Philippines in View A CASBAA Market Research Report

An exclusive report for CASBAA Members Table of Contents

1 Executive Summary 4 1.1 Pay-TV Operators 4 1.2 Pay-TV Subscriber Industry Estimates 5 1.3 Pay-TV Average Revenue Per User (ARPU) 5 1.4 Media Ownership of FTAs 6 1.5 Innovations and New Developments 6 1.6 Advertising Spend 6 1.7 Current Regulations 6

2 Philippine TV Market Overview 8 2.1 TV Penetration 8 2.2 Key TV Industry Players 9 2.3 Internet TV and Mobile TV 11

3 Philippine Pay-TV Structure 12 3.1 Pay-TV Penetration Compared to Other Countries 12 3.2 Pay-TV Subscriber Industry Estimates 12 3.3 Pay-TV Subscribers in the Philippines 13 3.4 Pay-TV Subscribers by Platform 14 3.5 Pay-TV Operators’ Market Share and Subscriber Growth 14 3.6 Revenue of Major Pay-TV Operators 16 3.7 Pay-TV Average Revenue Per User (ARPU) 17 3.8 Pay-TV Postpaid and Prepaid Business Model 17 3.9 Pay-TV Distributors 17 3.10 Pay-TV Content and Programming 18 3.11 Piracy in The Philippine Pay-TV Market 20

4 Overview of Philippine Free-To-Air (FTA) Broadcasting 21 4.1 Main FTA Broadcasters 21 4.2 FTA Content and Programming 26

5 Future Developments in the Philippine TV Industry 27 5.1 FTA Migration to Digital 27 5.2 New Developments and Existing Players 28 5.3 Emerging Players and Services 29 Table of Contents

6 Technology in the Philippine TV Industry 30 6.1 6.1 SKYCABLE 30 6.2 Cignal 30 6.3 G Sat 30 6.4 Dream 30

7 Advertising in the Philippine TV Industry 31 7.1 Consumer Affluence and Ability to Spend 31 7.2 General TV Viewing Behaviour 32 7.3 Pay-TV and FTA in Relation to Philippine Social Strata 33 7.4 Advertising Spend 34 7.5 Key Advertisers and Future Trends 35

8 Regulation of the Philippine TV Industry 37 8.1 Key Stakeholders in Philippine TV Regulation 37 8.2 Current Regulations 38

Appendices Appendix 1: Number of Families by Number of TV Set Owned By Region in ‘000s (2010) 41 Appendix 2: Flagship FTAs and Sister Channels 42 Appendix 3: Smaller Broadcasters in the Philippines 43 Appendix 4: Content Split for Flagship FTA Channels 44 Appendix 5: Content Split for Sister FTA Channels 45 Appendix 6: Top FTA Programmes 46 Appendix 7: Programming Proposition of FTA Channels 47 Appendix 8: Pricing Bundles and Channel List of Pay-TV Operators 48 Appendix 9: CPI Content Operation and Distribution 56 Appendix 10: NTC Organisational Structure 58 Appendix 11: NTC Departmental Structure 59 Appendix 12: MTRCB Organisational Structure 60 Appendix 13: IPO Organisational Structure 60 Appendix 14: OMB Organisational Structure 61 Appendix 15: MTRCB Television Classification Ratings 61 Appendix 16: Contact and Contacts’ Details 62 Appendix 17: Abbreviations 68 ­1 Executive Summary

The Philippine pay-TV industry has entered into Attractiveness of the terrestrial offering will be a period of development and diversification, as enhanced as rollout begins in 2014 of digital companies explore new types of content offerings terrestrial television (DTT). Policy on DTT has been particularly in the relatively affluent urban areas. slow to develop in the Philippines, with a final Internet (OTT) as well as mobile methods of delivering decision in favor of the Japanese ISDB-T standard content are in various stages of commercialization coming late in 2013. Implementing Rules and and development, and digital service expansion Regulations for the digital rollout are expected soon; continues in order to provide bigger bouquets a key question will be who – in addition to current including more sophisticated programming (e.g. HD national broadcasters – will be licensed to broadcast channels) to consumers. digital channels, and how many competitors there will be. The cable sector continues to be dominated by ABS-CBN subsidiary SKYcable, which claims about 1.1 Pay-TV Operators 800,000 subscribers nationwide, or 45% of the overall The Philippine pay-TV market has been dominated by pay-TV market. Its major competitor is PLDT affiliate SKYcable since its establishment 23 years ago. As a Cignal DTH service, which in a few short years of company, SKYcable has focused on offering varied rapid growth has reached 600,000 subscribers, giving and specialized content on pay television to enhance it a roughly 25% market share. Growth of the market the viewing experience of an increasingly discerning and development of new content offerings is being Filipino audience. Currently, SKYcable offers over 200 driven by the competition between these two major channels. media conglomerates (ABS-CBN and PLDT). The remainder of the market is made up of 600 smaller Although SKYcable historically has led the pay-TV operators (including two smaller DTH platforms as sector of the TV industry, Cignal Digital TV, under the well as provincial cable operators.) MediaQuest Holdings of the Philippine Long Distance Telephone Company (PLDT) Group, has changed the Reception of pay-TV signals nationwide is still competitive landscape since its launch in 2009. Cignal relatively low at about 19.7% of TV households; this is a subscription-based direct-to-home (DTH) satellite reflects the low spending power of many households TV provider. It offers around 90 channels at present. and the widespread availability (and popularity) of free-to-air terrestrial channels. (With a population Smaller DTH operators Dream and G-SAT offer of 96.7 million, the Philippines had 16.9 million TV more limited content bouquets. There are also other households by the end of 2012, representing a TV operators, such as Cablelink, which offer services household penetration rate of 79%.) in limited areas in the country. Cablelink has a

4 Philippines in view subscription-based cable antenna television system This inconsistency in subscriber number estimates is operation in 16 cities in the Philippines and also reflected in the varying figures reported by different offers high-speed cable Internet service. interviewed industry players or groups, as seen below.

Because of the Philippine’s archipelagic geography, Research in the Philippines suggests that the there are many rural and small operators throughout uncertainty in pay-TV subscriber estimates will remain the country. Presently, there are around 800 licensed for some time. However, with increased digitization of pay-TV operators in the Philippines. However, pay-TV networks, the uncertainty element is expected Philippine regulators indicate that there are only about to reduce somewhat over the next few years. 600 active pay-TV operations. A detailed description of the pay-TV industry is set out in Section 3. Factors that are driving pay-TV take-up include: • Higher household incomes 1.2 Pay-TV Subscriber Industry • Lower cost of television sets Estimates • Increased choice and cheaper subscription Concrete and verifiable industry-wide data on pay-TV packages, including prepaid options. subscription numbers are impossible to obtain; there is no enforceable government reporting requirement 1.3 Pay-TV Average Revenue Per User nor any authoritative source with access, in (ARPU) particular, to provincial subscription numbers. Based At present, SKYcable has reported an ARPU of US$14 on discussions with key media industry stakeholders per month for pay-TV and US$25.5 per month for its in the Philippines, estimates of subscriber numbers broadband service. Cignal has reported ARPU of spanned from 1.5 million to 3.8 million for 2012, as similar US$13.4 per month for its postpaid service reflected in the following exhibits. Different Philippine and US$5.8 for its prepaid service. However, MPA has media groups concurred that the industry suffered estimated a national pay-TV ARPU of US$11.1 in 2012. from prevalent underreporting and misrepresentation of subscriber numbers from provincial operators, as well as rampant illegal connections via signal theft, making subscriber estimates notoriously shaky.

Exhibit 1: Philippine Pay-TV Subscribers According to Different Industry Groups in ‘000s (2012)

4,000 3,500 3,600 600 3,000 1,700 2,600 800 2,000 3,000 2,850 2,700 1,000 1,800 1,800

0 A B C D E

Uncertainty Range of Reported Subscriber Numbers Base Number of Reported Subscribers

Source: Venture Consulting discussions with media companies in the Philippines

Philippines in view 5 1.4 Media Ownership of FTAs Disney Company, CBS Studios, Sony Pictures, Private media groups dominate the TV industry in Warner Brothers, and 20th Century Fox. the Philippines, as major FTA channels and pay-TV • Broadband penetration remains low. As a result, operators share similar parent companies. There are Apple TV, Google TV, Netflix, Hulu, Amazon, and six major FTA channels, which collectively account other legitimate international over-the-top (OTT) for 92% of the national audience share in 2013. The services are not expected to be launched in the remaining share is split among several smaller private Philippines anytime soon. However, downloads of or government-owned channels. Correspondingly, the content from illegal pirate OTT sites are common. two major pay-TV operators jointly represent 70% of subscriber share in 2012, with the remaining share 1.6 Advertising Spend distributed among – 800 smaller operators. Advertising spend in the Philippines in theory amounted to US$4 billion in the first half of 2013 Two private media/telecom groups, ABS-CBN based on rate card revenue. This amount is Corporation and PLDT, have interests in both FTA and comprised of digital, as well as the tri-media of pay-TV businesses. television, radio, and print. However, according to Mindshare, the estimated spend in 2013 is expected 1.5 Innovation and New Developments to be – US$3 billion for the full year. • The current Internet TV offerings in the market are ABS-CBN’s iWanTV! and Cignal’s TV-To- Among all media, TV has the highest share of rate- Go. iWanTV! has been operational since 2008, card revenue, with US$3 billion, followed by radio offering catch-up programming, VOD movies and with US$706 million. Print has a small share of streaming of ABS-CBN’s terrestrial channels. US$136 million, while digital, despite its infancy, has Cignal TV-To-Go is under beta testing and will a respectable share of US$130 million. Within the TV commercially launch in early 1Q 2014, with a focus industry, the three major FTA channels cover almost on live streaming of more than a dozen channels. 87% of the total ad spend by FTA channels in 2012. • Mobile TV, video viewed on mobile handsets, has significant growth potential given the country’s 1.7 Current Regulations high mobile penetration rate, which was reported The regulatory environment in the Philippines is to be 82% of the population in 2012. As a result, largely permissive and facilitative. major media groups in the Philippines are interested in offering mobile TV propositions. The Philippines maintains a generally liberal On this front, ABS-CBN intends to launch a regulatory environment for businesses, and this mobile service, using Globe Telecom’s network, carries over into its approach to the pay-TV industry. to provide voice, SMS and data services. The There are no wholesale or retail rate regulations, new service will also provide TV programming no “landing rights” licensing requirement for via smartphones and tablets; it is likely to be channels, no imposition of exorbitant licensing fees launched in the first half of 2014. on wholesale or retail providers, no restrictions on • In terms of online digital propositions, Omni advertising revenue, and no government rules for Digital Media Ventures, a subsidiary of Solar tiered or bundled services offerings. Entertainment, launched Blink in October 2013. Blink is an online platform catering to young, However, regulatory agencies are relatively weak upwardly mobile 21-to-35 year olds. The content – they have been unable to quell some of the available on Blink is comprised of 193 movie titles malpractices that distort the industry – particularly and 23 television titles from Paramount, The Walt with respect to intellectual property rights.

6 Philippines in view Exhibit 2: Philippine Pay-TV Subscribers Growth in ‘000s (2008-2013)

2,500

2,000 9%

1,500

1,000 2,000 2,214 1,596 1,761 1,415 1,509 500

0 2008 2009 2010 2011 2012 2013

Pay-TV Subscribers CAGR

Source: MPA Data includes paying subscribers only

Moreover, the country’s slow-moving national judicial It is notable that industry players are not waiting for and legislative systems prevent industry players and a regulatory framework for new media offerings to regulators from improving the legal environment develop; they are designing and rolling out services for pay TV. The Philippines’ legislature has been (described in the main report) even while the slow to ratify key bills and legislative amendments, regulatory vacuum persists. including the harmonization of legal frameworks for convergent operators and improvement of IP laws. The regulatory system has not kept pace with the rapid developments in the industry. Regulators’ main focus for now is implementation of the digital terrestrial transition – and this is understandable as the bulk of the population continues to rely on FTA TV for their TV content.

But the more advanced “new media” industry sub-segments have already advanced well beyond the regulatory framework. There are, for example, currently no regulations governing provision of TV over the Internet. A much-discussed Convergence Bill may or may not change this, as the NTC does not strictly regulate content and only has some specific guidelines as to what cannot be shown or broadcast.

Philippines in view 7 2 Philippine TV Market Overview

This section sets out an overview of the Philippine TV While there is still room for TV penetration growth in industry. It includes discussion of the country’s TV the Philippines when compared to other Southeast penetration, key TV industry players, media ownership Asian countries, the urban-rural split already shows structure, and recent developments in Internet TV and relatively high penetration for the rural regions, mobile TV. despite the country’s geographical challenge of having numerous divided islands. 2.1 TV Penetration With a population of 96.7 million, the Philippines had 16.9 million TV households by the end of 2012, Exhibit 4: Philippine TV Penetration Versus representing a TV household penetration rate of Other SEA Countries (2012) 79%. However, there was significant disparity in the distribution of TV households in the country, as it is 98% 98% estimated that the Luzon and Mega Manila regions, with around 60% of the population, accounted 79% for more than 75% of the TV households in the Philippines. 61%

Exhibit 3: Overview of TV Market in the Philippines (2012)

21% Indonesia Philippines Thailand Malaysia

TV Penetration

Sources: Company Reports, Venture Consulting Analysis

79%

Households Without TV Households With TV (FTA only and Pay TV)

Source: Company Reports, Venture Consulting Analysis

8 Philippines in view Exhibit 5: Philippine TV Penetration by Household Urban-Rural Split in ‘000s (2010)

2,600 2,498 Number of Families (in 000s) 820 2,400 2,380 *R = Region 2,200 613 806 Rural with TV Total Rural 2,000 727 Urban with TV Total Urban 1,800

1,600 1,050 1,400 690

1,200 740 712 1,000 1,639 663 337 600 712 500 550 800 1,267 545 418 411 1,506 485 447 326 600 272 515 315 401 1,205 713 304 352 400 212 228 198 215 126 206 200 596 345 432 361 314 352 287 286 349 288 213 247 273 183 248 172 189 0 107 117 114 159 141 153 86 128 53 65 R I NCR CAR R II R III R V R VI R VII R IX R X R XI R XII R IVA R IVB R VIII R XIII ARMM

Note: For definition of the region labels, see Appendix 1 Source: National Statistics Office, 2010 Annual Poverty Indicators Survey

Among households with television, almost 90% were 2.2 Key TV Industry Players reported as late as 2010 to have just one TV set; only 2.2.1 Free-To-Air (FTA) Broadcasters around 10% owned multiple televisions, from two Private media groups dominate the TV industry in sets onwards (Appendix 1). TV household penetration the Philippines, as major FTA channels and pay-TV is expected to increase in the next few years, as the operators share similar parent companies. There are prices of television sets are becoming more affordable, six major FTA channels, which collectively accounted especially with the influx of cheaply made appliances. for 91% of the national audience share in 2012. The remaining share is split among several smaller private or government-owned channels. Correspondingly, the two major pay-TV operators jointly represent 70% of subscriber share in 2012, with the remaining share distributed among – 800 smaller operators.

