Trading on ABS-CBN shares suspended
Shares of GMA Network sizzled on Monday after the House committee on legislative franchises junked the application for a new franchise of broadcasting rival ABS-CBN Corp. that, in turn, prompted the Philippine Stock Exchange (PSE) to suspend trading on the latter’s shares.
GMA 7 shares advanced by 10.28 percent to close on Monday at P6.65 per share, giving it a market capitalization of P20.27 billion.
Before trimming gains at close, GMA 7’s shares hit a high P8.50, up 41 percent in intraday trade from Friday’s P6.03, on expectations that its share of advertising placement will inevitably balloon now that its longtime competitor has gone off the air.
Market value
It was the day’s second most actively traded company in the thinly traded stock market on Monday, with about P498.4 million worth of GMA 7 shares changing hands.
ABS-CBN is now valued by the stock market at only P12.7 billion.
ABS-CBN shares were valued at P14.78 each as of last Friday’s closing compared with a 52-week high of P24.85.
Article continues after this advertisement“For ABS-CBN, I think it’s normal to temporarily suspend to give shareholders enough time to consult with brokers on what to do with their shares,’’ said Luis Gerardo Limlingan, managing director at Regina Capital Development Corp.
Article continues after this advertisement“On GMA 7, it’s the perception of increased ratings and therefore ad placements,” he added.
Big windfall for GMA 7
“GMA 7 can theoretically double their rates,” said veteran stock broker Joseph Roxas, president of Eagle Equities Inc.
Roxas, however, said the Philippine Competition Commission might have something to say about this, given the impact of reduced competition on the broadcasting business.
With ABS-CBN not getting a new franchise, Papa Securities chief strategist Manny Cruz said GMA 7 “is clearly seen to get the most market share in the broadcasting and entertainment segments.”
For years, ABS-CBN and GMA 7 had been on neck-and-neck competition for TV ratings.
In suspending trading on ABS-CBN’s shares, the PSE said: “Pursuant to the foregoing basic principle and disclosure standard, the exchange required the company to submit a full disclosure on the impact of the nonrenewal of its legislative franchise on the business, financial condition and operations of the company, as well as its prospects and business plan moving forward, and such other material information for the investing public.”
Trading on ABS-CBN’s Philippine depositary receipts was likewise suspended.
The PSE said the suspension would be lifted one trading day after dissemination of the full disclosure to the investing public. INQ
