Corporate Securities Info

Post ABS-CBN franchise scenario

/ 04:02 AM February 18, 2020

Barring a miracle, the TV and radio stations of media giant ABS-CBN would sign off for the last time at the strike of midnight on March 30.

Although some lawmakers say it can continue to operate until the adjournment of Congress in 2022 despite the expiration of its franchise, it is doubtful if it will take that course of action.


In the first place, that “continuing validity” theory does not have solid legal backing that ABS-CBN can rely on to justify its broadcasting activities after March 30.

Besides, its executives may be sued for violation of our telecommunications laws on the operation of media facilities without appropriate license or permit.


There is no dearth in our country of publicity-hungry lawyers who would do that, so why take the risk?

Come that fateful day, some 6,000 regular employees, 900 nonregular staff and 3,000 talents of ABS-CBN may find themselves out of job.

For the regular and nonregular employees, the question of whether or not they are entitled to separation pay would invariably arise.

Under existing regulations, the closure of a business establishment due to the installation of labor-saving devices, redundancy, retrenchment to prevent losses, or closing or cessation of operation entitle laid off employees to that benefit.

It would be difficult for ABS-CBN to invoke serious business losses to excuse the payment of separation pay considering that, as of end of September last year, it had a net income of P2.27 billion, which represents a 53-percent increase for the same period in 2018.

Neither can it claim that the expiration of its franchise equates to “closing or cessation of operation” because that would not result to the shutdown of the Kapamilya network.The corporate personality of its owner, ABS-CBN Corp., will remain intact and outstanding despite the nonrenewal of its franchise.

Although of immense value, the franchise is only one of its multimillion-peso assets and its loss does not prevent it from engaging in commercial activities outside of radio and TV broadcasts.


To ABS-CBN’s credit, it had the foresight to look beyond radio and TV broadcasts as sources of revenue.

It has diversified to other businesses, such as TV content production, movies and digital media, through its affiliate and subsidiary companies in the Philippines and elsewhere in the world.

Bear in mind that content plays a significant role in the success of any media outfit.

The most sophisticated or state-of-the-art broadcast facilities would be useless unless they have the material or content that can attract viewership from its market. And when it does, advertisers would not be far behind.

Judging from the high viewership of ABS-CBN’s prime-time TV offerings, it is apparent the Kapamilya network has proven its expertise in this field.

Through its digital or internet-based facilities, ABS-CBN has been able to deliver content to its target audience, in particular millennials who get their dose of news and entertainment from mobile phones, tablets and other similar gizmos.

With the use of Wi-Fi and other broadband techniques, ABS-CBN can continue to make its content available to the public and earn advertisement revenues despite the loss of its franchise.

For now, the revenue stream from digital media may be small compared to that of TV broadcasts, but taking into account the gradual shift of the viewing audience from TV sets to mobile phones and similar devices, it is not farfetched that the financial gains of the latter medium would soon be on a par with its predecessor.

Considering the owners of ABS-CBN have other sources of income and would not be impoverished by the expiration

of its franchise, they may choose to ride out the remaining two years or so of the Duterte administration and hope that the next political dispensation would be accommodating to them.

Shed no tears yet for ABS-CBN. INQ

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