GMA Network bullish on 2011 prospects

MANILA, Philippines – Publicly listed GMA Network expressed optimism about prospects for next year, with both top and bottom line expected to be much higher compared to this year.

In an interview, GMA chairman Felipe Gozon said that they are “very optimistic” about 2011. “Although we increased our advertising rates this year, the advertisers have already accepted it. Everybody is also optimistic about the prospects of the economy,” he explained.

By next year, Gozon said they will be launching a new channel that will be called GMA News TV. Their second channel, QTV, has been losing money for some time now, so that a change in format to an all-news channel is necessary, he added.

For this year, GMA expects that it will not be able to reach its target of P3 billion in net profits and P12 billion in gross revenues.

Gozon explained that while fourth quarter revenues may be higher compared to the same period last year, third quarter revenues were down.

The fourth quarter is traditionally a lean period for media, considering that advertisers have almost used up all their budget. “Last year, during the fourth quarter, there was already some amount of revenues generated from campaign-related ads. If we equal that, that would be very good,” he said.

He also revealed that their radio unit performed more than expected and will contribute around P400 to P500 million of total revenues.

The international operations, he said, will account for around P1 billion, while their cash cow GMA 7 will account for more than 80 percent.

The television and radio network is still finalizing its capital expenditure budget for next year although Gozon expects it to be lower than P1 billion.

GMA president Gilberto Duavit Jr. said that most of the spending next year will be for “regional push.”

“Our existing capex base is P500 million. Any amount that will be spent on top of that will be project-based,” he said.

Meanwhile, both Gozon and Duavit expressed doubts whether the 2015 deadline set by the government for the complete shift from analog to digital transmission can be achieved.

“The issue still boils down to affordability. Many households still use analog televisions. When we shift to digital, they will have to use set-top boxes to enjoy the benefits of digital tv. The last mile to the households is the issue here because the television networks are ready to shift to digital,” they said.

Duavit said that they may have to spend an additional P300 to P500 million for the shift to digital transmission. “We have not acquired the transmitters, but all our equipment are digital-ready,” he pointed out.

For the first nine months of 2010, GMA posted revenues of P10.87 billion, eight percent higher compared to the same period last year.  

It said that airtime revenues from all platforms were ahead of last. Subscription revenues from international operations posted double digit growth from a year ago due to a higher subscriber base.