GMA-7 mulls IPO next year

GMA Network Inc. is planning to raise funds through an initial public offering next year to beef up its facilities in a bid to reclaim the number one position in the broadcasting industry.

GMA 7, the top station until the People Power Revolution in 1986, is expected to join big-ticket issues ‚ Caltex Corp., Shell Petroleum Philippines Corp. and energy companies PNOC and Mirant Corp. – which have signified their interest in offering their shares to the public next year.

An industry source said GMA-7 is studying the feasibility of going public next year to sustain the upward trend in its ratings and sales performance and to improve the loading of its programs.

The same source said GMA is just waiting for better times to sell its shares to the public.

Once considered a get-rich-quick investment option, an IPO is a means of raising funds for expansion and capital, employed by companies as a cheaper alternative to the more expensive debt instruments such as bonds and bank loans. It is done by selling a portion of the company’s shares of stock at a price based on its book value or on its projected earnings for the year. These stocks are then listed with the Philippine Stock Exchange so that stockholders and investors may trade the issue.

GMA 7 is hoping to topple industry leader ABS-CBN Broadcasting Corp. from the top spot by producing big budget high-quality soap operas and programs and by continuing to offer lower primetime advertising rates.

The broadcast firm said it has been successful in attracting more advertisements as corporations have jacked up their commitments by up to 70 percent from last year, GMA 7 said.

Based on the latest available financial data, GMA’s revenues grew by nine percent for the first nine months of 2002 from P2.27 billion to P2.9 billion. The 2001 figure included about P90 million in political ads. Without this non-recurring revenue, GMA’s 2002 sales performance would have shown a P322 million or 12- percent improvement.

For September alone, GMA’s gross revenues reached an all time high of P473 million or 61 percent more than the previous level of P294 million.

Revenues have increased mainly as a result of GMA’s surge in the ratings game where it is now neck-and-neck with ABS-CBN in the morning (6 a.m. to 12 noon) and afternoon (12 noon to 6 p.m.) timeslots while making some headway in the much-coveted primetime slot (6 p.m. to 12 midnight).

Felipe S. Yalong, GMA senior vice president for corporate services group and director, attributed the network’s outstanding performance to the considerable improvement in the ratings, audience share and loading of GMA’s programs.

GMA 7 expects its 2002 revenues to grow 17 percent to a record P3.54 billion from P3.023 billion a year earlier.

It has a network of 45 VHF and two affiliate stations nationwide, and can be seen in a number of households in Asia, Australia and Hawaii via satellite. It can also be heard on the airwaves through dzBB-AM and dwLS-FM in Manila; dySS-AM and dyRT-FM in Cebu; and in 27 RGMA radio stations throughout the country.

The network is owned by the management triumvirate composed of Felipe Gozon, Gilberto Duavit, and Menardo Jimenez who introduced a programming concept catering to the new audience.

Poor market conditions marked by the small volume of traders and low capital circulating within the bourse have been preventing corporations from tapping the equities market. The weak economic environment aggravated by the worsening global slowdown has made it even more difficult to attract investors into the stock market.

The Philippine Stock Exchange is hoping to attract more companies – from SMEs to giant multinationals – to list their shares and provide the impetus for a long-awaited stock market rally by next year.

The PSE is in active discussions with small and medium enterprises, which seemed more eager to offer their stocks to the public.