Following a privilege speech at the House of Representatives on the “state of Philippine cable television (CATV)” and the “probable encroachment of foreign-owned companies” in the industry, Rep. Terry Ridon of Kabataan party-list has filed separate cases before the Supreme Court against international giants AXN Network Philippines Inc. and Fox International Channels Philippines Corp.
In his January 27 privileged speech at the House of Representatives, the lawmaker explained that he was acting on information that foreign-owned corporations such as AXN and Fox have been illegally engaging in mass media and advertising through the CATV system in the Philippines.
On Wednesday, the lawmaker formally brought the issue to the attention of the High Court via separate cases filed against AXN and Fox, G.R. 210885 and G.R. 210886, respectively.
“The direct but unwarranted competition with legally existing domestic corporations engaged in similar activities pose threats to the continuing viability of constitutionally protected domestic industries and employment of thousands of its workers,” said the lawmaker, seeking a stop to the alleged intervention of unwarranted foreign ownership in nationalized and protected industries.
“The Constitution limits the ownership and management of mass media to citizens of the Philippines, or to corporations, cooperatives, or associations, wholly owned and managed by such citizens,” Ridon stressed.
Latest documents from the Securities and Exchange Commission (SEC) reveal that foreign shares constitute 99.99 percent of ownership of Fox and AXN. Both have been allegedly engaged in mass media ownership and management by providing programming content, among other activities, to CATV operators nationwide.
“Under their existing ownership structure, these corporations cannot be allowed to engage in mass media by providing programming content to CATV operators or engaging in advertising, pursuant to the limitation under the 1987 Constitution and other statutes governing the mass media industry,” explained Ridon.
Both companies have supposedly also engaged in advertising activities by entering into sponsorship and advertising contacts with different clients.
“The same corporations are also allegedly engaged in advertising activities, by entering into sponsorship and advertising contracts with different clients. These activities seem to be perfectly legal, unless one discovers that the said corporations—in fact—have foreign shares that constitute the largest percentage of ownership,” he stressed.
The Foreign Investments Act Negative List states that the mass media industry cannot have foreign equity and the advertising industry can only have up to 30-percent foreign equity—on both instances, constituting violations of Philippine laws, explained Ridon.
“Only Filipino citizens or corporations or associations at least seventy percent of the capital of which is owned by such citizens shall be allowed to engage in the advertising industry,” he said.
“The failure of government regulation over activities of these corporations has allowed these corporations to directly compete with legally existing domestic corporations engaged in similar activities in the mass media industry. Big cable operators may not have any problem with this, but what about the hundreds of small local cable TV operators and local content providers and advertisers?” Ridon added.