Philippines in view 9 Two private media groups, ABS-CBN Corporation and PLDT, have interests in both FTA and pay-TV businesses.

Exhibit 6: Media Ownership of FTA Channels in the Philippines

Media Group ABS-CBN Corporation GMA PLDT

100% 100% 100% ABS-CBN Channel 2 GMA Network TV-5 Free-To-Air Channels 100% 100% 100% Studio 23 GMA News TV Aksyon TV

55% 100% Pay-TV Operators SKY cable Cignal

100% 100% City Network Marketing & Star Cinema and TV FTA Channels Productions Content Producers Pay-TV Operator 100% 100% Creative Programme Inc. GMA Network Films TV Content Producer

Source: ABS-CBN, GMA, PLDT, TV-5, Venture Consulting Analysis

The three FTA heavyweights (ABS-CBN, GMA, and TV5) continued to dominate the national audience Exhibit 7: National Audience Share of share through 2013. A sample audience share from Philippine FTAs (May 26 – June 1 2013) mid-year is depicted below. The three main players each carry a flagship FTA channel, as well as a sister FTA channel (Appendix 2). 50%

40% 36.0% Among the smaller broadcasters, the strongest player 30.8% is Solar Entertainment Corporation, which also offers 30% content on pay-TV platforms.

20% 15.6% 2.2.2 Pay-TV Operators 9.4% The Philippine pay-TV market has been dominated 10% 4.8% 3.4% by SKYcable since its establishment 23 years ago. 0% Its commercial launch happened in January 1992, ABS- GMA TV5 GMA Studio Other CBN News 23 FTAs two years after its founding. As a company, SKYcable intended to offer varied and specialised content on pay television to enhance the viewing experience Audience Share of an increasingly discerning Filipino audience. Source: Company Reports, Nielsen, Venture Consulting Analysis Currently, SKYcable offers over 200 channels.

10 Philippines in view Although SKYcable has historically led the pay-TV SKYcable. It started as an exclusive service to Sky sector of the TV industry, Cignal Digital TV, under the BroadBand and Bayan DSL subscribers with just MediaQuest Holdings of the Philippine Long Distance ABS-CBN content but eventually opened to the public Telephone Company (PLDT) Group, has changed the in 2011. competitive landscape since its launch in 2009. Cignal is a subscription-based direct-to-home (DTH) satellite Currently, the platform freely offers the three latest TV provider. It offers around 90 channels at present. episodes of each show on ABS-CBN. The daily broadcast of ABS-CBN Channel can be viewed via There are other operators, such as Cablelink, which live streaming. Premium content, through foreign offer services in limited areas in the country. Cablelink and local movies, is also available to SKYcable and has a subscription-based cable antenna television SKYbroadband subscribers. Local movies shown are system operation in 16 cities in the Philippines and those produced by ABS-CBN through its content also offers high-speed cable Internet service. production arm, while foreign movies on iWanTV! are acquired movies shown on ABS-CBN Channel, as Because of the Philippines’ archipelagic geography, well as Kix Thrill. there are many rural and small operators throughout the country. Presently, there are around 800 licensed 2.3.2 TV-To-Go pay-TV operators in the Philippines. However, Cignal’s TV-To-Go currently provides live streaming of Philippine regulators indicate that there are only about 14 channels, including TV-5. The service is available 600 active pay-TV operators. A detailed description of only on Android smart phones and tablets, but the the pay-TV industry is set out in Section 4. company plans to eventually expand the service to other operating systems. TV-To-Go aims to achieve 1 million subscribers by 2014. 2.3 Internet TV and Mobile TV Both the Internet TV and mobile TV markets in the There is limited visibility on the actual take-up of Philippines are nascent. They are limited by the lack these services. of Internet connectivity in the less urban areas in the Philippines, with Internet and broadband population Mobile TV, video viewed on mobile handsets, has penetration at around 35% and 1.3%, respectively. significant growth potential given the country’s high mobile penetration rate, which was reported to be The current Internet TV offerings in the market are 82% of the population in 2012. As a result, major ABS-CBN’s iWanTV! and Cignal’s TV-To-Go. iWanTV! media groups in the Philippines are interested in has been operational since 2008, while Cignal TV-To- offering mobile TV propositions. On this front, ABS- Go is under beta testing and will only commercially CBN intends to launch a mobile service, using launch in early 1Q 2014. The potential of Internet Globe Telecom’s network, to provide voice, SMS and TV seems to lie with the growing trend of catch-up data services. The new service will also provide TV viewing, as evidenced by the success of iWanTV’s programming via smartphones and tablets; it is likely highest rated shows, which are usually the on- to be launched in the first half of 2014. demand viewing of daytime and primetime soaps. Unlike existing TV services, mobile TV offers viewers 2.3.1 iWanTV! the convenience of itinerant watching and may iWanTV! offers live streaming and on-demand videos therefore gain in popularity, especially with the over the Internet via the iWanTV! portal. It is a service increasing growth of smartphone penetration in the started in 2010 and co-owned by ABS-CBN and Philippines.

Philippines in view 11 3 Philippine Pay-TV Structure

This section takes a deeper look into the pay- 3.2 Pay-TV Subscriber Industry TV market, setting out subscriber numbers and Estimates subscriber projected growth, as well as market Based on discussions with key media industry splits, usage description, and coverage area. It also stakeholders in the Philippines, estimates of covers pay-TV content programming, pricing strategy, subscriber numbers spanned from 1.5 million to 3.8 business models, and it sets out the effects of piracy million for 2012, as reflected in the following exhibits. on the industry. Concrete and verifiable subscriber numbers are notoriously difficult to obtain; different Philippine 3.1 Pay-TV Penetration Compared to media groups revealed that the industry suffered from Other Countries prevalent underreporting and misrepresentation of As shown below, Philippine pay-TV penetration is subscriber numbers from provincial operators, as well lower thanother Southeast Asian countries and we as the rampancy of illegal connections via signal theft. believe it has significant potential for growth. This inconsistency in subscriber number estimates is reflected in the varying figures reported by different Exhibit 8: Philippine Pay-TV Penetration interviewed industry groups, as seen below. Compared to Other SEA Countries (2013)

Exhibit 9: Philippine Pay-TV Subscribers According 100% to Different Industry Groups in ‘000s (2012)

80% 4,000 65% 3,500 3,600 60% 56% 600 3,000 2,600 1,700 40% 2,000 800 19% 20% 3,000 10.5% 2,700 2,850 1,000 1,800 1,800 0% Indonesia Philippines Thailand Malaysia 0 A B C D E Pay – TV Penetration Uncertainty Range of Reported Subscriber Numbers

Source: Company Reports, BroadbandandTVnews.com, Venture Base Number of Reported Subscribers Consulting Analysis Source: Venture Consulting discussions with media companies *Includes paid and unpaid connections in the Philippines

12 Philippines in view By comparison, we have set out estimates for pay-TV However, there is consumer resistance. Industry subscribers from CASBAA and MPA, as seen below. observers report that in many cases where households were asked to pay for cable services (e.g. when analogue service was withdrawn), they chose Exhibit 10: Philippine Pay-TV Connection to disconnect. Further, in provinces, some people Estimates by CASBAA and MPA in ‘000s (2012) worried about the power consumption and heating effect of the set-top box (STB) and therefore opted 3,000 out of the paid service. Consumer resistance for all these reasons will tend to dampen growth in legal subscribers at least in the immediate term. 2,000

2,900 3.3 Pay-TV Subscribers in the Philippines 1,000 2,000 The chart below sets out the recent growth trend in pay-TV subscribers in the Philippines, based on consistent data from one expert source. 0 CASBAA MPA

Connections Exhibit 11: Philippine Pay-TV Subscriber Growth in ‘000s (2008-2013) Note: CASBAA’s figures are based on evaluation of several surveys by media research companies and reflect both paid and unpaid connections Source: CASBAA, MPA 2,500 2,214 9% 2,000 2,000 1,761 1,596 Our discussions in the Philippines suggest that the 1,509 1,500 1,415 uncertainty in pay-TV subscriber estimates will remain for some time. However, with increased digitization of 1,000 pay-TV networks, the uncertainty element is expected to reduce somewhat over the next few years. 500

Factors that are driving pay-TV take-up include: 0 2008 2009 2010 2011 2012 2013 • Higher household incomes • Lower cost of television sets Pay-TV Subscribers CAGR • Increased choice and cheaper subscription Source: MPA packages, including prepaid options.

Philippines in view 13 This data series shows that pay-TV penetration of TV 3.5 Pay-TV Operators’ Market Share households has increased steadily and is currently at and Subscriber Growth 12%, as set out below. Currently, the country’s pay-TV market is dominated by SKYcable and Cignal. As seen in the chart below, Exhibit 12: Growth of Philippine Pay-TV and FTA SKYcable holds the largest market share, though Penetration of TV Households (2008-2013) Cignal has been enjoying strong growth. 100% 91% 91% 90% 90% 89% 88% 90% 80% Exhibit 14: Pay-TV Operators’ Market Share 70% Based on Subscriber Numbers (Dec 2012) 60% 50% 40% 30% 30%

20% 45% 9% 9% 10% 10% 11% 12% 10% 0% 2008 2009 2010 2011 2012 2013

Pay-TV Penetration / TVHH 25% FTA-Only Penetration / TVHH

Source: MPA

SKYcable Cignal 3.4 Pay-TV Subscribers by Platform Others (~800 smaller operators) In 2013, the highest number of subscribers was Source: Company Reports, PLDT, Venture Consulting Analysis still on analogue cable. However, subscribers on other platforms, especially DTH, have increased significantly, as shown in the exhibit below. 3.5.1 SKYcable SKYcable offers pay-TV service, as well as Internet Exhibit 13: Philippine Pay-TV Penetration by and VoIP services. In terms of ownership, ABS-CBN Platform in ‘000s (2008 -2013) Corporation owns 55% of SKYcable, while STT Group 1,400 Singapore owns 40% economic rights via Philippines 1,278 1,291 1,216 Depository Receipts, with no voting rights nor Board 1,200 1,115 1,082 1,099 Member representations. Lopez Holdings Corporation 1,000 holds 5%. 800 635 The company in its present form was established in 600 477 464 424 2008, when PLDT’s economic stake in Home Cable 385 400 and Benpres’ shares in SKYcable were consolidated 205 294 175 200 80 112 into SKYcable Corporation. 57 106 0 2008 2009 2010 2011 2012 2013 SKYcable’s shift from analog to digital enabled it to offer High Definition (HD) channels, as well as Analogue Cable Digital Cable DTH the ‘select’ service, which allows customers to add Source: MPA channels to existing subscription plans. Moreover, the

14 Philippines in view shift lessened signal theft and eased the expansion to Internet broadband and Voice-Over-Broadband Exhibit 16: Cignal’s Subscriber Target in ‘000s (2013 and 2018) service. Currently, there are 147 SD channels and 40

HD channels available to SKYcable subscribers. 2,500

2,000 In 2012, SKYcable’s subscription numbers were 2,000 boosted by 200,000 subscribers through the acquisition of Destiny Cable, Philippine’s 3rd largest 1,500 cable operator, UniCable, the biggest provincial 1,000 operator in Cebu, and Solid Broadband Corp. This 600 purchase had a consolidated value of US $81.2 500 million. Most of SKYcable’s subscribers are located within Metro Manila. However, the company does not 0 make available a specific regional breakdown. 2013 2018 Cable Subscribers (Postpaid and Prepaid)

Source: Cignal Exhibit 15: Subscriber Growth of SKYcable in ‘000s (2012 – 2013)

1,000 3.5.3 Cablelink 900 Cablelink is a smaller pay-TV operator with 800 800 720 subscription-based cable antenna television system 700 operations in southern cities of Metro Manila. It is Cignal 600 owned by Cable Link and Holdings Corporation. 500 Formerly known as Conception Pay-TV Network, it 400 300 started its cable television (CATV) operation in 1995. 200 In 2004, Cablelink launched its broadband Internet 80 100 60 service known as i-Blaze Cable Internet. 0 2012 2013 3.5.4 Dream Satellite TV (Dream) Cable Broadband Dream was the first all-digital DTH television

Note: Subscriber numbers include the 200,000 subscribers broadcasting service via satellite in the Philippines. In acquired from Destiny Cable April 1997, Dream was incorporated as the Philippine Source: SKYcable Multi-Media System, Inc. (PMSI). In 1998, PMSI was granted a 25-year franchise term for television and radio broadcasting in the Philippines. On April 22, 3.5.2 Cignal 2001, the commercial launch of Dream Broadcasting Cignal, which was launched in 2009, is the leading System, the first DTH system in the Philippines, took DTH satellite provider in the Philippines. Cignal is a place. service under MediaScape Inc., which is a subsidiary of MediaQuest Holdings, the media partner of the Dream broadcasts from the Dream Broadcast Center PLDT Group of Companies. located at the Clark Special Economic Zone in Pampanga. Currently, Dream offers a bouquet of 38 In the past two years, Cignal has been aggressive in TV channels and 10 radio channels, and has around growing its subscriber base. Its target is to reach 2 100,000 subscribers. million by end of 2018, from 600,000 currently.

