ABS-CBN turns to profit on labor cuts

Friday, April 28, 2006

ABS-CBN turns to profit on labor cuts
By Darwin G. Amojelar, Reporter

ONE-TIME gains made from an employee-reduction program and other production cost cuts helped ABS-CBN Corp. turn to profit in the first quarter of the year.

Addressing the company’s tosckholders, Eugenio Lopez 3rd, ABS-CBN chairman and chief executive officer, said preliminary figures for the first quarter showed the company made a profit of P121 million, a turn around from the P114-million loss registered in the same period last year.

Lopez said the improved performance was due to more judicious spending on production and a lower cost base brought about by last year’s reduction in the company’s head count.

The company has trimmed its manpower by 400 from 1,800 earlier.

He added that license fees generated from the company’s DirectTV boosted income in the first three months of the year.

“Although we are not yet completely out of the woods, 2006 promises to be a turn-around year. Indeed the seeds of recovery are in place, and we intend to nurture these seeds to reach full blossom and bear fruit,” Lopez said.

Randolph T. Estrellado, ABS-CBN vice president for finance, said the company’s revenues, although slightly down from last year, was an improvement compared with the 12-percent drop in the last quarter of 2005.

Lopez added, “We don’t expect revenues to be up this year [due to industry’s weak advertising spending]. Our biggest challenge is to be profitable [even with] flat revenues. If we can do that, then I think our profitability will increase.”

The company’s gross revenues went up 8 percent to P17.047 billion, driven by license fees from DirectTV and continued growth of ABS-CBN Global.

Mario Rosario Santos-Concio, ABS-CBN executive vice president and head of the entertainment group, said the company is eyeing to regain leadership over the prime-time slot by July.

“Our programming is becoming seasonal and a change in program [is planned] perhaps every quarter. We [are] also launching 11 new shows,” she said.

“Our shows [are the] most efficient now because in the past we [were] producing [expensive] shows,” she added.

Last year, ABS-CBN’s audience share averaged 34 percent compared with rival GMA Network’s 45 percent. In prime-time shows, ABS-CBN’s audience share improved to 36 percent in the fourth quarter of 2005 vis-à-vis GMA’s 46 percent, while in metered provinces the Lopez family-controlled broadcasting company maintains the lead.

Lopez also disclosed that the company plans to introduce MYX, an Asian-oriented music channel in California. “It’s an opportunity to go beyond as a Filipino channel in California and it is a beginning to allow the company to even grow more,” he added.

Estrellado said the company is setting aside P1.2 billion for its capital spending program this year. Of this, P600 million to 700 million will be allotted for maintenance and the remaining would go to film rights acquisitions.

Internally generated funds will fund the spending program, he said.

ABS-CBN will amortize its debts in the next three years amounting to P1.5 billion a year.

The company’s obligations reached P5.7 billion last year from P4.1 billion the year before. “Two-thirds of the company’s debt is in US dollar but its hedge in Philippine peso,” Estrellado said.

http://www.manilatimes.net/national/2006/apr/28/
yehey/business/20060428bus7.html