the country’s largest satellite-to-home TV company with 1 million subscribers as of September last year. MediaQuest’s subsidiary, Hastings Holdings Inc., is the holding company for the group’s newspaper investments.

Clever use of pension fund
It has been obviously clever for Salim to use the PLDT employees’ trust fund to set up his media empire, which most probably has aims other than mere profits.

By having the BTF as investor in the media empire, Salim can pretend that his print and broadcast media empire does not violate the constitutional ban on foreign investors in local media enterprises.

Yet, through his power over PLDT as the biggest single stockholder, he controls the media empire through BTF’s Board of Trustees, which has been chaired since del Rosario stepped down to become the Aquino government’s foreign secretary – by Ray Espinosa, chief legal counsel of PLDT, said to be Salim’s and Pangilinan’s top legal adviser.

MediaQuest President Espinosa has been Salim’s man running the media conglomerate. He has been the publisher of Philippine Star and BusinessWorld.

It is astonishing how the Philippine ruling elite pretends that Salim isn’t in control of one of the biggest multi-media conglomerates in the country today, in violation of our Constitution.

BTF’s resources, however, were not enough to fund the huge requirements of Salim’s media enterprises. Its investment in MediaQuest already made up 80 percent of its assets. So Salim borrowed a page from his competitor, broadcast company ABS-CBN Holdings book, which first used in 2013 the so-called Philippine Depository Receipts (PDRs) to get foreign equity injected into its media conglomerate.

PDRs have been a recent invention by the country’s tycoons to go around the constitutional ban or limit on foreign investment in restricted industries. Each PDR represents a share in a restricted company, and when bought by a foreign entity, gives the buyer the right to all the dividends due the shares of stock acquired. The foreigner, therefore, does not technically own a share to create the legal fiction of compliance with the Constitutional restrictions, but will receive the income due that share.

Why would an investor hold a PDR if such paper does not give him a share of the company it represents? The answer is obvious in the case of PLDT’s subsidiary, ePLDT. It does not need to have any control of MediaScape or its subsidiaries since its mother firm, PLDT, already controls this media entity.

P10B for Cignal TV
By September 2013, ePLDT had invested P9.6 billion in MediaQuest to fund Cignal TV, a direct-to-home satellite television service. The massive infusion of funds explains why Cignal TV in just four years became the largest Direct to Home (DTH) Pay-TV operator in the country, with a claimed 1 million subscribers by September 2014.

In March 2013 and then March 2014, ePLDT put in a further P2.45 billion in the form of MediaQuest PDRs, in order to fund its subsidiary Hastings Holdings, Salim’s holding firm for his print enterprises. Some of the P2.45 billion new funding was apparently used as payment to House Speaker Feliciano Belmonte in exchange for his family’s holdings in Philippine Star in 2014.

PLDT, however, took a different tack in funding its TV5 unit. PLDT and its subsidiary Smart Telecommunications made advertising placements with it, paid in advance, which it committed to total P868 million in 2013 and a further P758 million in 2014.

PLDT’s contract with TV5 for these advertising placements started in 2010 for a five-year term, and has been renewed for another five years, to continue up to 2021.

PLDT’s advertising-money support for TV5 has worried the broadcast media industry, as it is obviously the template for channeling not only PLDT’s funds to finance Salim’s media outfits but those of his other firms, especially Meralco.

With advertising funds limited in the country, Salim’s competitors in the media industry could be hit badly, even driven to the ground if the Indonesian tycoon decides for two years to devote the entire amount of advertising funds of PLDT, Smart and Meralco to TV5 and its newspaper, the Philippine Star.

Why has Salim gone into a crowded industry, whose profits would never be really stellar because of the Philippines’ small market, and where the country’s richest tycoons such as the Sys, Gokongweis and the Ayalas haven’t dared to go?

Public opinion
One important reason involves the obvious fact that media plays a dominant role in forming public opinion in the modern era. It is also a major force in politics. Political leaders in the country all woo the friendship of owners and editors of the major broadsheets and TV networks as their media outfits have the power to demonize a political leader and prettify a preferred one.

Salim, in fact, now has in place a perfect machine for controlling a population’s mind. First, a content generator made up of his news enterprises in print, broadcast and the internet; and second, a content disseminator consisting of his cellphone firms Smart Communications, the biggest in the country (with Sun as a cheaper brand) and his direct-to-home satellite television service Cignal TV and his cable news network.

