Financial Adviser: 5 Business Lessons Everyone Can Learn from Atty. Felipe Gozon, Co-Founder and CEO of GMA Network

In the world of television broadcasting, success stories often emerge from the most unexpected places. One remarkable tale that stands out is that of Atty Felipe Gozon, whose journey from a lawyer to a broadcasting mogul made a lasting impact on the industry and continues to shape its course.

Gozon's entry into the broadcasting realm came by chance when one of his clients offered him the opportunity to purchase a struggling TV station, which happened to be owned by Bob Stewart, the beloved host of the popular children's show "Uncle Bob's Lucky Seven Club" in the 1980s.

The TV station, facing financial difficulties and desperately in need of revival, was presented to Gozon at a bargain price with attractive payment terms. It was an opportunity he simply couldn't resist. Despite his unfamiliarity with the intricacies of the television business, Gozon recognized the potential for growth and made the decision to accept the offer.

With the ambition to turn around a failing TV station into a thriving enterprise, Gozon realized that he couldn't accomplish the task on his own. He reached out to his friend Mr. Gilberto Duavit Sr. and his brother-in-law Menardo “Nards” Jimenez, inviting them to become his partners. In 1974, they successfully acquired the station, which would later become known as GMA Network or GMA-7.

Assuming pivotal roles within the company, Nards Jimenez became the CEO, while Gozon took on the position of chairman. Together, they set out to breathe new life into the TV station, and their efforts soon began to pay off.

GMA embarked on a transformative journey, spearheading a wave of innovation and delivering quality programming in the Philippine television industry. They introduced a series of popular TV shows that captured the hearts of the nation. In the 1970s, GMA produced hit series which gained immense popularity among viewers, and pioneered original shows like Anna Liza and Student Canteen.

However, it wasn't until 2000 when Gozon assumed the role of CEO that GMA truly experienced exponential growth and expansion. His strategic vision and relentless dedication to excellence propelled the company to new heights.

Under Gozon's leadership, GMA achieved a significant milestone—an annual net income of P1.0 billion for the first time in its history. This remarkable achievement solidified GMA's position as a dominant force in the Philippine broadcasting industry.

How did Gozon's leadership contribute to making GMA Network the country’s number one broadcasting company? What business principles and values can we learn from Gozon’s success?

Here are the five business lessons every entrepreneur can learn from the co-founder and CEO of GMA Network, Atty. Felipe L. Gozon:

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1| Know how to seize opportunities and take risks

Seizing opportunities enables us to step out of our comfort zones and challenge ourselves. By undertaking unfamiliar tasks and taking risks, we have the opportunity to acquire valuable skills, expand our knowledge, and develop resilience and adaptability.

Taking risks enabled Gozon to shape the future of the TV station, despite his initial limited knowledge in the field. It allowed him to apply his vision, determination, and exceptional leadership skills, leading to the transformation of the station into GMA Network, a dominant force in Philippine broadcasting.

“At that time Channel 7 was way, way down,” Gozon says. “I think they could hardly meet their expenses kasi they were small and the capitalization was not great compared to the others. It was martial law and you can imagine there was no competition, but Channel 7 was allowed to reopen, maybe because the owner was Bob Stewart, who is an American. Nevertheless, it was an unfair situation. Channel 7 was hardly breaking even.

“So eventually, Mrs. Stewart decided to sell, but she did not want to sell to people she did not know. She was trying persistently to ask me to buy.

“But at that time, I did not have that kind of money. Maliit lang naman, par value lang, walang premium, kasi it was not making money and most of time, losing pa. That was the situation then, black and white ang Channel 7 noon e, while the others were already in color.

“They were not competitive because they could not pay the suppliers of the canned programs, so they had been replaying yung Combat! if you will remember, and yung Popeye for more than 10 years. They could not acquire new programs eh. Ayaw na silang bigyan dahil nga hindi sila makabayad.

“Although I knew that the net book value was below par, I asked my friend, Duavit, and my brother-in-law, Nards Jimenez, if they would like to join me because I cannot buy it alone, so they decided, okay, provided the terms are, you know, we can pay par value, but installment, yung not cash immediately, so we got the shares.

“At that time, I changed the name from Loreto F. de Hemedes to Republic Broadcasting System incorporated. Because we already took over the management, it was already making money. Nards Jimenez became the president and I became the chairman.

