ABS-CBN franchise renewal controversy

As prescribed by the American Insular government-era Act No. 3846, or the Radio Control Act, which became effective in 1931, broadcasting networks require a congressional franchise to operate television and radio stations, which usually last for up to 25 years.[9] ABS-CBN, which had been operating since June 13, 1946, and made its first television broadcast on October 23, 1953, had last been granted a 25-year franchise extension on March 30, 1995 by virtue of Republic Act No. 7966 (but later implemented on May 4, 1995). This expired on May 4, 2020, as upheld by the Department of Justice (DOJ).[10]

The Philippines is touted to have the "freest and liveliest press" in Asia,[11][12][13] where media is considered a watchdog[14] and a "fourth estate" helping to maintain the checks and balances of democratic governance.[15][16]

Despite this, the country is consistently ranked as one of the world's most dangerous countries for journalists.[17][18][19] In May 2020, it slipped two spots down to 136th place (out of 180 countries) in the World Press Freedom Index.[20]

Media watchdogs such as Reporters Without Borders,[21] the Center for Media Freedom and Responsibility,[22] Amnesty International,[23] the Photojournalists' Center of the Philippines (PCP), Foreign Correspondents Association of the Philippines (FOCAP), and the Consortium on Democracy and Disinformation (D&D)[24] have noted that various forms of attacks against the press have increased since the Duterte administration came to power in 2016 – with the Philippine Daily Inquirer, news website Rappler, nonprofit media organizations like Vera Files and the Philippine Center for Investigative Journalism, and ABS-CBN being particular targets because of coverage critical of the administration.[24][17][25]

Many of these media watchdogs[24] have issued statements placing the ABS-CBN broadcast stoppage in the context of systemic attacks against press freedom in the Philippines.[24][25] The shutdown order was denounced by media groups and people's organizations for being a loss of democracy, freedom of expression, and freedom of the press.[26][27][28] Some groups also placed the matter in the context of attacks and harassment aimed at those that criticize the government.[29][28]

The ABS-CBN broadcast network is acknowledged to be one of the Philippines' oldest and most influential media networks, run by the Lopez family.[3] The company generates about 50 to 60 percent of the group's total annual revenue mainly from selling airtime of its television and radio properties to advertisers. The remaining revenue is generated from consumer sales through distribution of cable and international channels, as well as operations of over-the-top platform services, and a family entertainment center in Taguig. According to the Philippine Competition Commission, ABS-CBN Corporation controlled "somewhere between 31% and 44%" of the Philippines' total television market as of 2020.[30]

Prior to the 2020 stoppage, ABS-CBN had been closed down on September 23, 1972, when martial law under Ferdinand Marcos was announced and the station's television and radio stations were sequestered.[31][32] This stoppage lasted until July 1986, when the sequestered stations were recovered and the frequencies returned to ABS-CBN.

During that 14-year period, use of the corporation's frequencies (except DZXL-AM 620, awarded to KBS/RPN as DWWW and DZXL-TV 4, awarded to the government-owned National Media Production Center for the launch of Government Television as DWGT-TV in 1974) was awarded to the Banahaw Broadcasting Corporation (BBC) owned by Marcos crony and sugar plantation owner Roberto Benedicto and was launched on November 4, 1973. Under martial law, BBC formed a de facto media monopoly with Kanlaon Broadcasting System/Radio Philippines Network (KBS/RPN), Intercontinental Broadcasting Corporation (IBC, acquired in 1975), and government-owned Government Television/Maharlika Broadcasting System (GTV/MBS). The company's headquarters, the ABS-CBN Broadcasting Center, was also sequestered without compensation from the network's owners and was renamed as Broadcast Plaza to serve as headquarters of BBC, KBS/RPN, GTV/MBS and, from 1980, the Bureau of Broadcasts (BB).[32][33]

Marcos was eventually deposed by the People Power Revolution of February 1986. The newely-created revolutionary government agency Presidential Commission on Good Government (PCGG) sequestered later dissolved BBC and returned the frequencies to ABS-CBN in July 1986, eventually resuming broadcast on September 14, 1986.

