RSA to buy Inquirer
On Monday, July 17, the owners of The Philippine Daily Inquirer led by its chair, Marixi Rufino Prieto, announced the prospective sale of the country’s largest daily to Ramon S. Ang, the president and chief operating officer of the San Miguel Corp.
Ramon Ang confirmed that he was buying 85 percent of The Inquirer after a due diligence. “I have accepted the offer of the Prieto family to invest in the Inquirer Group. I am looking forward to be part of this venerable institution and work with the men and women who made it what it is now,” RSA said in a cryptic statement.
In her 212-word statement, Marixi Prieto disclosed she “has resumed discussions with the longstanding friend and business partner Ramon S. Ang for the sale of the Prieto family’s interest and majority share in the Inquirer Group.”
“This culminates a series of talks that began between the two parties in 2014, and restarted early this year after the Prieto family completed its annual review of business plans in the Inquirer Group and other business interests. The due diligence review on the Inquirer Group will be undertaken soon by Mr. Ang,” Marixi said.
She explained that “the Prieto family’s decision to divest after 25 years is a strategic business decision that it believes will maximize growth opportunities for the Inquirer Group. The family is confident that Mr. Ang will uphold the Inquirer Group’s commitment to pursuing the highest standards of journalism. His investments and business expertise will unlock added value in the Inquirer Group’s newspaper publication, Internet communications, social media, corporate skills training, radio broadcasting, and logistics delivery.”
Prieto said that “all existing employment contracts of the Inquirer Group will remain in effect. Both parties acknowledge that the multi-media organization is where it is today because of the caliber of its people, dedicated to the continuing vision and mission of empowering Filipinos by telling their stories.”
No amount was mentioned but I estimate the deal to be in the vicinity of P6 billion. Or probably less. RSA is easily worth $2.6 billion. He is one of the ten richest Filipinos today.
I base the P6-billion estimate on the valuation given Philstar when Manny Pangilinan bought into Philippine Star. MVP initially paid almost P5 billion for 80 percent of Philstar group in 2013, valuing the newspaper at about 25 times annual earnings. Because of their power and influence, Philippine newspapers tend to have higher valuations.
Based on the BizNewsAsia Top 1000 Largest Corporations, revenues and profits of the Inquirer have been falling lately. In 2015, Inquirer had revenues of P2.065 billion, down 5 percent from 2014. Profits also fell more than half to P38 million in 2015 from P81 million in 2014.
Inquirer claims to be the largest newspaper. But it lags behind Philstar in profits. Philstar reported profits of P242 million in 2014 and P226 million in 2015.
Philstar also claims to be the No. 1 newspaper but the Manila Bulletin easily beats Philstar in sales by 47 percent (Bulletin had P2.946 billion revenues in 2015 and P2.862 billion in 2014; Philstar had P2.192 billion revenues in 2014 and P2.0 billion in 2015).
So in terms of revenues, Bulletin is the largest daily. In terms of profits, Star is the leader.
However, in terms of the influence, Inquirer tops both the Star and Bulletin. “The Inquirer has always strove to be different. We see what’s news that other media outfits fail to see…We set the agenda,” was Inquirer Executive Editor Joey Nolasco’s rather arrogant reply to columnist Bobi Tiglao who asked why the Inquirer ran on its entire page one last March 23, 2017 the New York Times’ March 22, 2017 scathing profile on President Duterte.
The publication en toto by the Inquirer of that NYT article might have been the straw that broke the proverbial camel’s back for Duterte.
The President served noticed he would destroy the Prietos as “oligarchs” and punish the Inquirer by attacking the paper and its owners on two fronts —the recovery of the state-owned Mile Long Property being leased since the early 1980s at sweetheart terms by the Prietos’ Sunvar Development Corp. (the lease expired in 2002 but the Rufino-Prieto families have refused to give it up) and the pursuit of tax cases against both Sunvar and the Prietos’ other main business, Dunkin’ Donuts.
Return of the Mile Long property will likely drive the Rufino-Prieto families to penury. A tax collection on Dunkin’ Donuts will drive them to even more penury.
In his speech to the Filipino community in Qatar in April this year, Duterte disclosed that five years ago, Dunkin’ Donuts was assessed P1.8 billion in back taxes. But the Bureau of Internal Revenue under Kim Henares, he said, lowered the figure to a precipitous P1.4 million. Duterte vowed to rake up the Dunkin’ Donuts tax case and to pursue the recovery of the Mile Long property.
In his Manila Times columns, Bobi Tiglao estimates the Rufino-Prieto families’ obligations to the government (in lease rentals to the government by Sunvar and in tax liabilities by Dunkin’ Donuts) to be about P3 billion.
The sale of the Inquirer to RSA will be good for the Prieto family, to the Inquirer itself, to RSA, and to the media industry.
I will tell you why in one of my future columns.