“We already had a vision at that point kasi, although Mrs. Stewart was a good manager, she hardly had the time to manage it properly. Because what was happening there was like a sari-sari store, so I thought if it was properly managed and ran, there was a good chance, so it was a risk because it meant that we had to borrow money kasi hindi pa colored e.

“If your competitors are already in color and you are not, it's like operating a narrow-body aircraft and your competitors are already operating a 747. Walang sasakay sayo, di ba? (laughs).

“Looking back, it was not that formalized, but we knew instinctively that if we do it properly and manage it properly, there is a good chance, even if you become number 2, you will already earn eh.

“The first thing we did was to get the financing, because you cannot get programs if you do not pay the suppliers, plus you have to make it color you know and that cost money, so alam mo naman we have many friends, we were able to borrow P8 million pesos from the bank, and we had to mortgage our assets. Eh pano ka papautangin ng bangko, P8 million at that time, personal loan?

“And yung na-finance na namin, we were getting good programs na like Rich Man, Poor Man, maybe you remember, Starsky and Hutch, amin yan eh, Voltes V in 1978. Kumikita na, in short. I don’t think after that we ever had a losing year. Never. Pero maliit lang yung net income as compared to Channel 9 or Channel 13.”

2| Know how to build trust and inspire others through consistency and authenticity

Demonstrating integrity, credibility, and authenticity in our actions and words is of utmost importance. It entails aligning our behavior with our beliefs, values, and commitments.

By embodying our principles, we establish trust and inspire others to follow our example. Consistency between what we say and what we do fosters accountability, encourages positive change, and cultivates a culture of honesty and reliability.

Gozon demonstrated his hands-on management style by consistently taking action, making informed decisions and staying true to his values. This inspired trust, credibility and respect among his colleagues, employees, and the industry as a whole.

“When I took over in 2000 from Nards Jimenez, my ambition was to become number one, and that was a tough order, you know, from a very far number two, at ang kalaban mo, Channel 2. They had all the money in the world at that time.

“It was a big challenge. I challenged the people in GMA. My style of management is, I walk the talk. Before I ask anybody to do something, I show them that I can do it, and I have proven that several times.

“What I expect from others, I do it. What else can I do if I myself cannot do what I'm saying? I train my executives by example. All of them know me, I am a very transparent person. Wala akong tinatago.

“You have to start from scratch practically—talents, artists, people who will produce the works. That's what we did, and I am very proud to tell you that in five years, we overtook Channel 2 in ratings and net income.

“Although GMA was already profitable at that time, yung P200 to P300 million, that’s a minimal profit. I saw already it could be much more than that. We have no long-term debt and our ratios, nobody can compare.

“If you compare us with our competitors, their gross is so high up there, but when you look at the net, it's a miserable net. Sa amin, there may be a leak, but not from me. That's where management comes in.

“Wala ako hiningi sa stockholders for capex. Internally funded lahat. That is how efficient we are. Only very few companies, not even other big companies with very good managers, can do that. Wala. I am very proud of that.

“Kami lang ang walang long-term debt, because I tried to know every detail. I approve every hiring. I know yung mga artista namin. I signed all the contracts. I know their talent fees.”

3| Know how to drive competitive growth by understanding the business

Understanding the business thoroughly before formulating a strategy is of paramount importance. It lays the foundation for informed decision-making, strategic planning, and successful implementation.

By comprehensively understanding the business, we can gain valuable insights into its internal and external dynamics. We become familiar with the industry landscape, market trends, customer preferences, and competitive forces. This knowledge enables us to assess strengths, weaknesses, opportunities, and threats, which are crucial in devising effective strategies.

Gozon’s thorough understanding of the business provided him a clear picture of his company’s core capabilities, resources, and competitive advantage. It also helped him identify unique selling points, target market segments, and areas for differentiation. This insight allowed him to align their strategies with the organization's strengths and capitalize on market opportunities.

“So in 2005, we were ahead of Channel 2. You know, as a lawyer, I have to research. I researched on my competitors. I read the books that are about them. I discovered how they conducted business, so that’s how I designed our strategy.

“Nobody knows that he will succeed when he starts to strategize. As I told you, I study the business just like I was reviewing for the bar. I had to know the operation. I applied what my lawyering was. I had to know everything about the case, and then about the judge, that's the audience and the advertisers.

“And then I have to know about the other lawyer, the competitor, I did all of that very thoroughly. After getting all the knowledge there is nothing more, I said, ‘Kaya natin ito.’ So I rallied our people to help me.

