ABS-CBN sees lower political ad spending

Holding firm ABS-CBN Corp. is tempering expectations for political ad spending during next year’s presidential elections—a traditional boom period for media companies—as it underscores a business model that will allow it to further cut its dependence on television advertising.

ABS-CBN chair Eugenio “Gabby” Lopez III said in a briefing following the company’s annual meeting Friday that the candidates in 2016 would likely spend less than those involved in the electoral exercise five years ago.

“2010 was an unusual year given who the presidential candidates were,” Lopez told reporters. “So I don’t think [spending] will be significant … as we’ve had in the past.”

President Aquino, running with a campaign that promised to end perceived widespread corruption, won by a landslide in 2010.

The windfall from election-related advertising propped up its 2010 net income to P3.2 billion, which remains ABS-CBN’s all-time record. In 2014, the company’s net income was flat at P2 billion year-on-year.

The outlook on ad spending in 2016, however, fits the company’s strategy to move away from traditional television advertising as it grows other business lines like pay television and broadband, under SkyCable, and ABS-CBN mobile, a telco service powered by Globe Telecom.

Information contained in its annual report showed that consumer sales, which includes SkyCable, accounted for 44 percent of total revenues in 2014, against the 42 percent seen in 2013, with the rest coming from advertising. Lopez said that the shift would continue through the next decade.

The company will nevertheless continue to invest in the roll-out of digital television, which it identifies as a new area of growth.

Carlo Katigbak, ABS-CBN chief operating officer, said the company would invest P500 million to launch its digital television service in Cebu, Davao, Iloilo, Bacolod and Cagayan de Oro. The service so far is available only in Luzon.

Features like better television quality will help ABS-CBN stay competitive in a space that has seen the entry of new players like CNN Philippines and Bloomberg Television Philippines, via a partnership with Philippine Long Distance Telephone Co.’s CignalTV, a rival of SkyCable.

“I think our market is primarily a local market. Both Bloomberg and CNN serve an English-speaking market. That’s not TV Patrol, and ANC services the English-speaking market in a competent and very satisfactory manner,” Lopez said, referring to the company’s own news channels. “Those are deals where the local guy pays a lot of money to Bloomberg and CNN. We don’t see the need to do that.”