GMA7 shares up 24% after ABSCBN’s shutdown

Shares of broadcasting giant GMA Network Inc. surged by 23.69 percent at the local stock market on Wednesday on expectations that its share of local advertising revenues will balloon while rival ABSCBN Corp. is off the air.

At its closing price of P5.90 per share on Wednesday, GMA-7 had a market capitalization of around P16 billion. It was among the day’s most actively traded companies.

GMA-7 is now valued a bit higher than ABSCBN’s valuation of P15.08 billion as of Tuesday.

Veteran stock broker Joseph Roxas, president of Eagle Equities Inc., said the stock market was surprised by the government’s order to shut down ABSCBN.

The spike in stock prices of GMA-7, he added, priced in the decline in competition in the broadcasting industry following the shutdown of its major competitor.

The Philippine Stock Exchange (PSE) suspended trading of common shares and depositary receipts of ABSCBN on Wednesday following the shutdown order issued by the National Telecommunications Commission (NTC).

The trading suspension will be lifted one trading day after dissemination of the full disclosure to the investing public, the PSE said in an advisory on Wednesday.

The PSE required ABSCBN to submit a full disclosure on the impact of the cease-and-desist order (CDO) issued by the NTC on its business, financial condition, operations, and prospects, as well as its business continuity plan, risk mitigation measures, and such other material information for the investing public.

“Under the PSE disclosure rules, the exchange is mandated to ensure that the investing public has access to full, fair, timely and accurate information where such information may reasonably be expected to materially affect the market activity and the price of securities,” the PSE said.

Following the expiration of its franchise, the NTC on Tuesday prohibited ABSCBN from continuing its broadcast operations.