Philippines in view 15 3.5.5 Global Satellite (G Sat) The following chart shows that this revenue is mainly G Sat is another DTH satellite pay-TV television from subscriptions. service in the Philippines. G Sat is owned by Global Broadcasting and Multimedia Inc. (GBMI) and First Exhibit 18: Philippine Pay-TV Revenue Split United Broadcasting Corporation, registered in in US$mn (2012) the Philippines with the Securities and Exchange Commission (SEC).

22% The group that owns G Sat is also engaged in satellite wireless transmission, WIMAX transmission, landline Total: transmission, satellite internet data transmission, US$ 280mn terrestrial television operation, broadband data service, content aggregation, production 78% and distribution, consolidation of telecom and broadcasting management. At present, G Sat offers 69 television channels (including 12 in HD) and 7 Subscriptions Advertising radio channels; it has around 40,000 subscribers.

Source: Company Reports, Venture Consulting Analysis 3.6 Revenue of Major Pay-TV Operators Based on publicly available data, pay-TV revenue is SKYcable’s revenue for the last few years is shown in expected to reach US$600 million by 2018, as shown the graph below. Its 13% CAGR is comparable to the in the graph below. 14% CAGR of the overall market revenue.

Exhibit 17: Philippine Pay-TV Revenue Forecast Exhibit 19: SKYcable’s Revenue in US$mn in US$mn (2012 – 2018) (2010 – 2012)

800 120 13% 100 14% 600 100 600 86 78 80

400 60 280 40 200 20

0 0 2012 2018 2010 2011 2012

Revenue CAGR Revenue CAGR

Source: Company Reports, BroadbandandTVnews.com, Venture Source: Company Reports, ABS-CBN, Venture Consulting Analysis Consulting Analysis

By comparison, Cignal’s gross revenue in 2012 was US$53.4 million.

16 Philippines in view 3.7 Pay-TV Average Revenue Per 3.9 Pay-TV Distributors User (ARPU) Key pay-TV distributors are Content Programs Inc. At present, SKYcable has reported an ARPU of US$14 (CPI), Accion, and Cableboss. per month for pay-TV and US$25.5 per month for its broadband service. Cignal has reported ARPU of 3.9.1 Cable Box Office Shows (Cableboss) similar US$13.4 per month for its postpaid service Cableboss is the largest program distributor, which and US$5.8 for its prepaid service. However, MPA has been in operation for 20 years. It is split into has estimated a national pay-TV ARPU of US$11.1 in Cableboss and OMNI, with the latter handling the 2012, as seen in the exhibit below. distribution of Fox, Setanta, and Jinx, among others. Overall, it has around 500 operator affiliates.

Exhibit 20: Philippine Pay-TV Monthly ARPU in Cableboss is the only distributor with a dedicated unit US$ (2008 – 2013) for fingerprinting to combat signal theft. Cableboss has no overlap with Accion, as they hold different 14.0 1% program distributions. 12.0 11.3 10.8 10.8 10.8 10.9 11.1 Advertising 10.0 3.9.2 Accion 8.0 Accion is a program distributor, which offers pay-TV and Internet services. It has been in operation since 6.0 1993 and its market is mainly provincial, with around 4.0 380 operator affiliates in the country. 2.0

0 While having Internet services, Accion’s main 2008 2009 2010 2011 2012 2013 segment of business is still cable TV distribution. It is in operation in key cities, particularly Olangapo, ARPU (US$) CAGR Zambales, Lucena, Quezon, and Batangas. Accion

Source: MPA has started to go digital in 2013, with Zambales being the first to digitise.

Overall ARPU of the pay-TV market is expected to Accion goes around the provinces per quarter to grow at a 14% CAGR over the next five years. liaise, as well as to conduct regular conventions for smaller operators. 3.8 Pay-TV Postpaid and Prepaid Business Model 3.9.3 Content Programs Inc. (CPI) The ABS-CBN group’s pay-TV operation content 3.8.1 Cignal production is handled by CPI, a subsidiary, which Cignal uses both prepaid and postpaid models. Of its operates, distributes, and handles the ad sales of gross revenue of US$53.4 million in 2012, 55% came seven channels, as well as its pay-per-view (PPV) from its postpaid service and 45% from its prepaid services. The details of the content and distribution of service. Cignal’s aim is to encourage its subscribers CPI can be found in Appendix 9. to migrate from prepaid to postpaid services.

A list of Cignal’s offered prepaid tariffs is in Appendix 8.

Philippines in view 17 3.10 Pay-TV Content and Programming international, while the top rated movies are those The top rated programmes are in entertainment and that are local. The lack of competition from local kids have generally been children’s shows and movies. programming may be one reason why international The most popular kids programmes are those that are content achieves high ratings.

Exhibit 21: Ratings of Top Philippine Cable TV Channels

Ratings of Top Cable TV Channels From Jan to Mar 2013 (in ‘000s)

Content Provider: 100 91.1 Movies (Entertainment) Drama (Entertainment) 75 69.3 Kids 61.9 55.8 Sports 50 47.6 43.8

25 18.7 18.5 16.1

0 Cinema Cartoon Pinoy Box Disney Star Movies HBO Nickelodeon Disney Basketball One Network Office Junior TV

Content Time ABS-CBN Turner VIVA Disney FOX Viacom Disney Solar Provider: Warner

Local Content Provider International Content Provider

Source: Kantar Media

Exhibit 22: Top Pay-TV Programmes

Top Kids’ Programme on Cable TV Top Movies on Cable TV Jan-Mar 2013 Jan-Mar 2013 S/N Programme Channel Rating (‘000) S/N Programme Channel Rating (‘000) 1 The Pink Panther Show Cartoon Network 169.6 1 Home Sic Home Cinema One 315.2 2 Dragon Riders of Berk Cartoon Network 168.8 2 Ala Eh... Con Bisoy Hale-Hale Cinema One 299.7 3 Pokemon: Black and White Cartoon Network 126.6 3 Supahpapalicious Cinema One 279.1 4 Paddle Pop Kombatei Cartoon Network 126.2 4 Pera O Bayong (Not Da TV) Cinema One 278.2 5 Otso-otso Pamela-mela Wan Cinema One 272.7 5 Power Rangers Samurai Cartoon Network 119.5 6 Home Along Da Riles Cinema One 268.7 6 The Power Puff Girls Cartoon Network 109.1 7 Ang Pulubi At Ang Prinsesa Cinema One 267.2 7 Oggy and the Cockroaches Cartoon Network 103.9 8 Marami Ka Pang Kakaining Bigas Pinoy Box Office 262.8 8 Ninjago Masters of Spinjitzu Cartoon Network 103.5 9 Guwapings: The First Adventure Cinema One 258.3 9 Mr Beat – The Animated Series Cartoon Network 103.1 10 Enteng Ng Ina Mo Cinema One 253.8 10 Paddle Pop Elemagika Cartoon Network 102.7 11 Dobol Trobol Lets Get Redi 2 Rambol! Cinema One 252.0 11 Tom and Jerry Show Cartoon Network 101.1 12 Costales Cinema One 245.8 12 Fish N Chips Cartoon Network 100.7 Enteng Kabisote 4: Okay Ka Fairy 13 Cinema One 245.7 13 Courage The Cowardly Dog Cartoon Network 99.8 Ko... The Beginning of the Legend 14 The Tom and Jerry Show Cartoon Network 95.6 14 Born To Love You Cinema One 245.3 15 Dragons Riders of Berk Cartoon Network 95.4 15 Mr Darling Domestic (Greyt Eskeyp) Cinema One 241.5

Note: *The top rated foreign movie, Kung Fu Hustle (on Star Movies), garnered rating of 222k. In comparison, the 15th placed local movie garnered rating of 241.5k Source: Kantar Media (by Average Ratings)

18 Philippines in view Exhibit 23: Genres Offered by Major Pay-TV streaming for FTA programming, as well as the FOX Operators Premium Play VOD service for SKYcable subscribers

SKYcable Cignal who have FOX Movies Premium HD. Movies Movies Sports / Men Sports Exhibit 24: SKYcable Channel Split (2013) Kids Kids Learning Educational / Documentary 100% 5% Music Music 15% General Entertainment General Entertainment 80% 27% 21% News News / Information 5% Lifestyle / Women Lifestyle 60% 9% 11% 3% Religious Religious 40% Embassy Channel Foreign Channels Chinese Channel 53% 52% 20% Source: SKYcable, Cignal 0% Local Channels International Channels HD channels are offered by both operators. Genres with HD counterpart are usually movies, sports, Others News/ Information kids, and general entertainment. Both operators Sports Kids Entertainment rebroadcast FTA channels. Source: SKYcable, Philippine Daily Inquirer, LinkedIn, GMA News, BusinessWeek, Venture Consulting Analysis Details such as channel lists and pricing bundles of the two major pay-TV operators are in Appendix 8. 3.10.2 Cignal Channels 3.10.1 SKYcable Channels Much like its rival, 70% of Cignal’s channels are The majority, 70%, of SKYcable’s channels are international and most of the channels are devoted international channels. 95% of these are acquired to entertainment programming. The breakdown directly from content providers with minimum is 64% entertainment, 10% kids, 16% news and guarantee and revenue share agreements in place. documentary, and 10% sports. SKYcable then negotiates for advertising space on the channels, specifically as much as a few minutes Cignal was the first to get into HD, with 19 channels per hour. Alternatively, it may have revenue share currently on high definition, and currently offers agreements for advertisements that they sell for the access to online video-on-demand service through content provider. Parent ABS-CBN owns most local FOX Movies Premium Play for subscribers who channels broadcast on SKYcable’s network. purchase the FOX Movies Premium HD channel.

Among all SKYcable channels, 52% are entertainment based, 25% are news and documentary, 9% are kids, 6% are sports, and the remaining 8% are the a mix of the other categories.

Forty of SKYcable’s channels are broadcast in HD. Currently, video-on-demand (VOD) services are only available through iWanTV’s online on-demand

Philippines in view 19 An additional emerging concern to the pay-TV Exhibit 25: Cignal Channel Split (2013) industry is Internet-based piracy, specifically as a result of the arrival in the market of Android-based 100% 5% “black boxes,” many of which tap Internet program 21% 16% streams originating in China. These boxes carry 80% 7% feeds of at least 500 channels and can easily be 14% 60% bought online or in electronics shops for as little as US $200 to US $400 for a year or two of usage, with 40% 79% subsequent years’ access charged at a much lower 58% maintenance fee. Although some of the sellers have 20% been reported to content providers and even to the regulator, NTC, these unlicensed and unregistered 0% Local Channels International Channels boxes continued to be available in the Philippines.

Others News/ Information Sports Kids Entertainment

Source: Company Reports, ABS-CBN, Venture Consulting Analysis

3.11 Piracy in the Philippine Pay-TV Market Piracy has been a longstanding problem for the Philippine media industry. In the pay-TV sector, the two main forms of piracy have historically been unauthorized distribution/underreporting and individual signal theft. Signal theft on an individual basis is gradually being reduced (as progressive digitization of networks makes individual theft more difficult, and as a new law against signal theft was enacted in 2013), but unauthorized distribution and underreporting by cable operators remain substantial problems.

20 Philippines in view 4 Overview of Philippine Free- To-Air (FTA) Broadcasting

This section sets out the FTA players’ backgrounds, programming. ABS-CBN’s pay-TV operation is run as well as their content, programming offerings, and by SKYcable, the largest pay-TV operator in the channel production. Philippines. Currently, SKYcable is seeking to add to its cable operations, and is vying for a DTH operation 4.1 Main FTA Broadcasters license with a pending application with the National Telecommunications Commission (NTC). 4.1.1 ABS-CBN Corporation ABS-CBN Corporation is the leading multimedia ABS-CBN engages in content production through conglomerate in the Philippines, with operations two wholly-owned subsidiaries, Star Cinema and in FTA broadcasting and pay-TV services. ABS- Creative Programs Inc (CPI). Star Cinema produces CBN, which started airing TV programmes in FTA TV programming, such as local dramas, while 1953, controls two FTA channels, specifically CPI provides content for SKYcable and other affiliate ABS-CBN Channel 2 and Studio 23. ABS-CBN cable operators around the country. targets Filipino households and focuses mostly on local entertainment, particularly drama and news

Exhibit 26: ABS-CBN Corporation’s Key Business Interests and Assets

Pay-TV Content Radio Publishing Content FTA Operations Telephony Operations Production Operations Business Syndication

100% 55% 100% 100% 100%

ABS-CBN Star Cinema ABS-CBN SKYcable DZMM Channel 2 and TV Publishing

(FTA Network) (Pay-TV Platform) (Content Producer) (Radio Network) (Publishing House) 100% 100% 100% 100% 100% 100%

Creative ABS-CBN ABS-CBN Studio 23 Star Recording DWRR Programme Inc. International Convergence

(FTA Network) (Cable Channels (Record Labels) (Radio Network) (Intl. Sales) Owner and Content Producer)

Source: ABS-CBN, Reuters, Venture Consulting Analysis

Philippines in view 21 ABS-CBN has significant broadcasting capabilities and content production resources. It owns 22 studios, Exhibit 28: ABS-CBN’s Net Revenue in US$mn 15 of which are in Metro Manila, while six are in other (2007 – 2012) areas in the Philippines and one in San Francisco, USA. It also owns 32 editing and production suites 800 and multiple offsite production vans. 8% 558 600 555 501 As a major FTA network, ABS-CBN derives most 446 441 398 of its revenue from advertising. ABS-CBN’s 400 subscription revenues are primarily derived from cable TV subscription to SKYcable packages, as well 200 as subscriptions to ABS-CBN channels in overseas markets. The split is shown in the following exhibit. 0 2007 2008 2009 2010 2011 2012 Exhibit 27: ABS-CBN’s Gross Revenue Split in Revenue CAGR US$mn (2012) Source: Osiris, MPA

4.1.2 GMA Network

40% GMA Network is a private multimedia conglomerate USD – $718mn that is known for its FTA channels in the Philippines.

