The impact of a non-renewal of ABS-CBN's franchise to the industry and country, according to KBP chief Jun Nicdao

ABS-CBN News

Posted at Jun 04 2020 11:51 PM

(Editor's note: This article by Mr. Jason Inocencio, followed by the views of KBP President Ruperto 'Jun' Nicdao Jr., first appeared on Adobo Magazine. We are republishing it with permission from Adobo Magazine.) 

Since 1974, the Kapisanan ng mga Brodkaster ng Pilipinas (KBP) has hoped to serve the Philippine broadcasting industry. As a private association of broadcast operators, the KBP has established its own system of self-regulation and standards for radio and television stations in the country while representing the interests of the broadcast media.

It aims for the promotion of an independent and free broadcast media, responsible broadcasting, enhanced public service by broadcasters, advancement of innovation in broadcasting, and the development of Philippine broadcasting.

With 121 members composed of the Philippines’ top TV and radio networks, the KBP also helps its members stay relevant in the 21st century.

On May 5, media and entertainment company ABS-CBN was shut down, and KBP President Jun Nicdao has since made a statement regarding how the shutdown of ABS-CBN affects the Philippines amidst the battle against COVID-19 and in the broader industry.

Since constitutional issues about freedom of speech, freedom of the press, congressional oversight of franchises, and the regulatory purview of the National Telecommunication Commission (NTC) have already been extensively discussed in mass media, Nicdao has gotten into the nitty-gritty in his statement — stating that the shutdown of ABS-CBN could not have happened at a worse time, in the midst of a do-or-die battle against an unseen enemy.

See Nicdao’s full statement below:

KBP President Ruperto Nicdao Jr. Photo courtesy of KBP website 

Over the past week, constitutional issues about freedom of speech, freedom of the press, congressional oversight of franchises, and the regulatory purview of the National Telecommunication Commission have already been extensively discussed in mass media.

As such, my response will focus specifically on how the ABS-CBN shutdown impacts the fight against COVID-19, the landscape of the Philippines broadcast industry, and the overall well-being of media professionals. In my view, the shutdown of ABS-CBN on May 5, could not have happened at a worse time – in the midst of a do-or-die battle against an unseen enemy that has wrought medical, financial, and sociological havoc on the lives of every Filipino.

THE SHUTDOWN AND THE BATTLE AGAINST COVID-19

1. The shutdown of ABS-CBN eliminates an established source of reliable information at a time when an informed populace is the first line of defense against the spread of COVID-19.

Faced with a crisis of this magnitude, the Filipino people deserve accurate and timely information about efforts of the scientific community to preserve health and programs of the government to prevent hunger.

Studies conducted by Nielsen and Kantar, two of the most reputable media research companies in the country, consistently show that free-to-air broadcasting is the most effective and most efficient medium in disseminating information to the broadest audience base.

Before being forced to go off-air, millions of viewers and listeners tuned into the ABS-CBN network of television and radio stations to find out about measures to avoid infection; data on the virulence of the virus; quarantine rules and restrictions; and when, where, and how to get cash and food assistance from government units.

These millions represent a captive audience that would have otherwise been easily reached with educational information and up-to-date news had the ABS-CBN network stayed on the air.

2. The loss of employment due to the shutdown of ABS-CBN adds a considerable burden to an already-strained social welfare system.

Medical experts around the world agree that until widely-accessible cures and vaccines are discovered and invented, physical distancing is the only viable measure to curb the spread of COVID-19.

Towards this end, more than 200 nation-states and territories with COVID-19 cases have all instituted measures curtailing the movement of people resulting in the partial or total suspension of business activities and the displacement of millions of workers.

This surge of unemployment is particularly pernicious for developing countries such as ours with flimsy social safety nets propped up only by a scant stack of government funds that is dwindling away, at an alarming rate, day by day.

The shutdown of ABS-CBN unnecessarily added to the ranks of the unemployed thousands of workers, a considerable number of whom could and would have otherwise continued working given the media giant’s healthy balance sheet and the Inter-Agency Task Force’s classification of media personnel as essential.

3. The shutdown of its broadcasting parent hampers relief efforts of the ABS-CBN Lingkod Kapamilya Foundation at a time when government needs the private sector to fill in gaps in social amelioration.

Amidst this crisis, the largest companies in the country have stepped up to contribute in two major areas — the construction of quarantine and testing facilities, and the distribution of relief goods. ABS-CBN was among these good corporate samaritans, using its media network to solicit donations, in cash and in kind, that were distributed as relief packages through its foundation.

This shutdown curtails the ability of ABS-CBN to accumulate and distribute aid at a time when government is most in need of financial and logistical assistance from the private sector to supplement its limited capabilities to provide amelioration to the poorest Filipinos.

FREE MARKET COMPETITION IN THE BROADCASTING INDUSTRY

The Philippine free-TV market is dominated by three major competitors — ABS-CBN, GMA and TV5. ABS CBN and GMA account for 80 percent of viewership while competing for the number one and number two spots.

The continued shutdown of ABS-CBN deprives audiences and advertisers of the benefits arising from competition; specifically, the impetus to continuously raise the bar of programming excellence and free market mechanisms reining in television advertising rates.

At the moment, it is unclear as to how long it will take before ABS-CBN is able to resume its broadcast operations.

