NOTE: This was a story I wrote a year after the Lopez family ‘sacrificed’ their stake in Meralco. In 2008, the family business was under attack due to the conglomerate’s media arm ABS-CBN’s news coverage that was critical of the then Arroyo government. This story captured the sentiments of the patriarch then, Oscar Lopez.
This was published on May 25, 2009 on the news sites of ABS-CBN and Newsbreak, but the links are both dead now. There have been many changes and challenges within the Lopez family itself, as well as in the boardrooms of the companies they run. I hope that sharing this piece of history provides context to the never-ending evolution of the Lopez family.

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The Lopez family patriarch admitted on Monday that the battle for control of Manila Electric Company only stressed that for the power retailer to be profitable, it will need “government support.”

In a speech to the stockholders in the First Philippine Holdings Corporation’s (FPHC) annual meeting, Oscar Lopez said, “Investing in a vital, influential and publicly- regulated business in our country inevitably requires government support. If that is missing, then it weakens the business model.”

He added, “With PLDT [Philippine Long Distance Telephone] and San Miguel Corporation as major players in Meralco, I hope that this weakness can be better addressed.”

Meralco’s long delayed petition for rate increase, which has actually been provided for under the law covering the energy sector, was only recently approved–when San Miguel and PLDT were already on board.

The country’s biggest power distributor had been waiting for the rate increase since 2003. The usual business model for utility companies, such as Meralco, is that their revenue sources are assured since the government, which awards the franchise that enables the private firm to monopolize the market, just grants a rate increase if warranted.

Oscar Lopez, in a strong and sentimental speech to stockholders almost the same time last year, blamed the government for its woes. He said the attacks against the family is a “diversionary scapegoat in order to deflect attention away from the many problems and issues that our people face, and on which their leaders have failed them utterly.” He added that the Lopez’s media arm, ABS-CBN, which showed “dogged determination…to expose the truth of our everyday lives,” as another reason for the attacks.

The FPHC, burdened by debts incurred to fund its investments in power generation business, has sold its 20 percent stake in Meralco to the Philippine Long Distance Telephone (PLDT) group, led by CEO Manuel Pangilinan. FPHC, which has kept its 13 percent stake in Meralco, has made an agreement with the PLDT group that they will vote together, making the deal an effort of the Lopezes to thwart efforts of San Miguel Corp.

San Miguel Corp. President and CEO Ramon Ang has said the food and drinks-turned-power conglomerate, together with other allies, have upped their initial 27 percent Meralco stake to 43 percent by buying from the market.

Meralco’s stockholders will vote members of its 11-man board tomorrow. Based on the board nominees, the PLDT-Lopez alliance has the upper hand with 5 board nominees compared to San Miguel’s 4. The other 2 seats are required to be occupied by independent directors.

Lopez said in the stockholders meeting that San Miguel, which acquired its initial stake in Meralco from Government Service Insurance System, “used friendlier tactics in winning over Meralco.”

Meralco’s chairman, Manolo Lopez, Oscar’s brother, was reportedly charmed by Ang. But Oscar had been skeptical. Oscar, who chairs FPHC, reportedly did not consult with Manolo about the deal with the PLDT group.

“We feel that in divesting a 20 percent interest in Meralco to the PLDT Group, we have forged a strategic alliance that will enable us to continue to participate, both as owners and as business partners, in a Meralco whose potential value has been greatly enhanced by the possibilities of synergy with PLDT,” the FPHC chief said.

He cited Meralco’s potentials in the broadband business.