60% It controls two FTA channels, GMA Network and GMA News TV, and started airing in 1961. Like its closest rival, ABS-CBN, GMA focuses on local entertainment and news programming targeted at Filipino households.

Advertising Revenue Subscription Revenue In addition to FTA broadcasting, GMA also Source: ABS-CBN, Venture Consulting Analysis produces its own content under two wholly-owned subsidiaries, specifically Citynet Network Marketing and Productions, as well as GMA Network Films. In terms of television ad spend market share, ABS- Citynet Network Marketing and Productions provides CBN commands the largest portion at 45% in the first programming for its TV channels, while GMA Network half of 2012. Films produces movies for distribution.

ABS-CBN has performed relatively well over the past few years, with a growth of ~8% p.a. The reported revenue decline in 2011 was largely due to a fall in advertising revenue, attributed by management to the bearish economy.

22 Philippines in view Exhibit 29: GMA Network’s Key Business Interests and Assets

Content Radio Content FTA Operations Production Operations Syndication

100% 100% 100%

GMA Network DZBB Super GMA Network 100% Films Radyo

(FTA Network) Citynet Network (Content Producer) (Radio Network) Marketing and GMA Worldwide 100% Productions 100% 100% (Content Producer; (Intl. Sales) GMA News TV television) GMA Records Barangay LS

(FTA news channel (Record Labels) (Radio Network) of GMA Network)

Source: GMA, Venture Consulting Analysis

GMA derives the majority of its revenue from GMA’s revenue growth of – 5% p.a. was less than “advertising related to television broadcasting” and that of its major competitors. Further, GMA has an acknowledges that it needs to “diversify its revenue ad spend market share of 34% in the first half 2012, base beyond advertising”. Expectedly, GMA has behind ABS-CBN. significant broadcasting capabilities with – 38% of its Property, Plant and Equipment Assets, which was at – US$65 million in 2011, coming from broadcasting and Exhibit 31: GMA’s Net Revenue in US$mn related equipment. (2007 – 2012)

400 GMA’s involvement in the pay-TV sector is confined to distribution of a small bouquet of channels led by its 4% flagship “Pinoy Channel” in overseas markets. 300 243 254 232 223 204 211 Exhibit 30: GMA’s Gross Revenue Split in 200 US$mn (2012)

8% 100

0 2007 2008 2009 2010 2011 2012 USD – $315mn Revenue CAGR

Source: GMA, Osiris, Media Partners Asia (MPA)

92%

Advertising Revenue Production Revenue and Others

Source: GMA, Venture Consulting Analysis

Philippines in view 23 4.1.3 TV-5 PLDT is the incumbent telecom operator in the Founded in 1960 and formerly known as ABC 5, Philippines and operates mainly in the mobile TV-5 was relaunched in 2008. Together with its sister and fixed communications businesses. PLDT channel, Aksyon TV, TV-5 is controlled by Mediaquest, has substantial interests in the media sector via which is affiliated with PLDT. Similar to its larger MediaQuest Holdings, a media conglomerate that is rivals in FTA broadcasting, TV-5’s FTA channels focus wholly-owned by PLDT’s retirement and trust fund. on local entertainment and news programming. They Apart from operating two FTA channels, Mediaquest also produce some of their content in-house. also owns cable pay-TV operator, Cignal.

Exhibit 32: PLDT’s Key Business Interests and Assets

PLDT Company

Pay-TV Telecoms FTA Company Operations

100% 100%; via ABC Holdings 100%; via ABC Holdings

TV5 Cignal

PLDT Smart Digital1 (FTA Network) (Pay-TV Platform) 100%; via ABC Holdings (Fixed Telecoms) (Mobile Telecoms) (Fixed and Mobile Telecoms) Aksyon TV

(FTA Network)

Note (1) Digtel owns Sun Cellular, a mobile operator in the Philippines: (2) While PLDT has no major content production subsidiary, TV 5 produces some of their own programming Source: PLDT

PLDT derives most of its revenue from its mobile business. Its revenue profile reflects the importance Exhibit 33: PLDT’s Gross Revenue Split in of mobile to PLDT. Revenues from PLDT’s interest US$mn (2012) in media, such as TV-5 and Cignal Digital TV, are not 5% consolidated into PLDT’s group revenue because they are deemed to be subsidiaries of PLDT’s retirement fund. 35% Total: US$3912 mn TV 5 earned net revenues of US$98 million and Cignal earned revenues of – US$ 30 million in 2012. 60%

Wireless Fixed Lines Business Process Outsourcing

Source: PLDT, Venture Consulting Analysis

24 Philippines in view PLDT’s TV-5 has quickly gained traction to become 4.1.4 Solar Entertainment Corporation a serious player in the media industry. In line with Solar Entertainment Corporation is a private media increase in net revenue, TV-5’s share of advertising group providing TV broadcasting and content revenue among FTA broadcasters rose from 3% in production services, which started operations in 2001. 2010 to 7% in 2011, and to 11% in 2012, with a net As an operator that offers content to both FTA and revenue CAGR of 215% since launch in 2009. pay-TV platforms, Solar’s focus is to be the leading content provider in the industry, while also being involved in TV broadcasting, film distribution, and pay- Exhibit 34: TV-5 Net Revenue in US$mn (2009 TV distribution. – 2012)

98.3 100 In film distribution, Solar is the local affiliate of 219% United International Pictures. As for pay-TV, Solar distributes eight cable channels of its own, and also acts as the channel distributor and advertising sales representative in the Philippines for Diva Universal, 50 41.3 Universal Channel, and Syfy.

18.2 The general content focus of the company is centred

3.0 on sports and entertainment. However, more recently, 0 Solar has begun incorporating news as one of its main 2009 2010 2011 2012 content offerings. Solar News is currently the only Revenue CAGR provider of English language news on Philippine FTA.

Source: Osiris, MPA Solar Entertainment had revenues of – US$50 million in 2012.

Exhibit 35: Solar Entertainment Corporation’s Key Business Interests and Assets

Solar Entertainment

Pay-TV Content FTA Operations Operations Production

Buys block time 35% 100% 100% on RJTV1 Solar Solar ETC Entertainment Entertainment Jack City (FTA Network) (Cable Channels3 (Content Producer) (FTA Network) owner) 100% Buys block time on BEAM2 Solar News Note: (1) RJTV is a small free-to-air television and radio network operator (2) BEAM is a small free-to-air television operator based in Manila 2nd Avenue (FTA Network) (3) Operates 8 channels but with limited viewership – Basketball TV (FTA Network) (local and international sports), Blink Cinema (international movies), Jack TV (entertainment), Shop TV; HSN (home shopping), Solar All Access (pay-per-view Fixed Lines international sports), Solar Sports (local and international sports), NBA Premium TV (international sports), The Game Channel (entertainment) Source: PLDT, Venture Consulting Analysis Source: Reuters, Venture Consulting Analysis

Philippines in view 25 4.2 FTA Content and Programming The sister FTA channels show local content only, Content among flagship FTA channels is focused predominantly local news, with the exception of mainly on local programming, particularly local Studio 23, which has a more entertainment-based entertainment and local news. International line-up and includes some international content. content on these channels is mainly comprised of A similar content split for each flagship and sister entertainment and kids programs. FTA channels could be seen in Appendix 4 and Appendix 5.

Exhibit 36: Content Split of Flagship FTA Channels

ABS-CBN Ch 2 54% 25% 4% 6% 7% 3% 1%

Studio 23 31% 8% 9% 28% 13% 11%

GMA Network 52% 12% 16% 20%

GMA News TV 19% 72% 1% 8%

TV-5 28% 27% 1% 26% 18%

Askyon TV 39% 61%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Local Entertainment Local News/Info Local Kids Local Sports Intl. Entertainment Intl. News/Info Intl. Kids Intl. Sports

Source: Venture Consulting Analysis

It is quite evident that local entertainment A list of top FTA programs, as well as a table of programming has widespread appeal in the the programming propositions of the different Philippines, as this category has dominated the list of FTA channels could be seen in Appendix 6 and most popular FTA programmes, with ABS-CBN being Appendix 7. the top provider of these shows.

26 Philippines in view 5 Future Developments in the Philippine TV Industry

This section discusses future developments in the All major stakeholders are awaiting the rules and industry, including FTA migration from analogue regulations for DTT implementation, which will be to digital and its subsequent effect on pay TV, new released in a few months. developments expected from the existing players in the industry and a review of some emerging players. According to current plans, households in the Philippines are expected to complete the migration 5.1 FTA Migration to Digital from analogue to digital by 2018, provided switch-on On 6 November 2013, the government announced occurs by mid-2014. Given the delays experienced in that it had selected the Japanese Integrated Services the past, it seems likely that this deadline will slip. Digital Broadcast- Terrestrial (ISDB-T) as the national TV standard for digital terrestrial TV (DTT). While there have not been any DTT licenses formally awarded as yet, it is understood that all current FTA It stated that one of the deciding factors for choosing broadcasters are expected to receive a DTT license, the Japanese standard over the European DVB standard provided that they meet the investment requirements. was the emergency alert system built into ISDB-T for In addition, new entities may be licensed to provide mobile phones and television, as well as expected DTT services. Currently, NTC reports around ten lower costs for set-top boxes compatible with existing service provider applications have been filed. An television sets. indicative timeline is set in the following exhibit.

Exhibit 37: Indicative Timeline of Analogue to Digital Switchover

Pre-Implementation Implementation Activities 2010 2011 2012 2013 2014 2015 2016 2017 2018 Preparatory work and consultation with 1. stakeholders Establishment of the National DTTB 2. Committee and Migration Plan Approval of Migration Plan, Policy Issuances 3. and Transmission Standards Approval o fImplementing Rules and 4. Regulations 5. Piloting / Trial Phase 6. Digital TV Switch-on 7. Broadcaster Roll-out 8. Simulcast Period 9. Analog Switch-off Period Process Milestones Source: ITU, Interim NRT’s DTT Migration Plan and Proposed Milestones

Philippines in view 27 5.2 New Developments of Existing mobile, Internet, and media businesses, possibly Players setting up an integrated advertising strategy that would maximise all three. It has been reported 5.2.1 ABS-CBN and SKYcable that PLDT’s media blueprint is to own, produce, ABS-CBN wants to diversify its revenue sources and and provide content across multiple platforms, reduce its reliance on FTA advertising revenues. substantially broadening its role from basic telecom Recently, through ABS-CBN Convergence Inc., it services. has partnered with Globe, a major mobile network operator in the Philippines, in a convergence initiative Currently, PLDT is building on current investments of network sharing. The partnership enables ABS- of Mediaquest. It plans to further invest in TV-5, as CBN to deliver ABS-CBN content and offer traditional it budgeted ~US$120 million in 2013 to improve telecoms services on mobile devices. Globe will program line-up and expand nationwide coverage. provide capacity and coverage for this service on a nationwide basis. 5.2.3 GMA GMA intends to continuously improve its TV Apart from TV content broadcast on the mobile broadcast proposition with the launch of DTT platform, ABS-CBN also intends to develop digital channels. Currently, GMA is focusing on the content that is uniquely for mobile platforms, expansion of its broadcast network outside of Mega reflecting their insights on Filipinos’ content Manila and Luzon, while strengthening digital consumption on mobile. Subsequently, they intend to propositions, such as its online portals, PEP.ph and explore user-generated content. Spin.com. It may enter pay-TV in the future; however, it has not disclosed specific plans. SKYcable plans to continue to expand its digital cable network nationally, as well as its broadband Internet 5.2.4 Solar Entertainment network. Presently, SKYcable has migrated 99% of Solar Entertainment intends to launch DTT channels, SKYcable’s Metro Manila subscribers to digital set- likely to continue Solar’s focus on entertainment, top boxes, while the figure is at 60% for SKYcable sports, and news. provincial subscribers. These percentages do not include the newly acquired Destiny subscribers, as Meanwhile, Solar has created an online digital digital service to Metro Manila Destiny subscribers proposition; Omni Digital Media Ventures, a has only been offered in 2Q 2013. subsidiary of Solar Entertainment, has launched Blink in October 2013. Blink is an online platform catering 5.2.2 Cignal, TV-5 and PLDT to young, upwardly mobile 21 to 35 year olds. The As stated earlier, Cignal is trialling its TV-To-Go content initially available on Blink was comprised service, and it is expected to launch commercially in of 193 movie titles and 23 television titles from 1Q 2014. Paramount, The Walt Disney Company, CBS Studios, Sony Pictures, Warner Brothers, and 20th Century This is an IPTV-based pay-TV service, deployed over Fox. Blink offers PPV movies at US$4 per title with 48 PLDT’s fixed telecoms infrastructure. When bundled hours to watch, as well as a monthly subscription at a with broadband and voice services, PLDT can offer US$10 fee for television series. subscribers a “triple play” of services over a single connection to the home. Blink plans to increase content up to 800 hours of TV shows a month and 200 movie titles, including PLDT plans to create better synergies between its sports and regional content such as Korean dramas.

