ABS-CBN unfazed by new TV5 owner

By Karen Flores, abs-cbnNEWS.com

Posted at Nov 12 2009 12:52 PM | Updated as of Nov 13 2009 12:56 AM

MANILA - The country's biggest multimedia conglomerate said it is not threatened by the entry of telecommunications giant Philippine Long Distance Telephone Co. (PLDT) into the broadcast industry.

On the contrary, ABS-CBN Broadcasting Corp. Chief Finance Officer Rolando Valdueza said the company welcomes any competitor "for as long as it will lead to the advancement of the broadcast, media, and entertainment industry."

"Hopefully, (the entry of PLDT) will mean more choices for the viewing public for quality programs, and more jobs as well," Valdueza said during the company's financial briefing on Thursday.

Valdueza said it would take some time before TV5 can catch up with ABS-CBN and rival GMA Network Inc. in terms of airtime revenues. And even if it did, he expressed confidence that ABS-CBN will remain resilient since it has "successfully diversified" into direct sales.

"If you look at our business model, we have successfully diversified our business. Direct sales are now 42% (of total revenues), and we expect it to be close to 50%," he said.

As of end-September this year, direct sales now account for 42% of ABS-CBN consolidated revenues. Direct sales consist of cable and internet subscription fees, and earnings from the sale of products such as magazines, music, and video materials.

Reducing dependence on advertising revenues has been ABS-CBN's strategic direction for years. According to ABS-CBN Chief Research and Business Analysis Officer Vivian Tin, the company needs to find other ways of monetizing concent since "the ad market hasn't been growing."

"PLDT is also now into broadcast. If we're reliant on airtime, we may not be that resilient," she said.

Mediaquest Holdings Inc., the media arm of PLDT's beneficial trust fund, recently acquired a 75% stake in ABC Development Corp., the owner and operator of TV5. The company also forged an agreement to acquire Primedia, a block airtimer for TV5.

The investment is seen to create value in TV5, which Mediaquest described as a "strong number 3 in the Philippine television industry."

Profits up

ABS-CBN maintained its 10% profit growth forecast for 2009 as its 9-month profits reached P1.35 billion, already close to the company's full-year earnings in 2008 of P1.39 billion.

"We're still into the 10% growth forecast. At least 10%," he said.

EBITDA (earnings before interest, taxes, depreciation, and amortization), the usual measure of a company's cash flow, jumped 16% to P5.16 billion.

Consolidated revenues grew 11% to P18.34 billion as of end-September, with airtime revenues contributing 58% or P10.68 billion. Direct sales, including SkyCable's contribution, rose 19% to P7.67 billion.

ABS-CBN booked P5.6 billion in consolidated general and administrative expenses (GAEX) for the 9-month period, 18% higher compared to the same period last year.

Early this year, Valdueza said ABS-CBN said it will focus on cutting costs and increasing profitability, setting a P1-billion savings target from cost-efficiency measures by 2010.

ABS-CBN has earmarked around P2.8 billion for capital expenditures this year and in 2010. The company said bulk of the amount would be used for production, broadcast and transmission equipment, as well as film rights acquisition. By Karen Flores, abs-cbnNEWS.com

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