ABS-CBN in Talks With Creditors, Says It's Confident It Can Satisfy Financial Obligations
ABS-CBN is in discussions with its creditor banks in relation to its long-term debts, but says it is confident it will be able to satisfy its financial obligations despite the rejection of its application for new congressional franchise.
In a filing with the Philippine Stock Exchange, the beleaguered network said the resolution significantly affects its Media, Networks, and Studio Entertainment (MNSE) operations, specifically its free-to-air business in the Philippines.
“For the unaudited period ended September 30, 2019, 68 percent of the revenues of this MNSE segment was free-to-air advertising, which revenue amounted to P15.9 billion as of said period,” it said.
ABS-CBN added that its free-to-air advertising was approximately 50 percent of the its unaudited consolidated revenue for the period ended September 30, 2019.
“In terms of material contracts and/or financial obligations that will be affected bythe non-renewal of its broadcast franchise, ABS-CBN is currently in discussions with its creditor banks with respect to its long-term debts as discussed below,” the company said. “We are not aware of other material contracts, nor have we received any claims or demands, the payment obligations of which will be adversely affected by the Resolution.”
“The Company is likewise confident that any payments or financial obligations that may arise under its customary or usual business agreements are manageable and will not have a material adverse impact on ABS-CBN at this time,” it added. “The Company is committed to honor all existing obligations for goods delivered and services rendered by its third party suppliers and/or to negotiate new terms for these obligations, should it be necessary.”
ABS-CBN also insisted the denial of its franchise application “does not affect the primary franchise of ABS-CBN to exist as a corporation and does not affect the rights of its shareholders.”
The Lopez-owned network said it has worked out a detailed plan to mitigate the impact of the denial of its franchise application. Primarily, the company said it will continue to operate in its businesses that do not require a legislative franchise “such as international licensing and distribution, digital and cable businesses, as well as, continue with the syndication of content through various streaming services.”
The company also highlighted the shift in its audience and consumer behavior in terms of accessing content. In this regard, ABS-CBN said its content is available through other distribution platforms, such as online (website and social media platforms), mobile apps, YouTube, and IwantTV.
ABS-CBN also mentioned its cost control measures, including “reducing general administrative expenses (GAEX) or overhead, rationalizing capital expenditures, and streamlining its manpower requirements.” It has already announced a retrenchment process that will reportedly affect a significant number of its employees.
Finally, the company said it would focus on its businesses that will “generate growth in revenues” and reduce investments in non-core activities. In this regard, it has already announced the closure of KidZania, a five-year-old interactve theme park that it operates through its subsidiary Play Innovations. Inc. It also said it would shutter its home shopping affiliate O Shopping Channel, a joint venture with CJ ENM Company Limited, by the end of the year.