In 2014 and 2015, ABS-CBN requested the 16th Congress to tackle the extension of its franchise early, despite the fact that its renewal was not due until six years later, in 2020.[2]

Media sources in the legislature indicated that the network's 2016 initiative was the result of having been "particularly singled out" by supporters of President-elect Rodrigo Duterte because of the perception that they "consistently showed him in a negative light".[2] The Philippine Daily Inquirer reported that a member of the House legislative franchise committee said ABS-CBN "did not want to risk going through the renewal under an 'unfriendly' administration."[77]

The Inquirer's source also said that the initiative "lacked support from President Benigno Aquino III's allies in the House" because they felt that ABS-CBN's criticisms against Aquino were "too personal and offensive and went to the point of nitpicking."[77][2]

ABS-CBN eventually had to withdraw these franchise renewal initiatives due to time constraints.[2]

Philippine President Rodrigo Duterte has attributed his objection to the franchise renewal of ABS-CBN to an election ad controversy during the campaign leading up to the 2016 Philippine presidential election. He said the network refused to air his 2016 presidential campaign ads and favored the negative political ads paid by then-vice presidential candidate Antonio Trillanes critical of his remarks on the campaign trail.[78][79]

The network's president and CEO Carlo Katigbak has apologized to President Duterte for not airing his political advertisements during his 2016 polls. President Duterte has accepted the apology, leaving the franchise's renewal to the Congress.[80][81] ABS-CBN also offered to return the money spent for these advertisements, which Duterte declined, stating that the money should be donated to a charity instead.[80]

Meanwhile, Commission on Elections spokesperson James Jimenez defended the controversial ad as being well within Election Law, under "Partisan Political Activity."[82][83]

Throughout his term, which coincides with the 17th and 18th Congress, President Duterte publicly reiterated that he will oppose the franchise renewal of ABS-CBN.[8][40][42][54]

Opposition lawmakers as well as labor groups objected to Duterte's stand on ABS-CBN as the franchise non-renewal will compromise the employees of the network; stating that the blocking of the franchise renewal had no merit.[84] Opposition groups have stated their opinions that the non-renewal of the franchise violates press freedom.[24]

The President later changed his stance after the network's apology, stating that he will not interfere with the franchise renewal in the Congress. However, the President did not say whether he will veto the bill or not.[80][81]

In November 2016, Nueva Ecija Representative Micaela Violago filed House Bill 4349 in the 17th Congress to renew the network's franchise.[85][86] The 17th Congress adjourned sine die with the bill never getting out of committee.[87]

During the 18th Congress of the Philippines, at least 12 house representatives and 2 senators filed their own versions for a new franchise of the network. House Speaker Alan Peter Cayetano made assurances that the Congress will tackle the franchise with fairness.[88]

On January 6, 2020, Albay representative Edcel Lagman filed House Resolution 639, urging the House Committee on Legislative Franchises for its immediate action on the several bills lodged to the committee.[55] At least 91 other representatives signed the resolution.[56]

On February 24, 2020, the Congress finally made its decision to tackle their franchise renewal.[89] During a Senate hearing on the same day, public services panel chair Grace Poe stated they were to tackle ABS-CBN's compliance with the terms and conditions of its franchise.[90] The conclusion was that there was no breach of laws or franchise terms. The following is a summary of the findings:

1. The Bureau of Internal Revenue stated that ABS-CBN had fully complied with the tax requirements of the government. Sir Cabantac Jr., BIR Large Taxpayers Service head stated that the company had paid P14.298 billion from 2016 to 2019. In 2019, ABS-CBN also settled P152.44 million in tax payments with the BIR.[91]
2. The Department of Labor and Employment cleared the media giant for its compliance with general labor standards, occupational safety and health, and security of tenure. Former ABS-CBN corporate services head Mark Nepomuceno said they also have contributed to mandatory employee benefits such as SSS, Phil-Health, PAG-IBIG. He also stated that ABS-CBN was no longer practicing end-of-contract scheme, as well as giving benefits to independent contributors varying per contract negotiation[91]
3. Telecommunications Commissioner General Gamaliel Cordoba stated that franchise laws cover "commercial purposes", including pay-per-view service. Section 1 of Republic Act 7908, which allows ABS-CBN Covergence's broadcast operations, states that: "It is hereby granted a franchise to construct, operate, and maintain, for commercial purposes." Even though ABS-CBN introduced the service without NTC guidelines yet, the fine for such violation is a measly P200. Senate President Recto stated that the NTC can just impose a fine on ABS-CBN rather than shutdown.[91]
4. Securities and Exchange Commission Commissioner Ephyro Amatong clarified that a legal interpretation from 1999 stated that Philippine Depository Receipts were not equivalent to certificates of ownership, which may have evolved in recent years. Senator Poe pointed out that companies should be notified of any changes in the legal interpretation of the investment instrument, as all media companies have to be 100% Filipino-owned. Issuing PDRs is a common practice among Philippine media outfits—including Rappler and GMA. The SEC has not yet conducted a review whether there are violations in ABS-CBN's PDRs, with Amatong saying he "would rather not make a categorical statement at this time" as to whether there are violations in ABS-CBN's PDRs, given the pending case at the Supreme Court, as of May 6, 2020.[91]

