Steady earnings to ensure ABS-CBN’s dominance in local broadcast industry

Media giant ABS-CBN Broadcasting Corp. said stable EBITDA margins will ensure its dominance in the highly competitive broadcasting industry.

Following a strong recovery last year, ABS saw its EBITDA (earnings before interest, taxes, depreciation and amortization) growing by 18 percent to P4.29 billion from P3.6 billion in 2002.

EBITDA reflects the company’s ability to generate cash from operating its business units. This cash can be used for paying off debt and for investing in promising new projects.

ABS-CBN attained the best EBITDA performance among Philippine broadcasters due to its diverse sources of revenues.

ABS-CBN chief financial officer Randy Estrellado said: "This means that we are not solely dependent on advertising revenues which vary based on the economic cycle. A significant portion of revenues come from cable subscription, both local and international, which from experience is quite resilient to the ups and downs of the economy."

Estrellado said the impressive EBITDA performance was due to management’s determined efforts to "drive revenues, optimize operating efficiencies and closely manage capital spending."

He said the cash pile improves ABS-CBN’s financial position and ensures it can settle all obligations due in the next 12 months. Net interest bearing debt in 2003 was down to P4.21 billion and net debt-to-equity stood 32 percent versus 46 percent the previous year.

ABS-CBN’s 16-year dominance of the industry stems from its ability to provide high quality content and make such content available on multiple platforms such as film, tele-vision, radio, publications and recording.

According to CLSA Asia-Pacific Markets analyst Alex Pomento ABS-CBN’s growth in 2004 "would come from improving ad minutes due to campaign-related expenses and the likelihood that effective ad-rates would increase at least eight percent this year."

ABS-CBN reported a 500-percent increase in its net income last year to P1.01 billion from only P166 million in 2002, fueled by a double-digit growth in revenues.

Consolidated gross airtime and other broadcasting-related revenues rose 12 percent to P11.06 billion from only P9.91 billion

the previous year with growth coming from airtime revenues.

Airtime revenues, which primarily consisted of advertising revenues from VHF and UHF channels and AM and FM radio stations increased by 14 percent to P10.85 billion. This was attributed to strong growth in advertising minutes.

Channel 2’s airtime revenues, which account for 93 percent of total airtime revenues, grew 15 percent to P9.9 billion from P8.7 billion.

This year, ABS-CBN is allocating P1.5 billion for its capital expenditures, and film and programming rights acquisitions.

To further improve its profitability, ABS-CBN is looking at further expanding its operations in Australia and Canada in line with the continued development of its international business.

The media giant also intends to expand its cable services in Asia, particularly in Hong Kong, Singapore and Taiwan.

ABS-CBN, which started its global expansion in 1998, is exporting its locally produced programs like soap operas, games shows and youth programs in the international market through its international sales and distribution.

ABS-CBN is looking at selling its programs to new markets in Asia, Europe, Africa and Latin America. The move follows the successful launch of the company’s two drama series – "Pangako Sa Iyo" and "Mula Sa Puso" in Malaysia, Indonesia and Brunei in 2002.