ABS-CBN vows to continue paying debts during shutdown
Media giant ABS-CBN Corp. promised to continue paying debts to banks even as the Duterte administration dealt a blow to its main business, broadcasting, threatening to wipe out thousands of jobs.
A day after the National Telecommunications Commission (NTC) ordered ABS-CBN to shutter its television and radio broadcasts, ABS-CBN group chief financial officer Ricardo Tan Jr. told the Inquirer that contracts will be honored.
“We have been in touch with our creditors and also assured them that we will be servicing all our debts according to the existing payment schedule,” Tan said.
He added that the company’s suppliers and service providers will also be paid for goods delivered and services rendered.
ABS-CBN’s latest financial filing in the third quarter of 2019 showed it had long-term debts to banks amounting to P21.2 billion. It said P259.3 million was due in 2020.
The NTC’s order, however, is significant for ABS-CBN and its roughly 11,000 employees since television advertising is its biggest source of revenues and almost all its profits.
Inquirer sources within the company said ABS-CBN CEO Carlo Katigbak promised employees during a video teleconference Tuesday (May 5) night that their jobs would be safe for at least the next three months.
“We are committed to keep as many jobs as possible,” Katigbak told over 2,000 ABS-CBN employees that joined the session, which was held after ABS-CBN stopped broadcasting.
As of September 2019, ABS-CBN said 53 percent of its P32 billion in revenues came from advertising. Its profit of P2.8 billion all came from advertising and movies.
The rest of its business, like SkyCable, broadband, digital media and theme parks, were still losing money during this period.
“Advertising for ABS-CBN (Channel 2) accounts for bulk of revenues, which will of course no longer exist,” April Lee Tan, COL Financial Group Inc. research head, said on Tuesday.
“Although ABS-CBN said it will continue to meet with obligations, it cannot be sustained unless it will be allowed to reopen,” Tan said.
She said this could eventually result in layoffs.
Chris Mangun, research head at stock brokerage firm AAA Equities, said in an interview this will depend on the length of the shutdown of broadcast operations.
In its cease and desist order to ABS-CBN, the NTC said the company’s 25-year franchise had expired on May 4, 2020.
The NTC reversed itself after commissioner Gamaliel Cordoba gave assurances last March that ABS-CBN would be granted a provisional authority to operate since bills for franchise renewal are pending in Congress.
“If they don’t get their franchise soon, they are going to lose a ton of money,” Mangun said.
Mangun, however, was more optimistic given encouraging statements from lawmakers and Malacañang’s statement that it will remain neutral.
“It’s still shaky but I think there’s a chance they can get a new franchise,” he said.
ABS-CBN shares were on trading halt on Wednesday (May 6) as the Philippine Stock Exchange sought details on the impact of the NTC order. Shares of main rival GMA Network Inc. surged higher by 23.7 percent to P5.90 apiece.
The Philippine Competition Commission said during a Senate hearing last February that GMA could end up with a market share of over 50 percent should ABS-CBN go off the air. The rest will be divided among smaller rivals like TV5 and CNN Philippines.
Edited by TSB
RELATED VIDEO