On February 10, 2020, Solicitor General of the Philippines Jose Calida filed a quo warranto petition before the Supreme Court of the Philippines seeking to revoke ABS-CBN's franchise and that of its subsidiary ABS-CBN Convergence over alleged breaches of its franchise, including operating its pay-per-view service Kapamilya Box Office (KBO) and constitutional restriction on foreign ownership of mass media.[92] The network responded to disprove the allegations levelled against it.[93]

Within the same month, various congressmen urged the National Telecommunications Commission (NTC) to grant a provisional authority to ABS-CBN to continue operations after the lapse of its current franchise until Congress has made a decision on its franchise application.[94] Having consulted with the Department of Justice (DOJ), the NTC affirmed in March 2020 that it would "likely" issue a provisional authority to ABS-CBN and "let ABS-CBN continue operations based on equity".[95] However, the Federation of International Cable TV and Telecommunications Associations of the Philippines (FICTAP) questioned the provisional authority, stating that it would be unconstitutional.[96]

On June 23, 2020, the Supreme Court of the Philippines dismissed the quo warranto petition to revoke ABS-CBN Corporation's franchise, stating that the petition was moot and academic as the franchise already expired, therefore the Court would not be changing anything by voiding the franchise ab initio.[97] However, the quo warranto petition filed against ABS-CBN Convergence Inc. for allegedly illegally operating KBO[4] remains pending.[98]

On March 5, 2020, lawyer, Larry Gadon filed a petition for prohibiton before the Supreme Court of the Philippines, seeking to stop National Telecommunications Commission from following House of Representatives's directive to issue ABS-CBN's provisional authority, saying the provisional authority to operate violates the doctrine of separation of powers.[99]

16 days after the shutdown, Gadon announces that he is withdrawing the petition which he filed, seeking to stop NTC from follow Congress's directive, stating that was rendered moot and the act sought to be prevented no longer exists.[100]

On June 2, 2020, the Supreme Court of the Philippines has dismissed the petition for prohibition against the National Telecommunications Commission from issuing provisional authority, stating that the court does not deem it efficient.[101]

The sign-off message broadcast by DWWX-TV (ABS-CBN Manila) before stopping all broadcasts at 7:52 pm (PST) in compliance with the NTC order

On May 3, 2020, Calida warned the NTC against granting the provisional authority to ABS-CBN, citing a Supreme Court decision in 2014, stating that provisional authority can only be granted after the franchise is secured in the Congress.[94][92] In the same statement, Calida cautioned that the agency would put itself at risk of prosecution under the Anti-Graft and Corrupt Practices Act should they issue the provisional authority without a legal franchise being held by ABS-CBN's operating companies, and that a 1991 DOJ opinion stating the NTC may issue provisional authority without a legal franchise was overturned by the Supreme Court.[92]

On May 5, 2020, NTC issued a cease and desist order to immediately close its broadcasting operations, including its radio stations DZMM, S+A and MOR, following the expiration of its broadcast franchise the day before.[102][103][104][1][105][4] The cease and desist order covers 42 television stations operated by ABS-CBN across the country, including the main ABS-CBN Network, ABS-CBN Sports and Action, ten digital broadcast channels, 18 FM stations, and five AM stations. However, ABS-CBN News Channel, TeleRadyo and its sister cable channels (run by subsidiary Creative Programs), as well as its online properties, and production companies Star Music and Star Cinema, were allowed to continue as their operations are not contingent on the legislative franchise.[106]

The network signed off the air at 7:52 pm (PST) following the news program TV Patrol. ABS-CBN executives Carlo Katigbak and Mark Lopez aired statements on the program appealing the NTC's cease and desist order.[107][108] The newscast was also simulcast on DZMM, S+A and MOR stations.[109] DZMM radio and television counterpart signed off at 8:20 pm, following SRO: Suhestyon, Reaksyon at Opinyon and rebranded simply as TeleRadyo following the newscast and the digital television networks available on ABS-CBN TV Plus including Asianovela Channel, Movie Central and the terrestrial operations of Jeepney TV, Myx, O Shopping and Knowledge Channel also signed-off.

