ABS-CBN well positioned for growth

MANILA, Philippines - ABS-CBN Broadcasting Corp. expressed confidence yesterday that it is well-positioned for growth, even with the entry of the Philippine Long Distance Telephone Co. (PLDT) Group into Associated Broadcasting Corp. (ABC-5).

This as the company posted a 12-percent growth in its reported net income for the first nine months of the year to P1.35 billion from P1.2 billion in the same period last year. Including adjustments relating to the consolidation of SkyCable, core net income grew 16 percent to P1.4 billion from last year’s P1.4 billion.

ABS-CBN officials said they expect to end the year with a flat or at least 10-percent growth in reported net income. Capital expenditure for this year is at P2.8 billion while next year’s capex budget is at P2.6 to P2.8 billion.

They said that they have already successfully diversified their business, such that 42 percent of revenues are coming from direct sales and 58 percent from airtime (advertising). By next year, the company expects direct sales and airtime to have an equal contribution to the topline percentage wise.

Mediaquest, the media arm of the PLDT Group and a wholly owned subsidiary of the PLDT Beneficial Fund, earlier acquired 75 percent of ABC-5 and talks are ongoing for the acquisition of the remaining 25 percent.

ABS-CBN chief finance officer Rolando Valdueza said the entry of the PLDT Group into ABC 5 is a welcome development for so long as it will contribute to the advancement of the broadcasting industry. “At least, the viewers will have more choices,” he pointed out.

He noted that ABS-CBN’s business strategy is designed to prepare it to compete. “Our business model has been proven correct. We have successfully diversified our business,” he said.

At present, about 42 percent of ABS-CBN’s revenues come from direct sales, which includes non-advertising revenues of SkyCable, ABS-CBN Global, Star Cinema, ABS-CBN Publishing, and cable channel subscriptions.

Company chief research officer Vivian Tin explained that with the advertising market not growing and if the company continues to rely on airtime, it will be very destabilizing. “Diversification has offered us a lot of resilience. We have been able to monetize our content and sell it among a number of outlets, including overseas,” she pointed out.

She said they have remained focused on their viewers, not on competition, and this has kept their programming quite strong.

Meanwhile, ABS-CBN said that its advertising revenues from political advocacies has already reached P460 million as of last week.

Valdueza added that October has shown a five percent growth in airtime revenues while that of November is expected to post a double digit growth.

Earnings before interest, taxes, depreciation and amortization (EBITDA) for the first nine months of the year was at P5.16 billion while EBITDA for the third quarter was P1.79 billion.

Consolidated revenues for the January-Sept. 2009 period was recorded at P18.34 billion, an 11 percent growth year-on-year.

The company’s revenue diversification continued to improve as direct sales, including sales of services from SkyCable grew 19 percent year-on-year to P7.67 billion. Airtime revenues grew five percent to P10.68 billion.