"What is it about this little-known company based in Budapest?"
ABS-CBN Global Hungary Kft is a wholly owned subsidiary of ABS-CBN based in Budapest, Hungary. Its main activity is the management of companies and enterprises. As indicated in the July 24, 2019 report of Dun and Bradstreet Corporation, the world-renowned commercial data, analytics and corporate risk assessment corporation, ABS-CBN Global Hungary Kft is a hugely profitable limited liability company with only one employee. As of July 2019, it had an annual revenue of US$54.74 million and was overseeing 133 corporate family enterprises and 70 subsidiaries of its ultimate parent - Lopez, Inc.
Although it had only one registered employee (probably the filing clerk or call assistant), the company was actually being run through various structured arrangements by four managing directors, presumably out of Europe (there is actually an ABS CBN Global Amsterdam BV) namely, Edgardo B. Garcia, Malta-Bey Eloi Laurent, Olivia Gatchalian de Jesus and Rafael Lao Lopez.
The company's operations provides a lot of materials on the web of interests which underlie
the ongoing debate on the fate of ABS CBN's bid to renew its radio and TV broadcasting franchise that, unfortunately, has been politicized probably beyond repair. But no matter.
What is important now is for us to have a better idea of the range of operations and byzantine layer of corporate interests of the country's media behemoth in the service of the Filipino people. After all, in the final analysis, the uproar over the cease and desist order on the company has everything to do with one and only one issue: why does it deserve to be given the privilege of using a frequency (or frequencies) all over again after having been afforded the use of this very limited resource for years?
The debate has nothing to do with press freedom and freedom of speech as is the mantra of a number of people and groups who should know better. Our people know better than that. By overwhelming numbers, our people understand that a franchise is a privilege, not a right, and once it expires there is nothing more to it. That privilege is extinguished and the use of the assigned frequency reverts to the State. Which is why the other ABS CBN subsidiaries like ANC continue to air with all the venom against the "high handedness of this administration" which some of its reporters and program anchors could muster.
It also has nothing to do with the fate of its employees, talents, partners and others dependent on and riding in the company's gravy train. The company has allotted funds for the salaries and benefits of its thousands of employees for the next three months. I am sure the talents, partners, independent producers and other gravy train riders have also been taken care of. Reports have it that the company has an accumulated retained earnings to carry this battle to the bitter end. Which is why I agree with our colleague in media, Philip Lustre, who posted a long paean to the resilience, grit and cunning of the Lopezes insisting in a sense that the family will never bend on its knees to get its franchise. They have been in many crises before and this thing is no different, Lustre noted. The family will fight or wait things out and will prevail in the end. That would come as no surprise at all.
Which brings us to this little known subsidiary based in Hungary which, if we go by the reports, has been the principal repository of millions of dollars in earnings from ABS-CBN and its network of enterprises (133 family owned corporations and 77 subsidiaries) over the years. Those earnings can definitely finance whatever way, method or direction the owners of ABS CBN will undertake as the franchise debate boils over. They are not about to collapse and fold up unless they have found other means to regain their monies and political clout in this age of digital and, yes, multi-media operations which have made “free radio and TV" almost an anachronism. This is not to suggest that they will simply abandon this platform; after all, free-to-air radio and TV still contributed 47 percent of the Kapamilya network's revenues and, ostensibly, a clear majority of its profits. Almost all of which went to this Hungarian subsidiary.
But wait. That is not the only mystery surrounding this little known Hungarian operation. It is the main customer of another ABS CBN fully owned subsidiary, Big Dipper Digital Content and Design, Inc. – a PEZA-registered company in charge of operating and maintaining the company's media asset management system which includes: analog video conversion to digital, video quality checking; cataloging of ingested materials and provision of transcription/translation/ synopsis writing and processing of multi-format dubbing. As a PEZA registered enterprise, it availed of tax holidays which in this case was in the form of dividends declared as "other income" for which it paid nothing. It was tax free. So, while ABS CBN was declaring losses in its operations all through the years, it was actually declaring "dividends/other income" through Big Dipper which was ostensibly "exporting its services" to the little known Hungarian company. That income was tax free and may have found its way to the ABS CBN network of 133 family enterprises and 77 subsidiaries spread all over the world.
And, as the truism goes, this is just the tip of the iceberg that is the web of interests and byzantine operations which ABS CBN has spawned using its free-to-air radio and TV operations since it got its franchise and expanded facilities for free in 1986. No wonder one of the favorites coming out of the airwaves in Pier 39 in San Francisco which is ostensibly the haunt of some of the ABS CBN bigwigs is a newly minted song to the tune of "Don't Cry for me Argentina."
At the worst time
A leading broadcast network was ordered shut down by the government last week. The order was announced in the late afternoon, and in the early evening, after its primetime newscast, the network went off the air. It employs some 11,000 individuals.
This action on the part of the administration stokes fear in the hearts of many, especially among those in the media. If the government could order the closure of a big organization, what is to stop it from acting adversarially against smaller ones?
The issue has polarized the public anew, and at a time when all differences should be cast aside so people could work together to fight the pandemic. On the one hand, people are crying suppression of press freedom. But those supporting the closure say the network had it coming because of its violations of the law.
It would be easier to assess the merits of the National Telecommunications Commission’s case against ABS-CBN if we could safely divorce the questions from the President’s own interest. Unfortunately, at the outset, Mr, Duterte has been vocal about his dislike of the network. He felt slighted when it failed to air his political advertisement – which he had already paid for – during the campaign for the 2016 polls.
Comments and accusations between those who denounce and support the network’s closure, especially on social media where trolls thrive, are also a sorry development when the conversations should only be about how to push the government to strive for a higher COVID-19 testing capacity. Only this will enable us to know the true extent of the virus’ spread and guide our decisions as we balance protecting ourselves with opening up the economy.
The story is far from over. The next weeks and months will expose who exactly stands to benefit from the network’s closure, who are to blame for the non-renewal of the franchise, and what awaits all those who dare catch a powerful man’s ire.