Embattled network tells shareholders: We’re down but not out
Media giant ABS-CBN Corp. may be down but not out, and it will continue to grow and evolve.
This was the company’s message to reassure its shareholders on Thursday as it disclosed to the Philippine Stock Exchange its plans to maintain its other businesses after being denied a new 25-year broadcast franchise.
Moving forward, ABS-CBN said it would focus on its business segments that did not require a legislative franchise.
These include its online channels, cable, international licensing and distribution, and production of content for various streaming services that still make money.
“The denial of the franchise application of ABS-CBN to construct, install, establish, operate, and maintain radio and television broadcasting stations in the Philippines does not affect the primary franchise of ABS-CBN to exist as a corporation and does not affect the rights of its shareholders,” ABS-CBN said.
It also committed to pursue “all available remedies and courses of action, and will comply with relevant legal, regulatory and contractual requirements” to sustain its current and future business operations.
Severe blow, free fall
The loss of a franchise has dealt a severe blow to the company and its millions of viewers and listeners around the country who relied on ABS-CBN for news and entertainment.
The network was ordered by the National Telecommunications Commission (NTC) to stop all its free-to-air television and radio broadcasts last May 5, a day after its franchise expired. On June 30, the NTC told the company to also stop its satellite and digital TV operations, affecting millions more.
Finally on July 10, the franchise committee of the House of Representatives voted 70-11 to reject its franchise application.
Days later, the company announced mass layoffs by Aug. 31 this year and the collapse of its various divisions around the country.
ABS-CBN relies on advertising on free-to-air TV for the bulk of its earnings. Without TV advertising, ABS-CBN was losing about P35 million daily, or P1 billion a month.
That has also led to a free-fall in the company’s share price.
On Thursday, ABS-CBN’s shares fell by the maximum 30 percent daily limit allowed by the PSE after it lifted eight days of trading suspension with the filing of the company’s disclosure.
ABS-CBN was traded at P10.36 per share—less than a fifth of its value before Mr. Duterte took office in June 2016.
In its filing to the PSE, the company indicated the increasing use of internet platforms as a potential opportunity to grow its business.
Long-term debts
The company owes banks some P21 billion in long-term debts and is in talks with lenders regarding the payment of its obligations.
“The company and its creditor banks are confident that with the proper security in place, the company’s obligations to its creditor banks will be satisfied in accordance with the existing terms, including payment schedules, under the relevant loan agreements,” ABS-CBN said.
It also committed to honor all obligations for goods delivered and services rendered by its third party suppliers, or it may negotiate new terms.
‘Takeover’ talk
The company did not disclose any plans regarding its assets, which House members who led the assault against its franchise said could be seized by the government, particularly the property occupied by its main broadcast facilities in Quezon City. The congressmen were looking at a possible takeover of the company by its workers so that it could operate again.
But Senate President Vicente Sotto III said the government could not just take over the facilities of the shuttered network, which are private property protected by the Constitution.
“Possession is given weight. There is a venue, the courts; and there is due process,” Sotto said in a statement.
Sen. Sherwin Gatchalian told reporters the government could take back the network’s frequency, but this could not be used without the equipment acquired by ABS-CBN for its radio and television broadcasts as they are specifically matched, he said.
“So without the permission of ABS-CBN Corp., the equipment can’t be used, therefore the frequency can’t be used,” he said.
“Legally and technically, it will be impossible to use that frequency,” he added.
The government could talk to the owners or force them to allow the use of the assets, but this has to be done “within a legal framework,” he said.
—WITH A REPORT FROM LEILA B. SALAVERRIA
