ABS-CBN to spend P6B for 6 sound stages in Novaliches

MANILA, Philippines - ABS-CBN Corp. is investing between P5 to P6 billion to build six sound stages in a recently-acquired 15-hectare property in Novaliches, allowing the broadcasting company to save at least P100 million a year from location rental expenses alone.

Company chairman Eugenio Lopez III said in an interview following yesterday’s ABS-CBN stockholders meeting that since the sound stages will be state-of-the-art, they can lease out the use of these facilities to foreign content producers.

At present, about 80 percent of content being produced by ABS-CBN is done remote while only 20 percent is done inside the studios. “Once the sound stages are completed, we hope that 80 percent will be done in the studios,” Lopez pointed out.

Around P3 billion will be spent over the next two years to build two to three sound stages. Of the 15-hectare property, around five hectares will be devoted for the sound stages and another five hectares for the office structures. The cost of building the sound stages is around P1 billion each.

Lopez also pointed out that the construction of the sound stages will not only mean less cost and even increased revenues (from leasing out the facilities) but also improved quality of the shows and films produced. “When you produce remotely, we encounter problems in terms of quality, lighting and audio,” he said.

ABS-CBN is allocating around P5 billion for its capital expenditures this year, most of which will go into the company’s move to shift from analog to digital terrestrial television transmission as well as into subsidiary Sky Cable’s expansion of its cable and broadband business.

Also during the interview, Lopez said so far, revenues have been softer than they would like them to be. “But on the average, it is not bad,” he pointed out.

He expressed confidence that they will still hit their P3.2-billion net income target for 2011. Last year, ABS-CBN reported a net income of P3.2 billion, a huge jump from the P1.7 billion made in 2009, largely due to political advertisements. Also in 2010, the company posted consolidated revenues of P32.19 billion, a 30 percent growth from the previous year. Unit Sky Cable, meanwhile, improved its revenues by 10 percent in 2010, with broadband revenues growing 64 percent year-on-year.

Meanwhile, Lopez said ABS-CBN Global has been experiencing some downtrend, especially in terms of new subscriptions, in areas like the Middle East and Japan. “So far, subscriber growth has been flat in these areas. But this year, we are hopeful about the prospects for our international business as we expand our offerings,” he revealed.

He explained that they plan to move their international subscribers from cable television or satellite to IP-TV. “This will mean more revenues for us because we do not have to share half of our revenues with the foreign cable or satellite TV provider,” he said.

Lopez revealed that they have already launched IP-TV in Canada, Japan and England. “It is too early to tell what the prospects of IP-TV will be. But with IP-TV, subscribers can watch the programs when they want it. We will also have more flexibility in terms of pricing because of the savings we will generate,” he added.

About 60 percent of ABS-CBN’s revenues are from advertisers while 34 percent is from consumer sales (subscribership). “The shift to IP-TV will change all these. We hope to increase the share of consumer sales to 50 percent. This is an area where we expect growth to come from in the next few years,” Lopez said.