ABS-CBN expects banner year

MANILA, Philippines - Multimedia conglomerate ABS-CBN Broadcasting Corp. expects 2010 to be a banner year with net earnings seen to reach P2 billion on the back of higher advertising revenues from both political and traditional ads as well as the growing subscriber base of the cable and broadband businesses under SkyCable.

“Barring any unforeseen circumstances, we expect a strong double-digit growth in our bottom line this year. We’re aiming to hit P2 billion. The last time we posted P2 billion in income was 10 years ago,” said ABS-CBN chief finance officer Rolando Valdueza in a press briefing yesterday.

Valdueza is confident ABS-CBN will perform much better this year given a strong first quarter which saw political and advocacy advertising revenues rising to P1.2 billion. 

He also noted the significant increase in revenues from regular advertisements in the first quarter, which he said was unexpected considering it was usually a slow quarter.

The favorable environment has allowed ABS-CBN to raise its advertising rates by 15 percent in February this year.

Valdueza said SkyCable is expected to post a net income of P200 million this year, 22 percent higher than the P164 million recorded in 2009.

Last year, ABS-CBN reported a 23 percent jump in net income to P1.7 billion with consolidated revenues expanding by 11 percent to P24.85 billion, inclusive of full-year revenue contribution from Sky Cable, amounting to P3.72 billion. 

A tight control over operating expenses and prudent financial management resulted in a 37-percent jump in core net income from P1.31 billion to P1.79 billion.

Earnings before interest, taxes, depreciation and amortization EBITDA reached P6.51 billion, yielding an EBITDA margin of 26 percent.

“We had a great year last year in spite of the crisis, “ Valdueza said.

The fast-growing consumer sales business accounted for 42 percent of ABS-CBN’s total revenues mainly driven by the double digit growth in the subscriber base of its international channel through US-based subsidiary ABS Global Inc. and contribution of SkyCable.

Consumer sales went up 18 percent to P10.39 billion with ABS Global accounting for 51 percent of the total while SkyCable contributed 34 percent of the total or P3.58 billion.

Despite a weak first quarter and a six-month deferral of airtime rate increases to August 2009, consolidated advertising revenues rose seven percent to P14.46 billion, with 92 percent coming from Channel 2, Manila Radio and the Regional Network Group.

As of end-December last year, ABS Global had an estimated total subscriber base of 2.16 million worldwide or 13 percent higher than the year ago level. Buoyed by strong double digit subscriber growth in the United States, the Middle East, Australia, Canada and the Asia-Pacific, ABS Global’s subscription and other service revenues grew eight percent year on year in dollar terms and by 16percent in peso terms.

Valdueza said the media giant has earmarked PP3.3 billion for its capital expenditures this year, P1 billion of which will go to the continued rollout by SkyCable of its digital boxes and expansion of its broadband business. The 2010 capex is higher than the P2.95 billion spent the previous year.

SkyCable’s digitalization of its cable network and rollout of digiboxes to 50 percent of its Metro Manila subscribers, allowed it to address cable piracy.

Sky Broadband, on the other hand, claims to be the fastest residential broadband service with speeds of up to 12 MBps.

Valdueza said P700 million of the programmed capital budget, which will be sourced internally, will be used to fund film rights acquisitions while the rest will go to facility/equipment upgrade. Sky Cable also expanded its product portfolio with the launch of

Sky Voice, the most affordable international voice-calling service, and pioneered the offering of HD-quality cable TV content in the Philippines with Sky Cable HD in 2009.