ABS-CBN cuts costs by P50M; more layoffs set

ABS-CBN Broadcasting Corp. has been able to reduce its production costs by P50 million to P100 million since the start of the second quarter as part of ongoing efforts to arrest the continued decline in its viewership ratings and boost its cashflow.

ABS-CBN president and chief operating officer Luis Alejandro said the network has managed to trim production costs in two areas: production planning and talent fees. "Production planning is the key to cost management. As regards talent fees, we have not implemented any increase and we have been disciplined in implementing this strategy," Alejandro said.

In fact, Alejandro said the network has already let go of some of their talents and stopped guaranteeing the artists. "That has helped us in a way," Alejandro said.

Cost of producing news, on the other hand, is fairly under control, Alejandro said.

The network is retiring 360 employees, or 20 percent of the work force, by the end of the year as part of its three-point recovery program to reclaim leadership in the broadcasting industry, a position now held by fierce rival GMA-7.

The retirement program is expected to cost the company around P500 million. It had laid off 150 employees so far.

ABS-CBN is confident that it can recoup the cost of the retirements in less than two years; it said the move could save P350 million a year.

The network has been overhauling operations and cutting down workforce to improve operating efficiency.

Alejandro said the network will continue to focus its efforts on regaining lead in the primetime ratings, optimizing production cost and cutting expenses.

ABS-CBN holds 38 percent market share in the Mega-Manila area as against GMA-7’s 43 percent. But GMA-7 continues to lord it over in the primetime ratings (6 pm to 10:30 p.m. slot).

ABS-CBN officials, however, expect an improved performance in the third quarter this year due to new programs offered.

Although earnings for the second quarter was an improvement over the first quarter, ABS-CBN’s income for the first half of this year – P185 million – was still 67 percent lower than in the first half of last year. Airtime and other broadcast-related revenue was down six percent, while household ratings in Metro Manila slid to 14 percent from 16 percent last year.

For a long time, ABS-CBN has been the hands down industry leader, armed with the most bankable artists and personalities and more advanced facilities and technology to extend its reach to the remotest areas of the country. But starting last year, something changed.

Although ABS-CBN is still the most widely watched network outside the capital, it lost its dominance in terms of ratings and audience share in the all-important metropolitan Manila market to GMA 7.