What is clear, however, are the deleterious effects of eliminating a major player in the broadcasting industry:

1. Lack of competition limits the quantity, quality, and diversity of programming choices for Filipino audiences.

Through the years, fierce yet healthy competition has fueled the drive for the top TV stations to create news, public affairs, educational, sports, and entertainment programs that have reaped accolades from local, foreign, and international award-giving bodies.

Furthermore, competition has also compelled both networks to accommodate the broadest range of perspectives on political and social issues because growing their respective kapamilya and kapuso communities is contingent on giving voice to those in the mainstream and the fringes of society.

Ultimately, Filipino audiences benefit from competition, which is possible only if there are at least two relatively equally-matched competitors in the Philippine TV industry.

2. A virtual monopoly of the free-TV market removes the ability of advertisers to craft an optimized media mix.

Effective advertising is contingent on maximizing reach while minimizing costs, and the ABS-CBN shutdown makes it that much harder for advertisers to achieve both goals. Media buyers have routinely maximized target audience rating points (TARPs) and minimized costs per thousand (CPMs) by shopping for airtime from at least two networks; an option which is now no longer available.

Not only does the shutdown limit the ability to concoct an optimized media mix, it also creates an artificial shortage of advertising inventory by substantially slashing the supply of prime advertising airtime.

Basic economics teaches us that inelastic goods — defined as goods that do not have comparable substitutes — are governed strictly by the laws of supply and demand; specifically, low supply and high demand leads to higher prices.

Since market studies show that up to 90 percent of consumers rely on TV and almost 60% on radio for relevant information before making purchase decisions, it is easy to see why there is no comparable substitute for broadcast airtime when it comes to reaching and convincing the largest target audience base.

3. In the event that only some ABS-CBN viewers shift to GMA, there will be an overall reduction in TV-viewing audiences.

Communication scholars all over the world have proposed theories that information-seeking behaviors tend to remain stable over time. In practical terms, this means that individuals tend to establish routines — referred to as “habits” in the academic literature — in selecting when, where, and how to acquire information.

Media consumption studies in the Philippines consistently show that Filipino TV audiences demonstrate a high level of loyalty to their broadcast network of choice, thus providing empirical support for theories on the durability of information seeking habits.

Given this, I expect that a large majority of ABS-CBN’s audience will not shift to the competition, especially after I saw from the most recently released Nielsen data that there has been a reduction in overall TV viewing hours after the shutdown.

This reduction in overall TV viewing hours is unexpected at a time when quarantine rules have forced the majority of Filipinos to stay indoors, at penalty of arrest, humiliation, and criminal prosecution.

There is a need for more thorough studies to identify the causes of this viewership dropoff, including the possibility that only a small percentage of ABS-CBN patrons have shifted to other TV channels, while the rest have opted to consume content from other non-TV platforms.

4. Consumption of ABS CBN’s content in their digital platforms will increase but probably will not supplant its free-to-air broadcasting.

ABS-CBN has a massive digital footprint and a vast inventory of content distributed for free and on demand over leased and owned Internet platforms.

Absent a congressional broadcast franchise license, ABS-CBN has reached out and remained relevant to global and local audiences via its digital platforms. In similar fashion, loyal consumers are also using these Internet platforms to preserve connections with their favorite ABS-CBN programs and personalities.

That said, the digital platforms of ABS-CBN, while robust, will not supplant its free-to-air broadcasting, at least in the short term, because the media giant relies on its brick-and-mortar operations to create content and generate revenues. I expect, however, that consumption of ABS CBN’s digital content would accelerate as the large number of loyal consumers of the network’s programs seek whatever platforms these content are available.

5. A continued shutdown of ABS-CBN will slow down the transition to digital terrestrial television and delay the availability of a nationwide emergency broadcast system.

Before its shutdown, ABS-CBN was a leading supporter of the transition to Digital Terrestrial Television (DTTV), a government mandated undertaking that entails huge investments coupled with considerable risks.

By being an early-adopter of DTTV, ABS-CBN is a major market force that compels other networks to follow suit, thereby accelerating the digital transition timetable. Without an early-adopter willing to take the risks inherent in shifting to new technologies, the transition to DTTV in the Philippine broadcasting industry would be much slower.

While many Filipinos are discovering the expanded entertainment offerings of digital television, few are aware of its most important feature — the ability to carry a nationwide emergency broadcast system.

By making digital television ubiquitously available throughout the country, government agencies can use the emergency broadcast system to provide every household with real-time, life-saving information in times of crises.

Typhoons Ondoy and Yolanda introduced us to a strange, new normal where global warming summons gale-force winds and diluvial downpours that wipe out Filipino lives in the thousands, in a snap.

COVID-19 is now introducing us to an even stranger, newer normal where bats and pangolins locked in Chinese wet market cages lash back with a corona virus that turns tens of millions of people all over the world into prisoners in their own homes.

Moreover, on Mothers’ Day this year, those of us quarantined in the National Capital Region were all reminded that disasters don’t take a number and wait in queue as an earthquake hit Occidental Mindoro in the wee hours of the morning while Typhoon Ambo crept towards the eastern coast of Mindanao.

If we are to navigate this dangerous world, leveraging digital technology to disseminate timely and accurate information is the only way we can prevail over the perils wrought by men, by beasts, and by nature.

MY FERVENT HOPE

As the trade representative of the broadcasting industry, the KBP stands behind ABS-CBN’s efforts to return on air.

It is my fervent hope that the KBP’s continuing efforts to spur constructive and productive conversations will convince decision-makers in government that allowing ABS-CBN to resume broadcasting is the course of action that yields the greatest good for the greatest number of Filipinos.