28 Philippines in view It is also projecting to expand into Malaysia and 5.3 Emerging Players and Services Indonesia in 2014 through joint ventures with Solar Apple TV, Google TV, Netflix, Hulu, Amazon, and Entertainment although no partnerships have been other international over-the-top (OTT) players are announced yet. not expected to be launched in the Philippines in the near future. OTT development will be hampered 5.2.5 Viacom International Media by broadband infrastructure constraints, as well as Networks Asia (VIMN) Content concerns about piracy. Localization VIMN has announced it will partner with Viva However, telecom companies have recognized that Communications Inc. in the local production, on- media is key, with smartphone activities playing ground events, marketing, and advertising sales of an increasingly significant role. This is especially MTV Philippines, which will be rebranded as MTV because of the Filipinos’ affinity for social networking, Pinoy by January 2014. as well as the country having strong growth potential for smartphones and tablets. MTV Pinoy is the only VIMN channel that has been localised collaboratively with a Philippine partner. Mobile network operators, such as Globe, may play a VIMN’s partnership with Viva started when Viva big role in the next few years, as they invest in higher was appointed as VIMN’s provincial distributor for speed (3G/4G) networks and seek other revenue Comedy Central Asia. sources. Currently, Globe is distributing mobile content through a partnership with ABS-CBN. VIMN is interested in accelerating localisation of its content for the Philippines. While it has announced collaboration with only Viva as of the present, it is also open to working with other appropriate partners as well.

Philippines in view 29 6 Technology in the Philippine Pay-TV Industry

This section covers the conditional access systems gain over DVB-S. It allows Cignal to accommodate (CAS) used by the pay-TV operators, as well as the both SD and HD TV broadcasts, including all corresponding satellite details used by DTH providers. interactive services available on their satellite TV service. With the supplement of video compression 6.1 SKYcable improvements, an MPEG – 4 AVC high definition SKYcable implements Digital Video Broadcasting- television (HDTV) service can be transported using Cable (DVB-C), a digital television signal transmission the similar bandwidth for DVB-S on MPEG-2 standard standard, through SKYcable Digital. Adoption of definition television (SDTV). For its encryption system, digital video broadcasting was an effort to curb cable Cignal uses Cisco VideoGuard in order to safeguard piracy and illegitimate connections. its content from signal piracy.

It also results in an improved viewing experience Cignal is broadcast from the SES-7 satellite; users for subscribers, providing sharper picture quality, require a 60cm dish. For its prepaid subscribers, customizable viewing preferences, and relevant Cignal uses the prepaid loading platform of its sister programming information through a real-time company SMART Communications. onscreen program guide and in-house mail function. 6.3 G Sat Skycable currently supports two different types of G Sat channels’ content is received from program digital boxes, using Irdeto or Verimatrix conditional providers, compressed and broadcasted via SES access technology. A PVR service is offered, and the New Skies NSS 11 using the DVB-S Standard. Users company markets its PVR service under the brand require 60 cm satellite dishes. iRecord. G Sat uses a CAS, with Conax technology, to secure 6.2 Cignal its content from signal piracy. Cignal Digital TV adopts the Digital Video Broadcasting-Satellite Second Generation (DVB-S2), 6.4 Dream a digital television broadcast standard succeeding Dream’s content is currently broadcast through the DVB-S system. Koreasat 5 (Mugunghwa 5) in DVB-S and NTSC color format. Users require 55cm satellite dishes. Dream With an increased available bitrate over similar uses the IRD and the Nagravision 3 Encryption satellite transponder bandwidth, DVB-S2 provides System. better performance than earlier digital television broadcast standards, particularly a 30% performance

30 Philippines in view 7 Advertising in the Philippine TV Industry

7.1 Consumer Affluence and Ability Exhibit 38: Average Monthly Expenses & to Spend Savings of Urban & Rural Filipino Households In 2013, there were about 20 million homes in in US$ the Philippines, comprised of an average four to five members, with 70% having children in their 600 560 respective homes. Urban citizens have an average 500 household income of PHP24,000 or USD$560 400 per month, while rural counterparts earn around 360 350 PHP15,000 or USD$350 monthly. Only two out of 300 ten Filipinos claim to have savings, as their overall 200 monthly household expenses reach PHP13,500 315 to PHP15,500 or USD$315 to USD$360, with food 100 200 expenses having the biggest share in the split at 0 35 PHP6,500 to PHP7,500 or USD$150 to USD$180 per Urban Rural month. As expected, urbanites spend more than Average Monthly Overall Expense their rural counterparts. However, when taken as a Average Monthly Balance After Expenses proportion of income, Filipinos in urban areas actually Source: Kantar Media, TNS Philippines, and Kantar World Panel spend less than the rural dwellers who spend more Information than 92% of their monthly income. Despite living in the provinces, rural Filipinos spend almost the same amount on food, with less than PHP1,000 or USD$23 Filipinos have been found to spend on milk products, difference with their urban counterparts’ monthly snacks, laundry products, food seasonings, coffee, food expenditure. canned goods, noodles, and hair care products. For both urban and rural Filipinos, the overall top must- have product category is milk products, with each urban and rural home spending PHP1,400 or USD$33 and PHP900 or USD$21 respectively per quarter on said category. Other popular categories are baby care and alcoholic beverages, which rank considerably high in the ‘spend per buyer’ figures.

Philippines in view 31 Exhibit 39: Top Purchased Product Categories for is approximately 3 to 4 million. In 2012, 80% of Urban and Rural Filipinos transactions in the country were conducted in cash,

Category Urban Rural as around 82% of Filipinos still do not have accounts Ranking with financial institutions. 1 Milk Products Milk Products 2 Snacks Snacks Exhibit 40: Sales of Filipino Household 3 Laundry Products Laundry Products Electronics and Appliance in US$mn 4 Food Seasonings Food Seasonings (2012 – 2013) 5 Coffee Coffee 2,800 6 Canned Goods Canned Goods 2,600 7 Noodles Noodles 2,400 9% 2,200 8 Hair Care Products Hair Care Products 2,000 5% 9 Household Care Cooking Oil 1,800 1,600 Products 1,400 1,200 2,400 10 Frozen Foods Soft Drinks 2,200 1,000 7% 1,900 2,000 Source: Kantar Media, TNS Philippines, and Kantar World Panel 800 600 Information 400 901 964 200 0 Overall, Filipinos, especially those in rural areas, Computer Sales TV Sales Handset Phone Sales are still attached to sachet marketing, which is a practice that promotes selling products in smaller 2012 2013 CAGR and more affordable sizes. This condones frequent Source: Business Monitor Data trips to purchase goods at lesser but more affordable volumes per trip. This Filipino mindset has allowed consumers to canvas and try different products and brands available to them and has given marketers 7.2 General TV Viewing Behaviour an avenue to test the loyalty of their consumers. Filipinos have strong affinity towards television Top categories for small but frequent purchases entertainment. Most people watch the television are snacks or biscuits at 26 to 31 trips, sauces and during weekdays for an average of five hours, in seasonings at 22 to 28 trips, and coffee at 20 trips per which time they can be reached by one of the over quarter. 8,500 advertisements aired daily on 136 television channels. An estimated 40% of Filipinos watch TV General sales for household electronics and during primetime. appliance staples reflect a growing disposable income for Filipino households. Computer sales have The demographics that strongly influence home seen robust double-digit growth in 2012, while mobile television viewing are housewives, and to some handset sales have made the Philippines a high extent, kids and teens. Housewives from rural areas regional growth market for smartphones. TV sales generally watch an hour less than urban housewives, have also grown, especially with increasing demand while rural kids and teens watch 45 minutes less than for flat-panel TV sets. their urban counterparts, according to reports by Kantar. Credit card penetration and vehicle ownership also reflect the level of the country’s consumer affluence. In terms of viewing pattern, rural housewives tend Credit card penetration is relatively low at 3%, which to watch between 6:30 to 8:00 PM, which is the

32 Philippines in view primetime period. They generally watch significantly These trends have strong marketing and media less television during the daytime, as well as after implications, as TV ads aired at the same time primetime. On the other hand, urban housewives’ nationwide are received by two different kinds of television viewing steadily climbs from 5:30 AM to viewers, with varying receptivity. As viewing peaks around 9:30 AM and goes on a steep ascent after and drops change, ad placement strategies must also 11:00 AM. Rural and urban kids have similar viewing shift accordingly. Filipino consumers and viewers in patterns in the morning, which lasts until 8:30 AM. Manila or urban Philippines should not be seen as However, the rural children watch less TV at noon and representative of the overall Filipino consumer and in the afternoon. They eventually pick up and surpass viewer. the urban children viewing between 5:30 PM and 8:30 PM, much like the rural housewives. Despite the increasing popularity of smartphones, tablets, and other portable media devices, the It is evident that television viewing is heavily Philippine market still prefers the TV platform to influenced by the ‘shape’ of the day. Generally, access news and entertainment. weekday and weekend programming are significantly similar for rural and urban Philippines, with two 7.3 Pay-TV and FTA in Relation to evident peaks, particularly the noontime and Philippine Social Strata primetime periods. Rural households generally view Given Philippine socio-economic environment, it is no less TV than urban ones during the daytime and surprise to find more affluent pay-TV subscribers as late at night, with their highest ratings at primetime. compared to FTA. The differences captured in weekly Urban counterparts peak later on both weekdays reach profile should influence advertisers’ decisions and weekends, as they tend to retire later than rural on TV ad spend. viewers. The overall average viewing time is five hours.

Exhibit 41: Pay-TV and FTA Weekly Reach Profile by Social Class (2013)

1%

9% 4% 18% 16%

31% Social class A/B Pay-TV FTA Social class C Social class D Social class E 56% 65%

Social Class A - Upper Class - executives, presidents, CEOs (>Php 100,000 / month) Social Class B - Upper Middle Class - professionals (Php 50,000-100,000 / month) Social Class C - Middle Class - white-collar jobs (Php 15,000-50,000 / month) Social Class D - Lower Middle Class - blue-collar/clerical jobs (Php,8,000-15,000 / month) Social Class E - Lower Class - living below the poverty line (

Philippines in view 33 The overall monthly reach for both pay-TV and FTA 7.4 Advertising Spend were relatively stable during 2008-2012 period. Philippines recorded actual media growth of 14% in 2012. However, time series analysis between 2009 and 2012 Media growth is projected to slow down in near term. shows that monthly reach of more affluent audiences has grown on both pay-TV and FTA. This might signal Exhibit 44: Media Growth in the Philippines affluent audiences’ increasing affinity to all TV. (2012-2014F) 20%

15% 14.0% Exhibit 42: Philippines TV Audience Monthly 12.4% Reach, All People (2009-2012) 10% In Millions 8.1% 50 45 5% 40 37.74 38.19 37.84 35.49 35 30 0% 2012 2013F 2014F 25 20 Source: Mindshare 15 9 10 10 10 8 Advertising spend in the Philippines amounted 5 to US$4 billion in the first half of 2013 based on 0 rate card revenue as shown below. This amount 2009 2010 2011 2012 is comprised of digital, as well as the trimedia of Pay-TV FTA television, radio, and print.* Source: Kantar Media People Meter* Among all media, TV has the highest share, with US$3 billion, followed by radio with US$706 million. Print has Exhibit 43: Philippines TV Audience Monthly a small share of US$136 million, while digital, despite Reach, Affluent Audience (2009-2012) its infancy, has a respectable share of US$130 million.

In Millions 8 7.37 Exhibit 45: Advertising Expenditure in the 6.80 Philippines by Media in US$bn 6.11 5.88 (1st Half of 2013) 6 4,500 4,014 4,000

4 3.37 3,500 3.19 3,042 2.70 2.46 3,000 2 2,500 Cost of Advertising Expenditure 2,000 1,500 0 2009 2010 2011 2012 1,000 706

Pay-TV FTA 500 136 130 0 Source: Kantar Media People Meter* Total TV Radio Print Digital * All Kantar Media People Meter data is based on survey panel of Note: *Costs are based on published rate cards 2,609 homes and is considered representative of 75M individuals For TV and radio, OBBs, CBBs, and freeforms are excluded in the Philippines Source: Kantar Media

34 Philippines in view However, according to Mindshare, the actual spend in Within the TV industry, the three major FTA channels 2013 is expected to be – US$3 billion for the full year. cover almost 87% of the total ad spend by FTA channels in 2012.

Exhibit 46: Share of Ad Spend by FTA Channels 50% 43.0%

40% 33.5%

30%

20% Cumulatively sum up to 12.5%

10.9% 10% 5.1% 2.2% 1.8% 1.7% 1.0% 0.4% 0.2% 0% ABS-CBN GMA TV5 ETC (RPN) IBC RJTV GNTV STUDIO 23 SOLAR NBN

Source: Kantar Media; Media Partners Asia; MegaTam, Company Reports, Venture Consulting Analysis

7.5 Key Advertisers and Future which is led by hair care products, as well as Trends detergents and laundry aids. At 9.09% share, hair In the Philippines, key advertised categories on TV care, with the highest advertising share on Philippine tend to be fast moving consumer goods (FMCG), TV, amounts to US$2.8 million.

Exhibit 47: Advertising Share of Top Advertised Categories on Philippine TV (1st Half of 2013)

9.09% 8.52% % Share of Top Advertised Categories on TV

5.43%

4.35% 4.25% 3.60% 3.24% 3.15% 2.89% 2.82%

Facial Care Detergents & Milk Powder Products Hair Shampoo Entertainment Laundry Aids Hair Conditioner and Toothbrush Public Utilities Wireless TelephonyMiscellaneous Food Toothpaste, Mouthwash,Government Agencies &

Note: *Costs are based on published rate cards For TV and radio, OBBs, CBBs, and freeforms are excluded Source: Kantar Media

Philippines in view 35 Correspondingly, as for top advertisers, companies companies. This is determined through monitoring an that sell consumer goods take the biggest share on average of 250,000 commercials shown per month. Philippine TV followed by processed food and fastfood

Exhibit 48: Advertising Share of Top Advertisers on Philippine TV (1st Half of 2013) 16.04%

11.77% Consumer Goods Food Processing and F&B Others 7.56% 6.20%

3.44% 1.76% 1.73% 1.51% 1.19% 1.14 %

Nestle United Unilever

MondeCorporation Nissin Mead Johnson Cream, Inc. CorporationJollibeeCorporation Foods Procter & Gamble Colgate-Palmolive Unilever RFM IceUniversal Robina Philippines, Inc.Philippines, Inc.Philippines, Inc.Philippines, Inc.Laboratories, Inc. Philippines, Inc.

