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GMA 7 seen to miss profit target

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BROADCAST giant GMA Network Inc. will likely miss its full-year profit target of P2.3 billion due to weaker-than-expected advertising spending across the entire media industry.

GMA chair Felipe Gozon said despite improving economic conditions in the country, the advertising budgets of most big corporations had shrunk, leading to lower revenues.

GMA’s P2.3-billion target is already lower than the company’s previous goal of P2.8 billion, but is higher than last year’s profit of P1.715 billion.

“There has been a reduction in total ad spending. We haven’t recovered,” Gozon told reporters late Thursday. “Revenue (growth) in December was slow compared to the previous months as advertisers followed an industry-wide reduction in ad spend,” he said.

The slower growth in revenues was partly caused by economic crises in the United States and Europe, where most multinational companies operating in the Philippines are headquartered.

Expenses also climbed in the fourth quarter, following the payout of bonuses for employees and higher production costs.

“The construction of the originating stations in Ilocos and Bicol likewise contributed to the rise in operating expenses,” Gozon said.

For the first nine months of 2012, GMA’s net income totaled P1.58 billion, up 0.4 percent from the same period last year, due to the company’s improved ratings that helped grow ad revenues.

Despite the slump in the fourth quarter, Gozon remained optimistic about prospects for next year, given the upcoming mid-term elections that usually result in huge windfalls in terms of political advertisements for media firms.

Under the law, airtime minutes sold to politicians running for office are equivalent to listed rate card prices, minus a 20-percent discount. Today, Gozon said a 30-second slot on GMA’s primetime programs could set advertisers back by as much as P500,000.

He said revenues from traditional advertisers were also starting to show signs of recovery, noting that 60 percent of GMA’s available airtime for the whole of 2013 had already been sold as of the end of last week.

He said the annual increase in the company’s advertising rates would also help keep revenues up.


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