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How are ABS-CBN Corp. and GMA Network Coping with Falling Ad Sales in 2018?

While one is diversifying sources of revenues, the other is keeping a tight rein on spending
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The earnings of the two biggest broadcasting stations in the country continued to drop in the first nine months of the year, their respective interim financial reports filed with the Philippine Stock Exchange (PSE) showed.

Both ABS-CBN Corp. and GMA Network Inc. said softening advertising revenues, which make up a bulk of their respective financials, caused the declines. 

“Nine months into the year, GMA Network and Subsidiaries continued to display resilience amidst the industry-wide contraction in advertising spending,” GMA Network said in its quarterly report.

Compared to the same period last year, GMA’s net income dipped by 14.9 percent from Php2.3 billion to Php2.0 billion in the first nine months of the year. Its advertising revenues, which made up 88 percent of its net sales, decreased by 6.5 percent from Php10.5 billion in 2017 to just Php9.8 billion this year.


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The similar trend can be seen in ABS-CBN’s earnings. The Lopez-led broadcasting station suffered a bigger decline in net income at 34.7 percent in the first nine months of the year compared to last year, from Php2.3 billion to Php1.5 billion. Its advertising sales likewise dropped by 2.8 percent, from Php15.3 billion to Php14.9 billion.

However, unlike GMA, ABS-CBN is trying to actively offset the losses in advertising revenues by diversifying its revenue sources. As of the third quarter of 2018, both advertising revenues and consumer sales share 50 percent of the company’s revenue mix. In 2017, it was 52-percent advertising and 48-percent consumer sales.

 

“Consumer sales increased by Php412 million, mainly resulting from a 24-percent increase in TV Plus boxes sold year-on-year,” ABS-CBN explained in its report.

Apart from TV Plus boxes, ABS-CBN also has ventured into other consumer products and experiences, such as live events, merchandise stores and theme parks. In September, the company opened to the public its newest indoor theme park called ABS-CBN Studio Experience, which they called “one of a kind.”

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But while ABS-CBN earned way more revenues, GMA Network retained more in net income because of lesser expenses. Since it doesn’t have other business aside from broadcasting and production, GMA Network only spent about a third of ABS-CBN’s total expenses in the first nine months of the year. 

As of November 20, the two companies remained neck and neck in terms of market value. GMA Network Inc. was the 79th biggest listed firm in the country by market capitalization, followed by ABS-CBN at the 80th spot.

This story originally appeared on Entrepreneur.com.ph.

* Minor edits have been made by the Esquiremag.ph editors.

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Pauline Macaraeg for Entrepreneur.com.ph
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