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Friday, May 31, 2024

The Lopezes’ rise and fall

"What brought down ABS-CBN was political meddling."

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Although the word is ancient, oligarchy in Philippine context originally referred to the Lopez family.

The late strongman Ferdinand Marcos made “oligarchs” a pejorative term (it still is) after he declared martial law in 1972 and proceeded to destroy the Lopez business empire by sequestering or seizing their corporations without just due process and compensation. These included the television station Channel 2 of ABS-CBN, the daily Manila Chronicle, the power distribution monopoly Meralco, and its holding company, Meralco Securities Corp., which became First Philippine Holdings Corp. The assets were either taken over by the government and/or by families close to Marcos. These lucky families became known as “cronies”, a synonym for new oligarchs.

The shutdowns and sequestration drove the Lopez family to penury, leaving them with only the weekly tabloid Philippine News in San Francisco, California as the only asset worth noting. It was losing money.

In a 2006 speech before the Management Association of the Philippines, the patriarch of the clan, Oscar M. Lopez, the second of three sons of the late Don Eugenio Lopez Sr. (his eldest, Geny, died in 1999), explained Marcos’s motive for the takeover. It was “mainly due to the strong stand which my father and his newspaper, the Manila Chronicle, took against the graft and corruption of the Marcos regime.”

Recalled Oscar, now 89: “After my father died in San Francisco in 1975, the whole story of the Lopez business could have ended and died with him. And yet, after the martial law debacle, the family business managed to come back bigger and stronger than ever, primarily because my father had three sons whom he had trained well and who worked with him in all his companies.”

Forty-eight years later, ABS-CBN has been shut down for the second time. The closure is not occasioned by a hostile takeover (although the family probably thinks by now that would have been a far better outcome), but by the family’s failure to secure a renewal for another 25 years of ABS-CBN’s broadcast franchise from Congress.

The House Legislative Franchises Committee, by a stunning 70-11 vote, rejected the renewal, on July 10, 2020. Up to that time, ABS-CBN had been broadcasting for over 50 years giving the Lopez family unrivalled political clout and the power to make presidents out of upstarts and gain businesses out of that connection.

The House committed cited nine grounds for the denial for a new franchise: the American citizenship of ABS-CBN top honcho Eugenio “Gabby” Lopez III (media must be 100-percent Filipino); issuance of virtual shares of stock called Philippine Depositary Receipts to foreigners, worth P8.6 billion; a 50-year limit on franchises; failure to follow the proper procedure in re-acquiring ABS-CBN from government in 1992; going into cable tv and pay-per-view tv which are outside of the franchise scope; block-timing for 23 hours Channel 23 which ABS-CBN owned 49 percent; unfair labor practices; tax avoidance amounting to billions; and political meddling and biased reporting.

To me, what brought down ABS-CBN was political meddling. It didn’t support the presidential candidacy of the Davao mayor of 23 years, Rodrigo Roa Duterte. ABS-CBN collected his money, over P2 million as pre-payment for his political ads but did not run them. Instead, it ran the ads of his arch critic Antonio Trillanes. That got Duterte’s wrath and marked ABS-CBN forever. The comeuppance came last July 10.

Political meddling is part of the Lopez business DNA and a major strategic policy. The Lopez saga spans 200 years. The family’s symbol is the phoenix, the mythical bird that rises from the ashes to regenerate itself.

Can the Lopezes regenerate ABS-CBN? The television Channel 2 and the am radio bandwidth 630 are now freed for auction to the highest bidder. I am sure, by the time Duterte leaves office, in June 2022, those vital broadcast assets would have been farmed out, hopefully not to another oligarch.

The Lopez oligarchy had its heyday under Eugenio Lopez Sr. After losing nearly everything to the destruction of World War II, family patriarch Don Iñing succeeded in creating the first airline in Asia, becoming a media mogul unafraid to take on the powerful and corrupt, and acquiring Meralco and many other businesses.

Here is Oscar Lopez in 2006 about the origins of the family:

The first thing to know about the Lopez family is that it is an entrepreneurial Filipino family whose roots go back not to Spain nor to China but right here in the Philippines, to a small town called Jaro, in the province of Iloilo, in the island of Panay. It must be pointed out that before my father started our Group of Companies in the late 1920’s, there were at least three generations of Lopez entrepreneurs who helped shape the entrepreneurial culture of the Lopez clan.

“¨ Up to the mid-19th century, the Lopezes of Jaro were mainly engaged in the native textile industry and in trading. But with the opening of Philippine ports to world trade in the mid 1850's, the native textile industry suffered a disastrous decline since it could no longer compete with the cheap mass-produced clothing materials from the mechanized factories of Manchester, England.

This was probably our first taste of the severe impact of globalization on our country and the first major adversity suffered by the Lopezes in business. In order to cope with its consequences, the Lopez family was forced to refocus its attention on a new industry — sugar production for the export market. The central Lopez entrepreneur in that era was the first Eugenio Lopez, who accumulated a lot of sugar lands and established the first steam-powered sugar mill in the island of Negros.

By the early 1930s, the extended Lopez family had accumulated more than 5,000 hectares of sugar land and established 2 centrifugal sugar mills, in the provinces of Negros Occidental and Iloilo which were run by two strong-willed Lopez women entrepreneurs, both daughters of the first Eugenio Lopez, Doña Maria Lopez who never married and Doña Rosario Lopez de Santos whose husband committed suicide after helping his wife build her sugar central.

These two sisters were in fact engaged in strong sibling rivalry in the field of business. It was at this point that my father also named Eugenio, who was fresh from graduate studies at Harvard Law School and newly married, and his brother Fernando decided to shift the family business from agriculture to industry.


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