Tuesday, December 27, 2011


Online reports are buzzing out yesterday about the rumored take over of TV5 Chairman Manny Pangilinan to the country's No.1, ratings wise, TV Network, GMA Network.  But what keeps us astounded is the circulating amount of the deal! The offer according to reports amounts to a mind blogging P500 billion!

Personally, TV NETWORK WAR, thinks this figure is way too exaggerated considering that the company's current value according to PSE only totals to P30 billion. If this P500 billion figure is true, then MVP might be risking too much attempting to buy a company 17 times its current market value!

Business wise, GMA Network should be not be valued greater than its current market value of P30 billion because its revenues and net income are expected to contract in the coming years with market share in the advertising market expected to shrink courtesy of new competition from TV 5 and the awaiting entrance of San Miguel via IBC 13 and RPN. Also, the country's shift to digitalization may also pose threat to the company's revenues as more channels will be made available in the free-to-air market.

If the rumored buyout is true, we are betting that MVP's offer  is somewhere close to P50 billion, a far cry from the P500 billion. This amount (P50 billion) is still 60% above GMA's market price and company owners might consider this a good deal considering the contraction that is waiting for the company in the near future.
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