ABS-CBN sees growth despite slowdown in ad revenues

Media conglomerate ABS-CBN Broadcasting Corp. said it expects to ride out the ongoing global economic turmoil even as advertising revenues are forecast to either contract or flatten next year.

Rolando P. Valdueza, ABS-CBN chief financial officer, said the continued expansion and strong growth of ABS-CBN Global would help the media firm survive the financial crisis which has spread across the globe.

Valdueza said ABS Global’s subscriber base is seen to increase 13 percent this year and will continue to grow at a healthy double-digit rate with the addition of new markets.

The company recently penetrated Canada, Australia, Japan and Europe and is now setting its sights on Taiwan, Korea and Cyprus to further widen its reach.

Vivian Tin, vice-president for ABS-CBN’s research and business analysis, said Filipinos are least likely to give up their subscription to The Filipino Channel amid tough business conditions.

“They would eat out less but they would not give up their home theater,” she said.

Improving sales from goods and cost-cutting measures will also mitigate the effects of lower advertising revenues.

“With an expected double-digit growth in direct sales and cost-containment measures, we’ll be able to weather 2009 well,” Tin said.

While there has been a slowdown in advertising minutes in September and October, ABS-CBN bounced back in November with advertising minutes rising five percent so far, Tin said.

Valdueza said the media company will spend P1.6 billion to P1.7 billion for its capital expenditures next year, the same level as last year.

Another P1 billion will be go to ABS-CBN’s plan to offer digital television-terrestrial service (DTT) services to align with the global broadcast industry’s thrust to switch off analog television programming as early as 2010.

He said the company is also aiming to bring down production costs to the 2006 level of P2 billion.

Meanwhile, ABS Global has acquired 2.52 million shares of Multiply.com for $5 million or $1.9806 per share, with an option to raise its stake in the social networking site to 10 percent over a two-year period.

Paolo Pineda, head of ABS-CBN Interactive, said ABS Global would need $9 million to $10 million to acquire a 10 percent interest in Multiply.com.Funding for the purchase will come from internally-generated cash.