Note:*Costs are based on published rate cards For TV and radio, OBBs, CBBs, and freeforms are excluded Source: Kantar Media

In brands, Colgate toothpaste leads the ranking, goods as the top products with highest advertising followed by Palmolive shampoo with conditioner. share on TV. This corresponds to the findings that place FMCG

Exhibit 49: Advertising Share of Top Brands Advertised on Philippine TV (1st Half of 2013)

Detergent and Laundry Aids Hair Care Others 1.94% 1.80% 1.70% 1.57% 1.53% 1.47% 1.41% 1.36% 1.24% 1.22 %

Colgate Powder Powder SunsilkShampoo Hair Shampoo Toothpaste Palmolive Hair Detergents Surf Detergent CreamsilkConditioners Hair Ariel Detergent Nescafe Coffee Breeze Powder Selecta Ice Cream PalmoliveWith ShampooConditioner Note: *Costs are based on published rate cards For TV and radio, OBBs, CBBs, and freeforms are excluded Source: Kantar Media

36 Philippines in view 8 Regulation of the Philippine TV Industry

This section describes the regulations concerning the Self-Regulatory Bodies, and they are described in TV industry and the key stakeholders. turn.

8.1 Key Stakeholders in Philippine 8.1.1 Media Regulatory Bodies TV Regulation Roles and responsibilities of the Media Regulatory Key stakeholders are Media Regulatory Bodies and Bodies are set out below.

Regulatory Body Roles and Responsibilities National Telecommunications • Regulate and supervise radio and television broadcast stations, CATV, and pay television Commission (NTC) • Grant certificates of public convenience and necessity or provisional authority to install, operate, and maintain telecommunications, broadcast, and CATV services • Regulate the installation, operation and maintenance of radio stations both for private and public use, the provision of public telecommunications services • Monitor the operation of all telecommunications and broadcast activities • Enforce applicable domestic and international laws, rules and regulations, prosecute violation thereof, and impose appropriate penalties or sanctions Movie and Television Review and • Review and classify motion pictures, television programs and related promotion Classification Board (MTRCB) materials and commercials for TV and cinema, applying as general standard contemporary Filipino cultural values Others • Movies and programs shown by the television channels are reviewed and classified by the board. The board may suspend, reject or cancel programs, but cannot revoke broadcast licenses • MTRCB television classification ratings are set out in Appendix 15 Optical Media Board (OMB) • Regulate the manufacture, mastering, replication, importation and exportation of optical media • Issue licenses and handle registration of any person, establishment or entity that engages in one or more of the businesses or activities enumerated under the Optical Media Act

Intellectual Property Office (IPO) • Administer and implement the State policies declared in Republic Act (RA) 8293, known as the Intellectual Property (IP) Code of the Philippines • Examine applications and registrations to intellectual property owners of Copyright and Related Rights, Trademarks and Service Marks, Geographic Indications, Industrial Designs, and Patents

Philippines in view 37 A detailed depiction of each regulatory body’s 8.1.2 Self-Regulatory Bodies organisational structure can be seen in Appendix 10 Key self-regulatory bodies are set out below. to Appendix 14.

Regulatory Body Roles and Responsibilities Association of Broadcasters of • The foremost broadcast media organisation in the country, composed of owners and the Philippines (KBP) operators of terrestrial radio and television stations (Regular Members) and the radio and television stations themselves (Associate Members)

• Broadcast industry’s self-regulatory body which implements and enforces a code of conduct for terrestrial broadcast stations

Ad Standards Council of the • Handles screening of advertisements, with or without advertising claims. Philippines • Presides over hearing of disputes on advertisements which pertain to content of the advertisements.

• Provides resolution of dispute on advertisements arising from procedures of the ASC.

8.1.3 Industry Affiliates The key pay-TV industry affiliate is the PCTA, which is described below.

Regulatory Body Roles and Responsibilities Philippine Cable TV Association • Formed in 1987 by small independent cable television operators to promote and (PCTA) protect their interests, and to put the then infant cable television industry in the map of respected Philippine business

• Works closely with the NTC in formulating policies governing the industry

8.2 Current Regulations copyright owners. Pay-TV content owners seeking legal redress in the Philippines have been subject to 8.2.1 Intellectual Property arbitrary revocation of search warrants, and/or refusal Owners and distributors of broadcast programming of regional courts to deal with criminal copyright in the Philippines face twin obstacles in protecting IP charges against “influential” local persons. rights – a deficient legal framework and the lack of an effective enforcement system. National regulators, including the IPO and the Department of Justice, have taken some cognizance Legally, there are no specific protections accorded to of the problem; there have been proposals to establish broadcasters in the Philippines. Rather, the owners special courts to handle IP matters including in of the underlying channel content have the right to the broadcasting sector, but these have not been pursue legal action against IP breaches. implemented.

However, the country’s courts have proved unable For its part, the IPO has attempted to move forward, or unwilling to act against IP violations, even in establishing a Copyright Division to improve national the event of well-founded complaints from original policy focus on copyright issues, and using its

38 Philippines in view (limited) adjudication powers to defend IP rights, 8.2.3 Convergence Between Media and but it cannot bring to bear the criminal law (as the Telecoms judiciary could.) Officially, local laws prohibit telecom licensees from engaging in broadcasting services. Conversely, 8.2.2 Cable Piracy broadcast licensees are banned from offering The NTC and the IPO signed a Memorandum of telecoms services. The reality is somewhat different Agreement on cable piracy in 2006. Under the MoA, with telcos and broadcasters seeking to offer the NTC said it would “consider” revoking operating convergent services. licenses of provincial cable companies found by the IPO to be distributing pay-TV programming without In PLDT’s case, its media unit, MediaQuest Holdings, authorization. However, no test case has ever reached is owned not by the core business, but by a third the NTC. The IPO has effectively handled cable piracy party, the PLDT Retirement Fund. complaints in its quasi-judicial legal arm, the Bureau of Legal Affairs, but the high cost of bringing such Meanwhile, under the strict definition of the law, actions before the bureau has resulted in few cases PLDT’s cellular operation Smart Communications being heard. may not offer a broadcast service such as mobile TV. However, in mid-2007, Smart launched a mobile TV In turn, mass piracy of pay-TV programming by some platform in partnership with Mediascape, officially provincial cable operators is left virtually unchecked. only as a trial so as not to violate its license terms. There are hundreds of provincial pirate operators, using DTH receivers to feed illegal content to cable The ABS-CBN group has also had its share of license head-ends. A single box can feed thousands of victories. The firm reportedly lobbied the NTC to consumers. classify Internet services as a value-added service, as opposed to a basic telecom service, such as voice. Commercial and technological pressure, including This paved the way for the launch of SKYCable’s the remote shut-down of some illegal DTH receivers, residential cable Internet service. and the inability of many provincial operators to carry HD program signals, has helped to keep a lid Thus the major operators influencing the pay-TV on piracy. But legitimate operators face constraints sector are moving – as are similar companies in other on investments due to lost revenues and the need to economies – into more aggressive competition across “compete downwards” with pirate outfits. a range of sub-sectors.

Another problem that has weakened the sector is Regulatory policy has accommodated this movement, revenue leakage due to “cable theft” – the stealing of but regulatory officials and industry executives services from analogue cable systems by individuals acknowledge that this has occurred despite the who tap into the lines and pay nothing to the existing legal framework, and not because of it. The operator. National legislation to increase penalties key legal issue remains the differential classification for cable theft was stalled for seven years through of pay-TV players as media or telecom companies, three Congresses, but it finally passed and was with the resulting different applications of investment implemented in 2013. The law includes the possibility limits and operating rules. of jail sentences from 2 to 5 years for violations, and it will be interesting to see if the courts actually follow through.

Philippines in view 39 A draft bill known as the Convergence Bill has been in the way of economically rational new investments. stalled in Congress for more than a decade. The In sum, the current growth trend in Philippine pay- enactment of the Convergence Bill should allow TV documented in this report comes about because Foreign Direct Investment in pay-TV companies, at consumer demand is growing, and businesses find least. ways around the rules.

8.2.4 TV Over Internet There are currently virtually no regulations governing TV over Internet.1 NTC recognizes this as a void, but does not regard it as a priority, preferring to focus on issues surrounding digital conversion of the terrestrial broadcasting sector.

8.2.5 Market-Friendly Approach to Regulations The regulatory environment in the Philippines is largely permissive and facilitative.

The Philippines maintains a generally liberal regulatory environment for businesses, and this carries over into its approach to the pay-TV industry. There is no wholesale or retail rate regulation, no “landing rights” licensing requirement for channels, no imposition of exorbitant licensing fees on wholesale or retail providers, no restrictions on advertising revenue, and no government rules for tiered or bundled services offerings.

However, regulatory agencies are relatively weak – as noted above they have been unable to quell some of the malpractices that distort the industry – particularly with respect to intellectual property rights.

With the passage of time and increasing movement of video content over new modes of delivery, the regulatory system has not been able to keep up with the changes sweeping the industry. As a result, key players are launching “new media” initiatives to reach consumers in modern ways without having a clear view of the regulatory risk they might face. And the country’s slow-moving legislative process continues 1. For More Information on this, see CASBAA’s survey “A to place other obstacles (such as the constitutional Tilted Playing Field”, available at http://www.casbaa.com/ ban on foreign investment in cable-TV infrastructure) publications/regulatory

40 Philippines in view Appendices

Appendix 1

Number of Families by Number of TV Set Owned By Region in ‘000s (2010)

Region 1 2 3 4 5 6 7 Total

TOTAL 12,578 1,264 255 51 12 5 3 14,168

National Capital Region (NCR) 1,994 315 56 11 5 4 2 2,388

Cordillera Administrative Region (CAR) 222 8 1 2 - - - 233

Region I – Ilocos Region 819 59 10 1 - - - 889

Region II – Cagayan Valley 478 42 8 - 1 - - 528

Region III – Central Luzon 1,649 210 57 15 1 - - 1,932

Region IVA – CALABARZON 1,841 225 46 6 - 1 - 2,119

Region IVB – MIMAROPA 321 19 1 1 - - - 342

Region V – Bicol 605 64 13 1 1 - - 684

Region VI – Western Visayas 932 59 15 2 - - - 1,008

Region VII – Central Visayas 852 60 16 4 1 - - 934

Region VIII – Eastern Visayas 496 38 8 - 1 - - 543

Region IX – Zamboanga Peninsula 308 33 7 2 - - - 351

Region X – Northern Mindanao 514 34 8 3 - - - 559

Region XI – Davao 568 37 3 1 1 - 1 612

Region XII – SOCCSKSARGEN 452 32 3 - - - - 487

Region XIII – Caraga 275 22 3 1 - - - 301

Autonomous Region in Muslim Mindanao (ARMM) 252 7 - - - - - 259

Source: National Statistics Office, 2010 Annual Poverty Indicators Survey

Philippines in view 41 Appendix 2

Flagship FTAs and Sister Channels

Major Media Group FTA Channels and Target Segment(s) Ownership • Both channels are wholly-owned • Flagship Channel: ABS-CBN • Sister Channel: Studio 23

(targets Filipino households (targets youths) in general)

• Both channels are wholly-owned • Flagship Channel: GMA • Sister Channel: GMA News TV

(targets Filipino households (targets Filipino households desiring credible news in general) content)

• Both channels are wholly-owned via MediaQuest, an investee of PLDT’s retirement fund

(targets Filipino households (targets sports fans; male- • Flagship Channel: TV 4 in general) orientated content) • Sister Channel: Aksyon TV

Source: Company Reports, Venture Consulting Analysis

42 Philippines in view Appendix 3

Smaller Broadcasters in the Philippines

Private Free-To-Air Channels

1 2 3

Government Channels

People’s Television Network • Fully owned by the Philippines Government • Flagship government television network • Officially known as National Broadcasting Network • Airs news and public service shows and documentaries

Intercontinental Broadcasting Corporation • Fully owned by the Philippines Government via People’s Television Network • AKTV (owned by TV-5) airs sports coverage on the channel by buying block time

ETC (RPN) • Ownership: Philippines Government(20%), Solar Entertainment Corp (34%). Far East Managers and Investors Inc.(32%), and private investors(14%). • Airs content that is more targeted towards a female audience base

Note: (1) Solar buys block time on RJTV, a small free-to-air television and radio broadcaster, to air 2ndavenue (2) Jack City is owned by Broadcast Enterprises and Affiliated Media, Inc. and Solar Television Network. Solar also buys block time on BEAM, a small free-to-air television broadcaster, to air Jack City (3) Solar News Channel is a wholly-owned channel of Solar Entertainment Source: Company Reports, Venture Consulting Analysis

Philippines in view 43 Appendix 4

Content Split for Flagship FTA Channels

ABS-CBN Content Split (%) GMA Content Split (%)

Total:100% Total:100% 84%

25% 64% 1% 4% 12%

36%

54% 52% 16% 20% 3% 7% 16% 6% Local International Local International

Entertainment Kids Entertainment Kids

Sports News/ Information Sports News/ Information

Source: Company Reports, Venture Consulting Analysis Source: Company Reports, Venture Consulting Analysis

TV 5 Content Split (%)

Total:100%

56% 44% 27% 18% 1%

28% 26%

Local International

Entertainment Kids

Sports News/ Information

Source: Company Reports, Venture Consulting Analysis

44 Philippines in view Appendix 5

Content Split for Sister FTA Channels

Studio 23 Content Split (%) GMA News TV Content Split (%)

Total:100% Total:100%

GMA News TV does not have international 52% 48% content 72% 8% 11% 9% 13%

31% 28% 8% 1% Local International 19%

Local Entertainment Kids Entertainment Kids Sports News/ Information Sports News/ Information

Source: Company Reports, Venture Consulting Analysis Source: Company Reports, Venture Consulting Analysis

Aksyon TV Content Split (%)