Along with the order, NTC gave ABS-CBN 10 days to explain why its assigned frequencies should not be recalled.[110] In response on 15 May 2020, ABS-CBN reasoned that "it would be detrimental to the public interest as it would hamper the ability of ABS-CBN to immediately resume serving the public through its broadcasts, once the franchise is granted".[111] Additionally, House Bill 6732 was proposed by House Speaker Alan Peter Cayetano on 13 May 2020, which would have granted the network a provisional franchise to operate until October 31, 2020.[111][112] Subsequently on 27 May 2020, NTC was told to refrain from carrying out the recall while the Congress deliberates on the measures to grant provisional franchise and a fresh franchise.[113]

On May 13, 2020, House Bill 6732 proposed by House Speaker Alan Peter Cayetano, which grants the network a provisional franchise to operate until October 31, 2020 "unless sooner revoked or cancelled", was approved by the House of Representatives convening as a Committee of the Whole. The said bill was awaiting for a third and final reading after which it would have been transmitted to the Senate;[112][130] but on May 19, 2020, the proposal was withdrawn with the chamber opting to go straight to hearing measures seeking to grant the media giant a fresh 25-year franchise.[131]

• The first day of hearings was held on May 26, under the auspices of the Joint Committee for Legislative Franchises, Good Governance and Public Accountability, where ABS-CBN President and CEO Carlo Katigbak and Deputy Speaker Rodante Marcoleta gave their respective side's opening statements.[132]
• The second day, held on June 1, tackled the media conglomerate's ownership concerns.[133]
• The third day was held on June 3, mainly focused on Eugenio Lopez III's citizenship.[134]
• The fourth hearing was held on June 8, which also focused on Lopez III's citizenship.[135]
• The fifth hearing was held on June 11, which tackled the legalities of ABS-CBN's issuance of PDRs or Philippine Depositary Receipts.[136]
• The sixth hearing was held on June 15, tackled the media conglomerate's closure during Marcos regime and return to the Lopez family after the People Power Revolution in 1986.[137]
• The seventh hearing was held on June 17, which was attended by former Senate President Juan Ponce Enrile, tackled the constitutional 50-year limit on congressional franchises and airing of a program on ABS-CBN Davao hosted by Duterte called Gikan sa Masa, Para sa Masa.[138]
• The eighth hearing was held on June 29, tackled the network's blocktime agreement with AMCARA Broadcasting Network for continue airing the network's programs on free-to-air digital television through DWBM-TV (channel 43) in ABS-CBN TV Plus set-top box in Metro Manila, Laguna, selected areas of Baguio and Iloilo.[139]
• The next hearings are held on June 30,[140] July 1,[141] and July 2.[142]

ABS-CBN Corporation v. National Telecommunications Commission
Court	Supreme Court of the Philippines
Submitted	May 7, 2020
Started	May 19, 2020
Verdict	Pending
Citation	G.R. No. 252119
Questions presented
Is the ABS-CBN broadcast stoppage of "transcendental" constitutional importance? If so, was the NTC's CDO legal?

ABS-CBN Corporation v. National Telecommunications Commission (G.R. No. 252119) is a pending case before the Supreme Court of the Philippines. On May 7, 2020, ABS-CBN filed a petition for certiorari and prohibition asking the Court to issue a temporary restraining order (TRO) against the implementation of the National Telecommunications Commission's cease and desist order.[143][75] If granted, this TRO would allow them to operate until the case is decided.[144] However, some lawyers have questioned the legal merits of the petition,[75][145] as it was filed right to the Supreme Court, even before a motion for reconsideration before the NTC or a case in the Court of Appeals.[75] In the petition, ABS-CBN argues that it is proper to have filed first in the Supreme Court, as the case in their view involves "genuine issues of constitutionality that must be addressed at the most immediate time"[143]^:17 and that their petition is of "transcendental importance".[143]^:18 On May 19, the Court accepted the case, ordered the NTC to reply, and impleaded both the House and Senate.[76] The NTC filed its required comment on May 26.[146]