Never in our history has there been such a magnate controlling companies in all forms of media and communications.

The First Pacific conglomerate has become so huge in the Philippines, even if the legality of its controlling stake in public utility firms rests on flimsy legal grounds. Public opinion sympathetic with Salim, no matter if his companies violate the spirit of the Constitution, would be crucial for the holding company’s continued presence in the country. That makes me very curious if he has been a major player in our recent presidential elections.

An Indonesian disregards our Constitution and laws by skirting its regulatory, legal loopholes with the help of the best and brightest of Filipinos. An Indonesian controls a media conglomerate in an industry where the Constitution totally bans all foreign participation.

His conglomerate consists almost entirely of telecommunications, power, water services and infrastructure companies and, therefore, is heavily dependent on government regulation, the implementation, or lack of it, of which depends on the President.

Yet the Philippine elite looks the other way and pretends there is no conglomerate in strategic public utilities and in media controlled by an Indonesian tycoon.

What kind of a country have we become?

tiglao.manilatimes@gmail.com

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35 Comments

  1. Part of the Philippine oligarchs-run government’s “tuwid na daan”. Straight way to hell.

  2. Senator Mary Grace Poe told reporters here that how can Filipinos find a job when there are fewer investors that could provide employment in the Philippines.
    “Tama ang sinabi ninyo. Bakit? Walang namumuhunan sa atin sapagkat ang ating infrastructure. Paano sila makakarating sa lugar sa tamang oras kung walang utilities (like airport) (You hit the nail on its head on amendment. Why? No one wants to invest in the Philippines because of the lack of infrastructures. How can they punctually arrived on their destination when there are no facilities like airport),” she answered to the pose by Northern Watch how pathetic the country was when it got only U.S$ 6.2 billion 2014 foreign direct investment (FDI) while FDI poured $ 9.2 billion in Vietnam, $ 22.6 billion in Indonesia, $12.6 Thailand, and S67.5 billion in Singapore in the same year according to the United Nations Conference on Trade and Development (UNCTAD) had already eclipsed the country.
    READ FULL STORY: http://mortzortigoza.blogspot.com/2016/01/grace-poe-amend-constitution-for-more.html

  3. Maribel Calanda on

    Mr. Riglao, only Ferdinand Marcos among the list of Philippine presidents who shut down the media, whether print or broadcast during the martial law era. Your fears are founded. I heard he is just also a dummy, maybe he wants to hide his “dirty money” in the Philippines to make it legitimate, Does he have big and legitimate business in Indonesia?

  4. Waxey Gordon on

    In slamming ‘the Filipinos’ nonchalance over’ foreign control, Mr. Tiglao appeals to intangibles like nationalism. Yet even more nationalistic and traditionally protectionist countries like China and Vietnam are opening up to foreign investors, while we are losing companies like Ford Motors (closed since Dec. 2012) and Colgate Palmolive, ironic when you consider ‘Colgate’ is Pinoyspeak for ‘toothpaste’. We must remove that obsolete foreign ownership provision totally from the Charter, which is almost impossible to amend, and instead make a more liberal standard legislation that will be easier to amend to strike a balance as experience and changing economic conditions dictate.

  5. There are many ways to skin a cat….iginigisa ba tayo sa sariling mantika ng mga taong eto or do they bring added value investments to our country? Another senate blue ribbon inquiry on the making?

  6. hindi kasi sinusunod ang batas sa Maynila….Pag may pera ok lang kahit sirain ang batas…..Kaya pag napairal uli ang batas magbalot na kayo at umuwi na kayo sa bansa nyo

  7. Richelle Santos on

    We need to do something to stop this tycoon from controlling almost all of our basic utility companies not only media. Why is the government letting this happen? What is happening to our country? God help us

  8. icon consortium on

    “Why has Salim gone into a crowded industry, whose profits would never be really stellar because of the Philippines’ small market, and where the country’s richest tycoons such as the Sys, Gokongweis and the Ayalas haven’t dared to go?”

    The Manila Times was owned by the Gokongweis up until it ran into trouble with Erap.