Total:100% Aksyon TV does not have international content

61%

39%

Local

Entertainment Kids

Sports News/ Information

Source: Company Reports, Venture Consulting Analysis

Philippines in view 45 Appendix 6

Top FTA Programmes

Top 20 FTA Programmes During Primetime Weekday Jan-Mar 2013 Rank Programme Type Network Rating (%) 1 Juan Dela Cruz Local Drama ABS-CBN 24.02 2 Ine Kapatid Anak Local Drama ABS-CBN 22.35 3 Juan Dela Cruz Ang Simula Local TV Special1 ABS-CBN 21.41 4 Pricess and I Local Drama ABS-CBN 19.92 5 TV Patrol Local News ABS-CBN 17.46 6 Aryana Local Drama ABS-CBN 16.08 7 Apoy Sa Dagat Local Drama ABS-CBN 15.89 8 Indio Local Drama GMA 12.51 9 Kahit Konting Pagtingin Local Drama ABS-CBN 11.42 10 Aso Ni San Rogue Local Drama GMA 11.39 11 A Beautiful Affair Local Drama GMA 10.95 12 Mundo Mo’y Akin Local Drama GMA 10.67 13 Pahiram Ng Sandali Local Drama ABS-CBN 10.45 14 Temptation of Wife (Pinoy Version) Local Drama GMA 10.37 15 Little Champ Local Drama ABS-CBN 10.37 16 24 Oras Local News GMA 10.26 17 Kailangan Ko’Y Ikaw Local Drama ABS-CBN 10.21 18 Parca Ang Kuwento Ni Mariposa Local Drama GMA 8.34 19 Smile, Dong Haw Korean Drama2 GMA 6.74 20 Kahit Puso’y Masugatan Local Drama ABS-CBN 6.48

Top 20 FTA Programmes During Weekend Jan-Mar 2013 Rank Programme Type Network Rating (%) 1 Wansapantayam Local Drama ABS-CBN 20.93 2 Nmk Ang Tahanan Mo Local Movies ABS-CBN 20.35 3 Pilipines Got Talent Local Talent Show ABS-CBN 19.36 4 Rated K Hands Na Ba Kayo? Local Lifestyle ABS-CBN 18.96 5 Kapamilya Deal or No Deal Local Game Show ABS-CBN 16.44 6 Goin’ Buliit Local Comedy ABS-CBN 16.05 7 Kapuso Mo, Jessica Soho Local Lifestyle ABS-CBN 15.88 8 Magpakailanman Local Documentary GMA 15.05 9 Pepito Manaloto Ang Tunay Na Kuwento Local Comedy GMA 14.54 10 Vampire Ang Daddy Ko Local Comedy GMA 13.34 11 Masterchef Pinoy Edition Live Cook Off Local Talent Show ABS-CBN 13.17 12 Sarah G Live Local Music ABS-CBN 12.53 13 Kapuso Movie Night Local Movies GMA 10.41 14 Gandang Gabi Vice Local Comedy ABS-CBN 9.63 15 Kap’s Amazing Stories Local Documentary GMA 9.07 16 TV Petrol Weekend Local News ABS-CBN 8.96 17 Eat Bulaga! Local Variety Show GMA 8.59 18 Kepuse Movie Festival Local Movies GMA 8.36 19 Pinoy Pride XVIII World Champion vs World Champion Korean Sports ABS-CBN 8.33 20 Toda Max Local Comedy ABS-CBN 8.02

Source: Kantar Media, Venture Consulting Analysis

46 Philippines in view Appendix 7

Programming Proposition of FTA Channels

ABS-CBN Studio 23 GMA Network GMA News TV TV-5 Askyon TV Ch 2 Ownership ABS-CBN GMA PLDT (via MediaQuest) Target Filipino Filipino Youths Filipino Filipino Filipino Filipino Segment Households Households Households Households Households Broadcast Linear Linear Linear Linear Linear Catch up online Format Catch up online Broadcast Tagalog Tagalog Tagalog Tagalog Tagalog Tagalog Language English English English English English English Content Local Local Local Local Local Local Origin Asian International Asian International International International International International Genre News Dramas News News News News Documentaries Comedy Documentaries Documentaries Documentaries Documentaries Dramas Educational Dramas Dramas Dramas Dramas Comedy Religious Comedy Entertainment Comedy Comedy Entertainment Sports Entertainment Religious Entertainment Entertainment Music Music Religious Educational Educational Educational Kids/ Cartoons Sports Religious Religious Kids/ Cartoons Programming Weekday: 21hrs Weekday: 17hrs Weekday: 21.5hrs Weekday: 20hrs Weekday: 20hrs Weekday: 20hrs Hours Weekend: 20hrs Weekend: 18hrs Weekend: 21hrs Weekend: 19hrs Weekend: 19hrs Weekend: 20hrs

Source: Venture Consulting Analysis

Philippines in view 47 Appendix 8

Pricing Bundles and Channel List of Pay-TV Operators

SKYcable Channel List and Cable Price Bundles

Monthly Postpaid Subscription Plans Channels Dual-Def Dual-Def Dual-Def Dual-Def Bronze Bronze Silver Gold Chinese 499 999 1799 1999 299 499 830 1050 400 MOVIES Blink Cinema One • Fox Action Movies Fox Family Movies HBO MAX PBO Star Movies SPORTS / MEN Balls • BTV Fox Crime Fox Sports Jack TV KIX Manila Jockey Club Solar Sports Star Sports KIDS Animax * Cartoon Network Disney Channel Disney Junior Hero TV • Nickelodeon Toonami LEARNING Animal Planet Biography Discovery Channel History Knowledge Channel • Nat Geo Wild National Geographic Travel Channel

48 Philippines in view SKYcable Channel List and Cable Price Bundles Monthly Postpaid Subscription Plans Channels Dual-Def Dual-Def Dual-Def Dual-Def Bronze Bronze Silver Gold Chinese 499 999 1799 1999 299 499 830 1050 400 MUSIC Channel TV MTV Asia Myx • GENERAL ENTERTAINMENT AXN Be TV GENERAL ENTERTAINMENT Fox Channel Jeepney TV • Lifetime Channel O Shopping RTL-CBS Entertainment Star World Telenovela Channel Universal Channel Warner TV NEWS Al Jazeera ANC • BBC World Bloomberg Channel News Asia CNBC CNN Fox News Teleradyo • LIFESTYLE / WOMEN Asia Food Channel Diva Universal E! Food Network Asia Lifestyle Network Living Asia TLC Velvet • RELIGIOUS EWTN TV Maria

Philippines in view 49 SKYcable Channel List and Cable Price Bundles Monthly Postpaid Subscription Plans Channels Dual-Def Dual-Def Dual-Def Dual-Def Bronze Bronze Silver Gold Chinese 499 999 1799 1999 299 499 830 1050 400 EMBASSY CHANNEL Arirang Australia Network Deutsche Welle KBS NHK World Premium Saudi 1 TV5 France Voice of America CHINESE CHANNEL CCTV 4 CCTV 9 CCTV News CEC Celestial Classic Movie Da Ai / Tzu Chi CHINESE CHANNEL Star Chinese Channel Star Chinese Movies OTHERS SKYcable Channel One SKYcable PPV SD SKYcable Preview LOCAL CHANNELS 3 ABN ABS-CBN ACQ KBN Aksyon TV ETC Gem TV GMA 7 GMA News TV IBC 13 INC Channel Jack City NET 25 PTV Second Avenue Shop TV * Solar News Channel Studio 23 TV-5 UNTV Zoe TV

50 Philippines in view SKYcable Channel List and Cable Price Bundles Monthly Postpaid Subscription Plans Channels Dual-Def Dual-Def Dual-Def Dual-Def Bronze Bronze Silver Gold Chinese 499 999 1799 1999 299 499 830 1050 400 MOVIES HD Cinema World HD Cinemax HD Fox Action Movies HD Fox Family Movies HD Fox Movie Premium HD HBO Family HD HBO HD HBO Hits HD HBO Signature HD Sundance Channel HD SPORTS / MEN HD ASN HD Balls HD Crime & Investigation HD Fox Crime HD Fox Sports Plus HD NBA Premium HD Outdoor Channel HD KIDS HD Cartoon Network HD MUSIC HD Classica HD MTV Live HD GENERAL ENTERTAINMENT HD Channel M HD Comedy Central HD Fashion TV HD Food Network HD Fox HD Lifetime Channel HD RTL-CBS HS Star World HD Syfy HD Universal Channel HD Warner TV HD NEWS HD CNN HD

Philippines in view 51 SKYcable Channel List and Cable Price Bundles Monthly Postpaid Subscription Plans Channels Dual-Def Dual-Def Dual-Def Dual-Def Bronze Bronze Silver Gold Chinese 499 999 1799 1999 299 499 830 1050 400 LEARNING HD Biography Channel HD Discovery Channel HD History Channel HD Nat Geo Adventure HD Nat Geo Wild HD National Geographic HD Travel Channel HD SKYcable PPV HD

Legend: • Only on SKYcable * Not available in Cavite, Laguna, and Bulacan

Notes: • New subscribers of all basic plans except SKYcable plan 280 will receive an HD box for their main outlet. The HD box allows access to Balls HD channel for free, as well as other HD channels included in Dual-Def plans. It also allows for easy subscription to additional HD channels via SKYcable Select. • As of October 2013 exchange rate: • PHP299 = US$6.9 • PHP400 = US$9.2 • PHP499 = US$11.5 • PHP830 = US$19.2 • PHP999 = US$23.1 • PHP1050 = US$24.3 • PHP1799 = US$41.6 • PHP1999 = US$46.2

52 Philippines in view Cignal Channel List and Cable Price Bundles Monthly Postpaid and Prepaid Subscription Plans 290 390 430 430 590 790 990 1,290 1,790 Channels PRE PRE PRE POST POST POST POST POST POST paid paid paid paid paid paid paid paid paid FREE-TO-AIR Aksyon TV ABS-CBN 2 NBN 4 TV-5 GMA 7 ETC 9 GMA News TV 11 IBC 13 / AKTV Solar News 21 Studio 23 Jack City Net 25 2nd Avenue MOVIES Pinoy Box Office Viva HBO Star Movies Max Fox Family Movies Screen Red SPORTS Basketball TV Hyper Fox Sports Fox Sports News Solar Sports STAR Sports KIDS Cartoon Network Disney Channel Animax Disney Junior Toonami Nickelodeon NEWS / INFORMATION Weather Information Network CNN Fox News Channel Channel News Asia CNBC Bloomberg

Philippines in view 53 Cignal Channel List and Cable Price Bundles Monthly Postpaid and Prepaid Subscription Plans 290 390 430 430 590 790 990 1,290 1,790 Channels PRE PRE PRE POST POST POST POST POST POST paid paid paid paid paid paid paid paid paid GENERAL ENTERTAINMENT AXN Star World Fox Filipino GENERAL ENTERTAINMENT Teleasia Filipino beTV TruTV Diva Universal E! Entertainment Warner TV EDUCATIONAL / DOCUMENTARY National Geographic Nat Geo Wild Discovery Channel Discovery Turbo LIFESTYLE Colours Asian Food Channel MUSIC Channel V FOREIGN CHANNELS Al Jazeera TV chM Teleasia Chinese Arirang NHK World Star Chinese Channel Australia Network RELIGIOUS CHANNELS INC EWTN UNTV Zoe TV HD Star World HD Colours HD Outdoor HD HBO HD Fox HD Fox Sports Plus HD NBA Premium HD CNN HD

54 Philippines in view Cignal Channel List and Cable Price Bundles Monthly Postpaid and Prepaid Subscription Plans 290 390 430 430 590 790 990 1,290 1,790 Channels PRE PRE PRE POST POST POST POST POST POST paid paid paid paid paid paid paid paid paid HD Fox Movies Premium HD Fashion TV HD Nat Geo Adventure HD History HD Food Network HD Fox Crime HD Syfy HD Fox Action Movies HD HD Comedy Central HD Discovery World HD Nat Geo HD MTV Live HD Universal HD Cartoon Network HD AUDIO DZRH – AM 90.7 Love Radio – FM 101.1 Yes – FM 89.9 Magic – FM 99.5 RT – FM 92.3 News FM – FM GV FM (Angeles) – FM 102.7 Star FM Bombo – FM 93.9 iFM – FM DZXL 558 - AM

Notes: • Cignal Kit (set-top box) is free for all postpaid plans, which automatically get the HD box. Prepaid plans require payment of the Cignal kit, which is priced at PHP2990 or US$70 for SD type and PHP5590 or US$130 for HD type. • As of October 2013 exchange rate: • PHP290 = US$6.7 • PHP390 = US$9.0 • PHP430 = US$9.9 • PHP590 = US$13.6 • PHP790 = US$18.2 • PHP990 = US$22.9 • PHP1290 = US$29.8 • PHP1590 = US$36.7 Source: Cignal

Philippines in view 55 Appendix 9

CPI Content Operation and Distribution Assets / Content Source and Genre Key Programs Channels Production Balls Sports • Broadcast of Ball Sports Games or • Content is 30% local and Events: football, basketball, golf, 70% acquired international tennis, and volleyball content • Eventually included boxing, UFC MMA, WWE Cinema One Filipino and • Apart from the movies, there are • Content is local Asian Movies a couple of shows such as Inside • Has bought content but the Cinema with Boy Abunda and most are own-produced CinemaNews (i.e. ABS CBN / Star Cinema produced movies and Cinema One Originals) Hero Animation and • Filipino-dubbed Anime (i.e. Mask • Content is local Live-Action Man) • Has both bought and • Tokusatsu or live-action shows (i.e. own-produced (i.e. online Power Rangers) gaming, anime news, and • Western Animation (i.e. Clash of technology shows) content the Titans) Jeepney TV Classic and • Jeepney TV: Tawa Way Zone • Content is local archived series • Main segments include drama, • Has both bought and produced and/ comedy, talk & game shows, youth, own-produced (i.e. online or previously variety, movies, and even religious gaming, anime news, and aired by ABS- technology shows) content • Own-produced would be Operation CBN those by ABS-CBN and and would be a mix of in-house Distribution and commissioned content Lifestyle Lifestyle and • Main segments include food, • Content is 20% local and Network Entertainment home, travel, and self 80% acquired international content • Most are Lifestyle Network produced shows • Own-produced are non- Lifestyle network shows, which are produced by CPI (i.e. Food Prints, Curiosity, Got the Chef) Myx Music • Music videos in themed shows (i.e. • Content is local and hits from the 50’s to early 2000’s generally are in-house in MYX Backtrax), as well as chart productions shows. • Shows are segmented as daily and weekly, which includes talk shows on music Velvet Women’s • Features annual events (i.e. • Content is international General Oscars, Victoria Secret Fashion and bought Entertainment Show) • Usual segments like entertainment news & specials, game shows, stand-up comedy acts, drama, reality series, and award shows

