GMA bares risky strategy in bid to become next top PH conglomerate

Television broadcast giant GMA Network Inc. announced a plan to invest in technology startups, joining other Filipino companies that are betting on the risky sector that offers the potential for huge returns.

GMA, which became the country’s top TV company after the Duterte administration shut down rival ABS-CBN’s free-to-air broadcasts in 2020, said the move was part of its bid to become “one of the country’s big conglomerates.”

“We are actively looking for ways to diversify the company’s portfolio by investing in sustainable businesses and, ultimately, providing the best returns to our shareholders in the years to come,” GMA chair and CEO Felipe Gozon said in a statement over the weekend.

The company would be implementing the plan through wholly owned subsidiary GMA Ventures Inc., which was established earlier this year to oversee investments in “noncore” businesses.

In the statement, GMA revealed the first details on GMA Ventures’ plans, including investing in “tech start-ups with substantial growth horizons and industries that continue to expand.”

GMA said it was targeting acquisitions and partnerships within the Philippines and overseas.

“If you’re in that space, it is necessary to get ahead of the game when it comes to technology,” Luis Gerardo Limlingan, managing director at Regina Capital Development, told the Inquirer.

“Nobody wants to be like Blockbuster, Betamax, Friendster or Nokia,” he added, referring to businesses that have been forced to adapt or have seen their products rendered obsolete by changing technology.

GMA’s plans appear to mirror strategies announced by some of the country’s biggest companies.

Conglomerate Ayala Corp. said in 2019 it was setting aside $150 million to invest in digital ventures while the Gokongwei family, through JG Digital Equity Ventures, committed $50 million for start-ups in Southeast Asia.

Not all investments deliver lucrative returns as PLDT Inc. learned when it invested almost P20 billion in Germany’s Rocket Internet in 2014 only to sell its shares at a loss years later.

“Success rates are really low and I think that’s what they need to accept,” Limlingan said. “Of course, the payoff is big if they land the next Amazon, Netflix or Facebook.”

In the statement, GMA president and chief operating officer Gilberto Duavit Jr. said new investments were aimed at increasing value for shareholders.

“GMA Ventures will be our arm in identifying other viable sources of revenue and future profit pools,” he said.

GMA is riding a wave of investor interest after booking record profits in 2020 and paying historic-high cash dividends last May after securing TV dominance. Since the start of the year, the company has more than doubled its market value to P42.3 billion. INQ