  9. Shades of pre-Marcos Philippines… There was then an American named Harry Stonehill who claimed he had all Filipino politicians in his pocket or payroll except for a very few (Diokno and Tanada). He dreamed of controlling everything from business to the arts . He even began that reclamation part of the present CCP. And he almost succeeded. This Salim is Stonehill’s reincarnation.

  10. With this column, the Chizmis Queen and Serge should start another senate investigation to gain additional media mileage. Who knows, it may add additional campaign funds to his kitty. At the same time, the Left should use this opportunity to show beneegno’s capitulation to foreign economic interests. Those opinion writers and reporters in those newspapers do not know the real owner of the outfit they are serving?

  11. what has become of our country??? the sc, which is tasked with defending and upholding the constitution, is not doing its task as mandated. it is one of those who violates the constitution in protecting the interests of the members’ appointing power/s. it has become a tool of politicians and oligarchs. case in point is llamanzares.

  12. These is all BSA CALIGULAS fault we must all work together and jail this monster and his cohorts. We only have two choices for a change DUTERTE OR BINAY.

  13. Kaya nga dapat wag ng iboto ang mga taga Edsa. Sila ang sumira at yumurak sa Pinas.

  14. The Salim group entered our country thru First Pacific Holdings which purchased Metro Drug Incorporated of Don Manuel Galatas. They made Metro Drug as their Flagship company and made many spin-offs after. There were mergers made with Marsman and Co, and later Zuellig Pharma. Negros Navigation came later. First Pacific is basically a buy and sell company eyeing potential cash strapped companies. Their style of business is “guisado ka sa sarili mong mantika”. They’ll use the purchased company assets as a collateral loan and pay the duped owners in installments… These kind of business practice is not really good for our country. Government must do something to correct this…

  15. Ganoon naman pala. Anong ginagawa ng mga law enforcers natin? Why are foreigners being allowed to commit crimes in our own country? Are they untouchables and above the law? Hindi dapat na mangyayari ang ganiyan sa ating bansa, di po ba?

    • Kasi alam ng mga foreigners na ito na ung ating Supreme Court eh siyang unang-una na hindi sumusunod sa batas ng CONSTITUTION. why will they care when the present crop of justices plus the majority of AbNoy’s cabinet are LAW VIOLATORS, from De Lima, Abad, Drilon, Sereno and the other 8 associate justices. PURO PAMBABASTOS ANG GINAWA NG MGA ITO SA CONSTITUTION nation… pwe!

  16. Erlinda Rabe on

    I have no high hopes if ever someone will file a case with this one. Nothing will come out of it as I don’t trust the Supreme Court anymore after they disregarded the Constitution and favoring a foundling called Grace Poe. For me the Constitution is dead and buried by CJ Sereno and company.

  17. Amazing! Its all about power-money-power-money. Pray, that we shall have a leader with the political will to do the right things for our people.

  18. I heard Salim Group of Company, is an Indonesian Chinese Muslim and a dummy of the late Indonesian President Suharto.

  19. If these arguments can stand to legal scrutiny, so why hasn’t anyone sued Pangilinan and/or PLDT yet to this day?

    • Hijo, mahal ang filing fee. Sa ganyang kalaking kaso, filing fee pa lang ay milyones na. Bukod pa dyan ang Acceptance Fee ng abugado na kukunin mo.

      Pag nagsimula pa ang kaso, pagtutulungan ka ng mga dyaryo at TV nila para palabasin na sinunghaling ka.

  20. I pity the employees of PLDT since investment in TV 5 has been loosing a lot of monies and the Trust funds is slowly being eaten by these losses. They will be the one suffer most.

    • OK lang sa kanila yan na may lalabas na “losses” sila. Tax shield nila yan. Deductible sa income tax ang mga losses while they gain media mileage and sympathy for their causes. I duno if all those reporters, columnists, directors and talent can afford to boycott those media outlets.

  21. If you really believe that there is a violation of the prohibition under the constitution, why don’t you challenge it before the court?

    • As have replied to similar queries made on my other columns, I have a full time role as a journalist, and to filing suits vs the subjects of my criticisms isn’t my role, which could even result on a gag order vs me on grounds I have brought it the court. Other than this I do not have the resources to file a suit which can be expensive. I can only but hope that I have laid down the facts for Filipino patriots to use.