The Supreme Court set a further hearing for July 13 on the merits of the petition, though there may not be a ruling on that date.[147]

Before the expiration of the broadcast franchise, ABS-CBN talents and employees conducted weekly demonstrations in front of its headquarters in Quezon City as well as in its regional stations from January to February 2020.[148][149] During these demonstrations, presidential daughter and incumbent Davao City Mayor Sara Duterte-Carpio expressed support for the franchise renewal.[150]

The NTC's cease and desist order on ABS-CBN was met by widespread criticism by the Kapisanan ng mga Brodkaster ng Pilipinas (KBP) (in which the network is one of its members),[151] as well as various advocacy groups,[152][153] business organizations,[154][155] the local Catholic church,[156][157][158] and even some members of the Congress. Several journalists and celebrities from the network and its rival GMA Network expressed solidarity with ABS-CBN after it was ordered to cease its radio and TV broadcast.[159][160] The hashtag #NoToABSCBNShutDown topped the local and worldwide Twitter trending lists the same day.[161]

Within a day, numerous colleges and universities in the Philippines, including the UPLB College of Development Communication, Ateneo de Manila University and its Communication Department, the University of Santo Tomas, St. Scholastica's College and its Mass Communication Department, De La Salle University, and the UP Diliman College of Mass Communication released statements supporting the franchise renewal of ABS-CBN.[162]

The network's shutdown is noted to have placed the job security of 11,000 ABS-CBN employees in jeopardy during the COVID-19 pandemic, though the company assured them stable salary, and complete health and financial benefits for the next 2 months following the shutdown.[1][4] In response, the government may give a 2-month aid to the employees of ABS-CBN.[163]

GMA Network's shares increased by 24% as the Philippine Stock Exchange voluntarily suspends ABS-CBN's trading. However, investors remained cautious on GMA's stock rally due to the effects of the shutdown on business confidence.[164][165]

President Duterte has denied involvement with the network's shutdown,[166] despite earlier assertions that he will oppose franchise renewal.[8] His spokesman, Harry Roque, also thanked the network for its assistance to the country during the COVID-19 pandemic.[80][167] According to Roque, the president cannot mark the bill renewing ABS-CBN's franchise as urgent because it involves private interest, and that the president will be neutral to the renewal.[168]

On May 5, 2020, GMA's primetime news program 24 Oras interviewed the Federation of International Cable TV Associates of the Philippines (FICTAP) President Estrellita Juliano Tamano, who claimed that ABS-CBN violated their 1995 legislative broadcast by airing six channels. She argued that ABS-CBN should be instead broadcasting in one channel only and instead file for a new franchise for every channel they broadcast.[169][170]

On May 7, 2020, Philippine Cable and Telecommunications Association Inc (PCTA) President Ronaldo Manlapig argued that there is no need to file for a separate franchise for each channel as ABS-CBN is using digital transmission through their frequency, hence the multiple channels.[171][172]

The criticism behind ABS-CBN's shutdown mainly revolves around the NTC, for lack of fairness on the agency's cease and desist order on the network, and Congress – especially the lower house – for inaction to pass the franchise renewal bill.[173][174]

ABS-CBN's shutdown received international attention as news websites, magazines, newspapers and broadcasters including The New York Times,[4] The Washington Post,[1] Variety,[175] BBC News,[7] CBS News,[176] Time,[3] Al Jazeera,[105] The Guardian,[177] the Associated Press,[178] ABC News,[179] NHK,[180][181] KBS,[182] Yonhap News Agency,[183][184][185][186] the Financial Times,[187] and The Straits Times[188] published stories on the network's shutdown.[189]

The discontinuance of ABS-CBN's terrestrial broadcast operations created difficulties during the onslaught of Typhoon Vongfong, locally named "Ambo", when authorities and residents of some distant provinces, including Aurora, Quezon, and Sorsogon, reported being unable to get updated information about the typhoon from other sources, because ABS-CBN was the only national television station whose signal could reach them, and internet data was hard to get in their area.[190][191]

On June 4, 2020, it was announced that Kapamilya Channel will air programs from ABS-CBN such as Ang Probinsyano and ASAP Natin 'To beginning June 13, 2020 on cable and satellite TV providers nationwide.[192]