Media giant ABS-CBN on Wednesday promised to continue paying its debts to banks even after the government had shuttered its main business, broadcasting, threatening thousands of jobs.On Tuesday, a day after ABS-CBN’s 25-year franchise expired, the National Telecommunications Commission (NTC) ordered the network to halt its radio and television operations, breaking its promise to Congress to give the broadcaster provisional authority to operate while lawmakers decide its application for license renewal.
Contracts to be honored
ABS-CBN signed off after 7 p.m. The next morning, the Philippine Stock Exchange suspended trading on the company’s shares and depositary receipts as it sought clarity on the impact of the government order.
But ABS-CBN group chief financial officer Ricardo Tan Jr. told the Inquirer that the company would honor its contracts.
“We have been in touch with our creditors and assured them that we will be servicing all our debts according to the existing payment schedule,” Tan said.
The company’s suppliers and service providers will also be paid, he said.
ABS-CBN’s latest financial filing, for the third quarter of 2019, showed that the company had long-term debts to banks amounting to P21.2 billion. The company said P259.3 million was due in 2020.
The NTC order, however, could break ABS-CBN and throw its 11,000 employees into the street, as television advertising is the network’s biggest source of revenue and almost all of its profits.
ABS-CBN said that as of September last year, 53 percent of its P32-billion revenue came from advertising. It said its profit of P2.8 billion came from advertising and movies.
Its other businesses—SkyCable, broadband internet, digital media and theme parks—were losing money during the period, the company said.
“Advertising for ABS-CBN (Channel 2) accounts for the bulk of revenues, which will, of course, no longer exist,” April Lee Tan, COL Financial Group Inc. research head, said on Tuesday.
No layoffs for 3 months
“Although ABS-CBN [says] it will continue [meeting its] obligations, it cannot be sustained unless [it is] allowed to reopen,” she said.
Tan said the situation could lead to layoffs, but Inquirer sources within the company said CEO Carlo Katigbak had committed to keep workers for as long as possible.
That, however, depends on how long the network will remain shut, according to Chris Mangun, research head at stock brokerage firm AAA Equities.
“If they don’t get their franchise soon, they are going to lose a ton of money,” Mangun said.
But he was optimistic, saying “there’s a chance they can get a new franchise.”
If that happens within the next three months, the employees of the network have no problem.
ABS-CBN supervisors’ union president Raul de Asis told the Inquirer on Wednesday that the company assured its employees the day before that it would pay their full salaries and benefits for the next three months.
De Asis said the commitment covered all rank-and-file employees and program-based contractuals.
ABS-CBN talent Bianca Gonzalez said in a tweet that company executives were taking voluntary pay cuts.
GMA 7 surges
As trading on ABS-CBN shares and depositary receipts ceased on Wednesday, the shares of its rival GMA Network Inc. turned more valuable to investors, surging 24 percent on expectation that the company would corner the bulk of television advertising during the top broadcaster’s shutdown.
GMA 7 shares gained P1.13 to close at P5.90 per share on Wednesday, giving the company a market capitalization of around P16 billion, a bit higher than ABS-CBN’s valuation of P15.08 billion as of Tuesday.
GMA 7 was also among the most actively traded stocks on Wednesday with about P186.7 million worth of shares exchanging hands on the stock market.
As ABS-CBN looked for ways to restore operations, businessman Manuel V. Pangilinan was asked in an online press briefing about the possibility of the top broadcaster leasing airtime from his TV5.
“There has never been any discussions with ABS-CBN in that regard and to the extent that they have been asked to close down, the train has left the station already,” Pangilinan said. “It’s something that is not on our minds.” —WITH REPORTS FROM PATRICIA DENISE M. CHIU AND DORIS DUMLAO-ABADILLA