News article from Philstar.com by Zinnia B. Dela Peña

Now that everything is about to be fulfilled, the Pangilinan group of companies draws closer to the acquisition of GMA Network, Inc. via their current assets through Mediaquest Holdings, Inc. and Associated Broadcasting Co. (TV5). Pangilinan even mentioned last week that his group is willing to acquire GMA-7 at a much-higher price than the network’s capitalization, which amounts to P33.95 billion (as of July 20).

According to the article, Pangilinan’s acquisition of GMA Network will catapult his group up into the top position of the competition, thus, garnering the advantage of having the majority market share in the television broadcasting industry. Furthermore, it asserts that this will cause a virtual duopoly within the structure of the industry - a rivalry between GMA Network + ABC (TV5) and ABS-CBN. However, there is a high possibility that this deal might turn GMA7-TV5 merger into a monopoly in the television broadcasting industry, which could greatly affect the advertisers through higher advertising rates. This also leads to the fact that barriers to entry for the said industry increased, which will have a great impact on the structure of the market - whether it will become more or less free. With less competition, the leading companies in TV broadcasting industry could greatly control the said rates. MVP’s acquisition of GMA 7 is also a threat to existing competitors as the merger strengthens the incumbent’s diversification of products and services. This implies the possibility of the merger engaging in a cut - throat competition strategy, primarily speculating upon the aggressive investment approach of Manny Pangilinan. With these circumstances in mind, we can zero in on the underlying goals of the merger. Is the acquisition of GMA Network seen as a channel of innovation development between the TV broadcasting industry as well as the technological advances of the telecommunications sector? Or is it another profit-driven measure by the Pangilinan group of companies to acquire further monetary gains?


Authors:
Collamar, Mark Lester
Lavapie, Jestine Dale
Pinto, John Rudolph




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