MANILA, Philippines — Broadcast giant ABS-CBN Corp. fell into the red in the first six months after the pandemic and the Duterte administration’s closure of the network’s free television and radio channels left revenue streams drying up.
In a disclosure to the stock exchange on Thursday, the Lopez-led network reported a net loss of P3.93 billion for the first six months, reversing last year’s P1.5 billion profits. Broken down, consolidated revenues sank 36% year-on-year, while expenses decreased 11.4%.
ABS-CBN said succeeding orders by regulators to stop the network’s broadcast business in both free channels and digital TV last May 5 and June 30, respectively, exhausted revenue sources. In second quarter alone, net losses amounted to P3.18 billion.
“These events in addition to the COVID-19 pandemic that the country is facing, drove down both the advertising and consumer revenues of the company,” the network said.
The financial outlook is bleak for succeeding quarters following the ultimate rejection of ABS-CBN’s franchise application by the House of Representatives last month. “It is possible that the full brunt of these losses will be felt this quarter after the final announcement of the franchise denial,” said Astro del Castillo, managing director at First Grade Holdings Inc.
“Perhaps not as steep of a decline, but still lower (net income),” he added.
After the disclosure, shares at ABS-CBN are trading up 0.69% at P7.30 apiece as of 12:24 p.m.
Broken down, the network’s closure last May pulled down advertising revenues by 53.9% from January to June after “suffering a sharp decline in the second quarter.” As it is however, advertising earnings are coming off from a buoyant 2019 when senatorial elections boosted inflows.
Advertising accounted for 39% of revenues, down from 54% same period a year ago, figures showed.
Subscription revenues, which cover earnings from cable, broadband and digital businesses, among others, was one area of growth, inching up 3% year-on-year. Overall, Sky’s operating revenues rose 9.4% on the back of higher subscriptions, enabling profits of P115 million.
But other ABS-CBN ventures did not perform better. The bigger media and studio entertainment segment, which captures ABS-CBN’s free and cable channels such as Cinema One, sank into the red with P3.58 billion losses after revenues more than halved from last year.
Digital shift yet to pay off
ABS-CBN’s digital shift is also yet to deliver results. While IWant TV viewers rose to a daily average of 1.6 million after May, earnings from digital and interactive media, unaffected by the franchise debacle, dipped 9.1%. Losses widened to P347 million.
“It is still possible to capitalize on digital, but this will take time. The shift of the industry is towards that strategy anyway so they would need to invest on good content to attract not only the audience but also advertisers,” Del Castillo said. Capital expenditures stood at P1.58 billion in first half.
Consumer businesses such as the recently closed KidZania amusement park and ABS-CBN Studio Experience, also trimmed earnings by more than four times before their shutdown. Net losses reached P117 million.
Declining revenues across business lines more than offset lower expenses. Production costs shrank 16.9% year-on-year after ABS-CBN “ceased producing new content” following movement restrictions due to the pandemic.
Cost of sales and services sank a bigger 21.4% year-on-year, while general and administrative disbursements rose 5.3% from year-ago levels due to “the company’s corporate social responsibility programs such as ‘Pantawid ng Pag-ibig’” for pandemic victims.
As of the first six months, ABS-CBN Corp. had existing loans amounting to P25.84 billion. The broadcast firm earlier said obligations would continue to be honored despite the franchise denial.