56 Philippines in view Assets / Content Source and Genre Key Programs Channels Production ABS-CBN Filipino News • Main segments are news, • Content is local News Channel (in English) business, politics, and public • Has both bought and own- (owned by affairs produced content ABS-CBN) • Magazine and documentary-style • Bought content is sourced programs from CNBC Asia • Popular ones are ANC Breaking • Most are own-produced News, ANC Headlines, and ANC by ABS CBN News and Presents, among others Current Affairs and produced in-house DZMM • Mainly news, but also includes • Content is local Teleradyo general commentary, opinion, • Own-produced since (owned by public service, personals (i.e. DZMM 630 is the flagship ABS-CBN) advice shows), entertainment, radio station of ABS CBN drama, educational, sports, health & lifestyle, and even religious KIX 24/7 action • Action reality (i.e. Ghost Hunters), • Content is international entertainment Action Series (i.e. Bedlam), Action and bought – Celestial of a Movies, and Combat Sports (i.e. Tiger Entertainment (HK) Distribution combination Bellator MMA) Only of Asian and Western content curated for Asian market Knowledge Educational • Mixture of ABS CBN (i.e. Travel • Content is local Channel Time), Constel Programs (i.e. • Has both bought and Chemistry in Action, Eskwela ng own-produced (i.e. ABS Bayan (i.e. Why?), ETV Shows (i.e. CBN programs and original Art Jam), and Knowledge Channel Knowledge Channel Programs (i.e. Glimpses) programs) content Thrill Movies and • Thriller, suspense, and horror • Content is international Series movies, TV drama series, and and bought – Celestial anime series Tiger Entertainment (HK) PPV Services Reality TV • Pinoy Big Brother 24/7 • Content is local • Pinoy Dream Academy 24/7 • Has both bought and own- produced (i.e. reality TV and specials like concerts and boxing match events) content CgeTV User-Generated • General Entertainment • Content is local and own- Video Channel, produced now Internet Video-Sharing Defunct Website Maxxx Men’s General • Shows on poker, racing, comedy, • Content is local and Entertainment and adult-themed shows bought • Cartoons and all-time classic old TV series (i.e. Star Trek)

Source: CPI

Philippines in view 57 Appendix 10

NTC Organisational Structure

Office of the Presidnt

Office of the Commissioner

Deputy Deputy Commissioner Commissioner

Frequency Broadcast Service Managment Division Division

Administrative Telecommunications Common Carriers Radio Regulations Planning and Legal Fifteen (15) and Finance Authorization and Licensing Development Department Regional Offices Department Department Department Department

Field Offices

Source: NTC

58 Philippines in view Appendix 11

NTC Departmental Structure

Commissioner

Deputy Deputy Commissioner Commissioner

Telecom Planning Radio Regulations Common Carriers Administrative Legal & Development & Licensing Authorization & Finance Department Department Department Department Department

Fixed & Land Domestic & Int’l Financial Administrative Equipment Personnel General Services Mobile Services Carrier Service Management Cashier Unit Litigation Division Standards Division Divisions Division Division Division Division

Planning & Radio Operator Wire & Special Collection & Adjudicative Programming Training School Public Utilities Disbursement Records Section Division Division Division Service Division Section

Safety & Special Information Rates Regulation Radio Services Technology Unit Division Division

Frequency Commission Fourteen (14) Broadcast Statistics Unit OSPAC Management Secretariat Regional Offices Services Division Division

Field Offices

Source: NTC

Philippines in view 59 Appendix 12

MTRCB Organisational Structure

Office of the Presidnt

Board

Office of the Chairman

Executive Director

Review and Administrative Legal Classification and Finance Affairs Division Source: NTC Division Division

Appendix 13

IPO Organisational Structure

Office of the Presidnt

Office of the Director General

Office of the Office of the Deputy Director Deputy Director General General

Bureau Bureau Documentation, Bureau of Financial, Bureau of Legal Information and Copyrights and Management Managment and of of Affairs Technology Transfer Other Related Information Service Administrative Patents Trademarks Bureau Rights Service

Source: IPO

60 Philippines in view Appendix 14

OMB Organisational Structure

Office of the Presidnt

Office of the Chairman

Administrative Executive Registration and Enforcement and and Finance Investigation Legal Division Director’s Office Licensing Divison Division Division

Source: OMB

Appendix 15

MTRCB Television Classification Ratings

Description

G Viewers of all ages are admitted.

PG Viewers below 13 years old must be accompanied by a parent or supervising adult.

Stronger and more vigilant parental guidance is suggested, based on: T: Theme L: Language SPG V: Violence S: Sex H: Horror D: Drugs

Source: MTRCB

Philippines in view 61 Appendix 16

Contacts and Contacts’ Details

Regulatory Bodies National Telecommunications Commission (NTC) Address : BIR Road, East Triangle, Diliman, Quezon City Philippines Telephone : +63-2-924-4042; +63-2-924-4048 Fax : +63-2-924-7128 Email : [email protected] Website : www.ntc.gov.ph Key Person : Gamaliel A. Cordoba, Commissioner

Movie and Television Review and Classification Board (MTRCB) Address : MTRCB Building, No. 18 timog Avenue, Quezon City, Philippines Telephone : +63-2-376-7380 Fax : +63-2-376-7379 Email : [email protected] Website : www.mtrcb.gov.ph Key Person : Atty. Eugenio H. Villareal, Chairman

Optical Media Board (OMB) Address : 35 Scout Limbaga Street, Barangay Laging Handa, 1103 Quezon City, Philippines Telephone : +63-2-374-1393; +63-2-410-2488 Email : [email protected] Website : www.omb.gov.ph Key Person : Ronnie Rickets, Chairman and CEO

Intellectual Property Office (IPO) Address : 28 Upper McKinley Road, McKinley Hill Town Centre, For Bonifacio, 1634 Taguig City, Philippines Telephone : +63-2-238-6300 to 65 Loc: 205, 121, 122 Fax : +63-2-752-4869 Email : [email protected]; [email protected] Website : www.ipophil.gov.ph Key Person : Ricardo R. Blancaflor, Director General

62 Philippines in view FTA Broadcasters

ABS-CBN Corporation Address : Sgt. E.A. Esguerra Ave. Corner Mother Ignacia Street, Quezon City, Philippines Telephone : +63-2-415-2272 Email : [email protected] Website : www.abs-cbn.com Key Person : Eugenio Lopez, Chairman

GMA Network Address : GMA Network Centre, EDSA Corner Timog Avenue, Diliman, 1101 Quezon City, Philippines Telephone : +63-2-982-7777; +63-2-857-4627 Loc: 4300 Fax : +63-2-927-6210; +63-2-333-7661 Email : [email protected]; [email protected] Website : www.gmanetwork.com Key Person : Atty. Felipe L. Gozon, Chairman and CEO

TV-5 Address : TV 5 Broadway Office, Broadway Centrum, Aurora Boulevard, Quezon City, Philippines Telephone : +63-2-651-5300 Website : www.tv5.com.ph Key Person : Manny V. Pangilinan, Chairman

Solar Sports Entertainment Address : HV Dela Costa, Corner Tordesillas Street, Makati City, Philippines Telephone : +63-2-813-7100 Fax : +63-2-890-6431 Email : [email protected] Website : www.solarsports.ph Key Person : William Y. Tieng, Chairman

Philippines in view 63 Pay-TV Operators

SKYcable Address : 33rd Floor, Tektite Towers, Philippine Stock Exchange, Exchange Road, Ortigas Centre, Pasig City, Philippines Telephone : +63-2-381-0000 Fax : +63-2-635-6406 Email : [email protected]; [email protected] Website : www.mysky.com.ph Key Person : Rodrigo Montinola, COO

Cignal Address : 8th Floor, Net One Centre, 3rd Avenue, Corner 26th Street, Crescent Park West, Bonifacio Global City, Taguig City, Philippines Telephone : +63-2-244-6251; +63-2-689-3100 Email : [email protected] Website : www.cignal.tv Key Person : Annie Naval, COO

CableLink Address : 8210 Dr. A. Santos Avenue, Paranaque City, Philippines Telephone : +63-2-988-5465 Fax : +63-2-988-5401 Email : [email protected]; [email protected] Website : www.cablelink.com.ph Key Person : Armando M. Merilleno, Chairman and President

Global Satellite (G Sat) Address : First Global Broadcasting Corporation, 6th Floor, First Global Building, 122 Gamboa Street, Corner Salcedo Street, Legaspi Village, Makati City, Philippines Telephone : +63-2-882-9999 Fax : +63-2-812-0478; +63-2-844-3705 Email : [email protected] Website : www.gsat.asia Key Person : Philip J. Chien, President and CEO

Dream Satellite TV (Metro Manila Head Office) Address : Unit 1101 DPC Place Bldg. 2322 Don Chino Roces Avenue, Makati City 1231 Telephone : +63-2-889-8292 Fax : +63-2-889-8131 Email : [email protected] Website : www.dream.com.ph Key Person : Dennis T. De Guzman, Metro Manila Head Office Area Manager

64 Philippines in view InDustry Affiliates

Philippine Cable TV Association (PCTA) Address : Unit 504 Taipan Place Condominium, F. Ortigas Jr. Road (formerly Emerald Avenue), Ortigas Centre, Pasig City, Philippines Telephone : +63-2-638-8541; +63-2-638-8544 Fax : +63-2-638-8542 Email : [email protected]; [email protected] Website : www.pcta.org.ph Key Person : Cedric M. Sazon, President

SELF-REGULATORY BODIES

Ad Standards Council of the Philippines Address : 6-7/F, LTA Building, 118 Perea Street, Legaspi Village, Makati City, Philippines Telephone : +63-2-893-8103; +63-2-750-0047 Fax : +63-2-817-7287 Email : [email protected] Website : www.asc.com.ph Key Person : Raul S. Alavarez, Chairman

Kapisanan ng mga Brodkaster sa Pilipinas (KBP) or Association of Broadcasters in the Philippines Address : 6th Floor, LTA Building, 118 Perea Street, Legaspi Village, Makati City, Philippines Telephone : +63-2-815-1990 to 1992 Fax : +63-2-815-1993 Email : [email protected] Website : www.kbp.org.ph Key Person : Herman Z. Basbano, Chairman

Philippines in view 65 Appendix 17

Abbreviations

Terms

ARPU = Average Revenue Per User CAGR = Cumulative Average Growth Rate CAS = Conditional Access System CATV = Cable Television CPI = Creative Programs Inc. DBS = Direct Broadcast Satellite DTH = Direct-To-Home DTT = Digital Terrestrial Television DVB-C = Digital Video Broadcasting-Cable DVB-T = Digital Video Broadcasting-Terrestrial DVB-T2 = Digital Video Broadcasting-Terrestrial (Second Generation) DVB-S = Digital Video Broadcasting-Satellite DVB-S2 = Digital Video Broadcasting-Satellite (Second Generation) ECM = Entitlement Control Message EMM = Entitlement Management Message FICTAP = Federation of the International Cable TV and Telecommunications Association of the Philippines FMCG = Fast Moving Consumer Goods FTA = Free-To-Air GBMI = Global Broadcasting and Multimedia Inc. G SAT = G Satellite HD = High Definition HDTV = High Definition Television IOS = International Organization for Standardization IEC = International Electrotechnical Commission IP = Intellectual Property IPO = Intellectual Property Office IPTV = Internet Protocol Television IRD = Integrated Receiver-Decoder ISDB - T = Integrated Services Digital Broadcast – Terrestrial KBP = Kapisanan ng mga Brodkaster sa Pilipinas (Association of Broadcasters of the Philippines)

66 Philippines in view MCPC = Multi Channel Per Carrier MPA = Media Partners Asia MPS = Multiplay Service MTRCB = Movie and Television Review and Classification Board MVNO = Mobile Virtual Network Operators NTC = National Telecommunications Commission NTSC = National Television System Committee OMB = Optical Media Board OTT = Over-The-Top PCTA = Philippine Cable TV Association PLDT = Philippine Long Distance Telephone Company PPV = Pay-Per-View RP = Republic Act SD = Standard Definition SDTV = Standard Definition Television STB = Set-Top Box STT = Singapore Technologies Telemedia TVHH = Television Household VAS = Value Added Service VOD = Video On-Demand

Philippines in view 67 Disclaimer

Information Validity The information contained in this report is believed to be correct and reliable at the time of writing. It should be understood that some information contained in the accompanying report was obtained verbally from third parties without written documentation. In certain cases, publicly available sources were not available for independent verification. Where possible, Venture Consulting has sought to verify the information supplied by speaking to multiple sources.

Use of Information The report has been prepared for information purposes only and is intended for CASBAA and its members. The report must not be acted on or relied upon for any investment decisions or other specific actions without further study.

68 Philippines in view About CASBAA Established in 1991, CASBAA is the Association for digital multichannel TV, content, platforms, advertising and video delivery across geographic markets throughout the Asia-Pacific. CASBAA and its members reach nearly 470 million connections within a regional footprint ranging from China to Australasia, Japan to Pakistan. The CASBAA mission is to promote the growth of multichannel TV and video content via industry information, networking exchanges and events while promoting global best practices.

This report was compiled by Venture Consulting Pty Ltd. www.ventureconsulting.com/home

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