ABS-CBN net income jumps 10% to P560M in first half

Media giant ABS-CBN Broadcasting Corp. reported a 10-percent growth in its first half net income to P560 million, driven by the continued strong performance of its international operations as well as lower interest expense.

ABS-CBN chief financial officer Randolph Estrellado said net sales and services grew 23 percent to P2.055 billion with ABS-CBN Global, its international arm, contributing bulk of total sales.

ABS-Global registered revenues of P1.41 billion or an increase of 24 percent from the previous year’s level of P1.13 billion as subscriber base expanded by 24 percent. Viewership increased to 1.5 million by end-June 2004 from only 1.2 million a year earlier.

Last month, ABS-Global launched its own DTH (direct-to-home) service in Australia where about 150,000 Filipinos are based. ABS-CBN’s channels were previously distributed by a third party DTH provider. ABS-Global’s The Filipino Channel (TFC) office was set up in northern Sydney.

Airtime and broadcast related revenues rose five percent to P5.55 billion in the first half, mainly due to higher revenues from flagship TV Channel 2 brought about by a combination of an increase in advertising rates and an increase in advertising minutes, even as total free-channel industry minutes went down by one percent.

Airtime revenues from other platforms, on the other hand, slid seven percent as advertisers adopted a wait-and-see attitude in view of the national elections last May.

Other broadcasting-related revenues, consisting primarily of short messaging service (SMS)-related revenues, grew 38 percent as the nature of SMS activities evolved from audience interaction.

Estrellado said other subsidiaries performed well with a growth of 21 percent to P643 million from only P531 million last year. ABS-CBN Films grossed over P100 million from box office receipts and from shares in video sales.

As a result, total net revenues increased 10 percent to P6.61 billion while operating income fell 11 percent to P1.02 billion.

Operating expenses, however, went up 15 percent to P5.59 billion, primarily due to an increase in cash operating expenses.

Estrellado said ABS-CBN is expected to incur higher interest expenses in the second half with the signing of a $120-million loan of which around $100 million was drawn in June.

With the signing of the five-year loan, total interest – bearing debt stood at P6.02 billion. Part of the loan was used to refinance all existing loans of ABS-CBN while $30 million will be invested in new cable holding company Beyond Cable in the form of a convertible debt instrument which will be converted into equity after two years.

Estrellado said the foreign exchange exposure of the principal amount is fully hedged hence the company will not be exposed to foreign exchange risk other than on the interest.

Estrellado said ABS-CBN continued to dominate the prime time slot with an average audience share of 43 percent compared with its chief rival, GMA Network Inc. accounting for only 37 percent.

He said the media conglomerate’s performance for the third quarter may not be as strong as the second quarter due to the foreseen decline in advertising revenues. To counter this, he said the company will promote exciting packages to lure in more advertisers.

Estrellado said the company will do its best to meet its full-year income and revenue growth of 10 percent this year through improved services.