Media agents snared P360M in commission

Some 50 TV, radio, print outfits
did not submit all pol ads docs?

SOME CANDIDATES may have willfully mocked their lawful duty to file election-spending reports with the Commission on Elections (Comelec) but they are not the only ones who did so. Like these wayward candidates, many media agencies also failed to file reports with the poll body, in defiance of their obligation in law.

This is even though television networks, radio stations, and print-media agencies emerged as the biggest winners, money-wise, in last year’s elections: From political-ad spending by some 50 national candidates and their parties alone, these media agencies scooped a whale of a windfall — about P5.4 billion

Put another way, this means that on average, for every P100 they spent, these candidates plunked down P92 to prime, preen, and promise the moon and the stars in political ads.

And yet according to Comelec records, a significant number of media outfits did not submit a single document related to political ads that they had published or aired, and for which they received hefty sums from the candidates and the political parties.

PCIJ obtained from Comelec’s Campaign Finance Office (CFO) copies of ad contracts submitted by media agencies to the Commission from April to September last year. PCIJ then compared these contracts and Nielsen Media’s monitoring reports on ads that were actually aired and published during the 90-day campaign period for the May 2016 elections.

A review of these documents indicated that 55 media agencies — two TV stations, 15 newspapers, and 38 radio stations – may have failed to comply with their reporting duty under campaign-finance rules. The review does not yet include the agencies that placed four outdoor advertisements that Nielsen Media monitored in four different locations.

Surprisingly, the media nonfilers included the government-run People’s Television 4 or PTV 4.

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A serious matter

To Efraim Bag-id, acting head of the Comelec CFO, such acts of omission by media agencies are a serious matter.

Failure to file advertising contracts and receipts covering political-ad buys by the candidates and political parties in TV, radio, and print-media outfits constitutes an election offense under Section 13 of Republic Act No. 9006 or the Fair Elections Act. For this offense, media-agency owners and executives could be held liable and sent to jail. Comelec Resolution No. 9991 or the Campaign Finance and Disclosure Policy states that advertising contracts should be submitted to the poll body within five days after these are signed, and accompanied by a Summary Report of Advertising Contracts (SAC).

Based on Nielsen Media reports, the nonfiling of these documents by some media agencies involved in the 2016 election campaign translates to unreported political ads totaling at least P570 million in value, with radio ads having the largest share: P522 million. Next come print ads, (P26 million), then those on TV (P16 million), and last outdoor ads (P6.6 million).

In 2010, PCIJ published a report on political ads that identified almost the same set of media outfits as non-compliant with their reporting duties under campaign-finance rules.

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Inquiry letters

To verify the data it gathered, PCIJ sent inquiry letters to some of the companies that appeared to be noncompliant in 2016, in particular those that aired or ran ads worth at least P10 million.

Among these companies was the Philippine Daily Inquirer (PDI), which was very quick to reply. PDI General Counsel Rudyard Arbolado said, however, that the popular media outfit was puzzled over its inclusion in the noncompliant list.

PDI then showed PCIJ copies of ad contracts that the newspaper submitted to the Comelec’s CFO and which were marked “Received” by Comelec personnel. All of the contracts were not among Comelec’s compilation of submitted ad contracts seen and reviewed by PCIJ.

According to PDI’s records, these are the newspaper’s submissions to Comelec last year:

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CNN Philippines also replied swiftly, refuting PCIJ’s findings. CNN Marketing Manager Yna Ellorda even shared with PCIJ a copy of the document it submitted. The papers, however, showed that it was submitted to, and received by, the Education and Information Department (EID) of Comelec.

Upon a quick check of CFO records, Bag-id confirmed that the office had received documents from PDI, albeit with dates that did not match those in PDI’s records: March 17, April 7, April 27, and June 2. He also confirmed that the EID forwarded CNN’s submission and was received by the CFO on May 26 last year.

Bag-id said as well that the CFO staff has yet to review the advertising contracts submitted to the office. He conceded that it was possible that not all of the documents it received were made available to PCIJ.

The Philippine Star, for its part, recently acknowledged receipt of PCIJ’s query letters and follow-up, which were sent last July 6 and July 11 respectively. It has yet to send a formal reply to the Center’s queries, however.

Radio Mindanao Network (17 stations and three affiliated stations) and Tiger 22 Media Corporation (five stations) also acknowledged receipt of PCIJ’s inquiry letter, but have yet to send their respective responses to the questions.

Missing 15 percent?

For sure, though, the non-compliance of some media outfits with the requirement for them to submit reports on the political ads they ran can complicate attempts to calculate just how much commissions had been collected by the ad agencies that handled them for the candidates and the political parties.

Media outfits follow a formula for commissions on ad placements, depending on whether the ads were placed directly or through advertising agencies.

For ads placed through advertising agencies, it is:
Base Rate – Agency Commission + VAT – Withholding Tax = Amount payable to media outfit

For direct accounts, the formula is:
Base Rate + VAT – Withholding Tax = Amount payable to media outfit

Based on just the submitted ad contracts, the ad agencies involved would have received at least P361 million worth of commission altogether.

Then again, even the ad contracts submitted to Comelec pose problems for those trying to figure out the total commissions the ad agencies got, because of inconsistencies in reporting.

Some ad contracts, for instance, do not indicate how much commission went to the ad agency.

Some reflect the amount of the commission, but do not indicate the ad agency or there are no attached telecast or broadcast order to indicate the agency.

Some indicate that the advertisement was placed directly by the candidate but, just the same, reflect a commission amount.

Other figures do not tally as well across related documents. From advertising contracts to official receipts, to telecast or broadcast orders, values vary even for the same ads.

Comelec CFO Acting Head Efraim Bag-id says that receipts should be the basis to determine official amounts in ad-contract submissions. But then some of the ad contracts submitted by media agencies lack official receipts. There are also cases in which the same receipt was used to cover different ad contracts.

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PCIJ thus decided to write to three advertising agencies, again targeting in particular those that appeared to have received commissions worth at least P10 million, to clear some details.

Only one ad firm replied, however, and that was also only after a follow-up call was made: Media Market Lab Advertising, which had at least one vice presidential candidate and three senatoriables as clients, for whose ads it earned almost P47 million in commissions – at least according to ad-contract submissions to Comelec.

But according to Managing Director Emma Sierra, Media Market Lab received less than the computed P46.9 million in commission that the agency reportedly received from ad placements for its clients who were national candidates in May 2016.

When asked whether the firm’s profit as an ad agent in the 2016 elections was reported to the Bureau of Internal Revenue, Sierra replied, “Nag-submit naman kami sa RCF ng report. May mga resibo ‘yun (We submitted a report to RCF. That was with receipts).”

Sierra was not sure though what “RCF” meant. The RCF or the Report of Contractors and Business Firms is actually the form to be submitted by every person or firm to whom any electoral expenditure has been made. This is stated in Rule 11 of the Omnibus Rules on Campaign Finance, which also says that the RCF has to be filed within 30 days after the conduct of the election with the CFO of the nearest Comelec Field Office.

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— With research by Fern Felix, Davinci Maru, Vino Lucero, Ana Isabel Manalang, Jil Danielle Caro, Steffi Mari Sanchez, and Malou Mangahas, PCIJ, August 2017