“And I promise them that if we succeed, they will share in the success. I've been proving that. Ilan ang bonus natin? I think we are giving three months or two and a half, plus yung CBA namin, meron na kaming mga paternity leave. You know, wala ng mahingi, kung ano-ano na mahingi, so I'm giving back to the employees and they're happy.

“Kung yung show talagang natatalo na sa ratings at nalulugi pa, kina-cancel ko yun. Ako chairman ng programming committee. I am ruthless when it comes to that. Every week we meet, at least once a week. In detail, I go down to the details.

“They know, my people know, and sometimes I know more of their work than them. That's what they think, because I study. You cannot learn anything without studying. I work starting from four o’clock in the morning and before eight o’clock, tapos ko na lahat.

4| Know how to control cost and spend wisely

Prudent spending ensures that resources, including financial, human, and material assets, are allocated in the most effective and efficient manner. By evaluating the costs and benefits of different expenditures, businesses can optimize their resource allocation and achieve optimal outcomes.

By exercising financial discipline and seeking cost-saving opportunities, Gozon demonstrates his ability to reduce waste, improve profitability, and maintain a competitive edge in the business.

Through negotiating favorable contracts, leveraging economies of scale, and implementing cost-efficient processes, Gozon ensured that resources were utilized effectively and efficiently. This approach contributed to the financial stability and resilience of GMA Network.

Gozon’s prudent spending practice helped GMA Network maintained a healthy cash flow, minimized debt, and built reserves to navigate unforeseen circumstances. His commitment to prudent spending safeguarded against financial vulnerabilities and positioned his businesses to withstand economic fluctuations and unexpected challenges.

“I personally control the expenses,” Gozon says. “What happened to somebody will not happen with us. It cannot happen because lahat yan, may approval ko. The hiring I approve. Ang hindi ko lang ina-approve yung mga maliliit na.

“I tell my officers, especially the content producers, I don't mind spending P1 billion provided you give me a return of P2 billion. That is my principle, but if you will give me P900 million, no, no way.

“Before I approve anything, may business plan kami. Of course it’s never right all the time. We give them what is necessary. Sa amin lang, I think, meron leak, but I control it. I don't give our executives the license to kill. No way.

“Right now, talking from the present time, yes, we are the only station. We can get anybody, but during that time, we tried to develop our own because we cannot pirate and pay the exorbitant fees or we will lose money, you know.

“The most challenging in this business is people, not the machines because they can be bought. Good people like talents, executives, creatives, yan ang pinakamahirap dyan. With money, you can buy anything, but how do you buy these?

“Anything that can be bought is not hard. You just need money. Eto cannot be bought eh. You have to organize and you have to know, baka popular, then you are going to pay. Baka ma-overprice mo and then later on, wala na yung popularity. Yan ang hirap dun. In a word, people.

“We built artists from scratch. Pero ang hirap nun, after we built them, pina-pirate pero okay lang, you cannot stop this. You have to match, but that's how we did it. In most cases, napakalaki yung ino-offer eh.

“We did not match and we survived. Kailangan meron kang conviction and principle na sinusunod eh. You cannot follow them, if they want to spend money, let them spend money. That’s why there was a big discrepancy, apart from the leaks, from the gross to the net. That explains it.

5| Know how to future-proof the business by leveraging the power of technology

Businesses need to go beyond short-term goals and immediate profitability. It needs to adopt forward-thinking strategies that will enable the business to withstand and capitalize on future disruptions and opportunities.

Gozon keeps a pulse on industry trends, market dynamics, and technological advancements. By staying informed and aware, he is able to anticipate changes that may impact his business and take timely actions to adapt and leverage new opportunities.

Gozon also embraces innovation and adopts a proactive mindset that continuously evaluates and adapts to changing circumstances. Through applying a strategic approach, he is able to navigate uncertainties and capitalize on opportunities, ensuring the business remains relevant, competitive, and sustainable in the future.

“We are very much aware of the trends in digital technology,” he says. “I don’t think that will ever happen that people will never watch TV anymore. There will of course be, especially the young ones who will be watching programs sa laptop, but I ask you if you have the time, why will you prepare to watch it in a mobile when you can watch it in a TV set, just like the movies?

“So, to a certain extent, but not completely, TV will stay because TV can adapt. Pwede mong gawing high-tech yan eh, puede mo rin gawin applied artificial intelligence, so many things. The future is out there, nobody knows.

“Artificial intelligence can do anything, and I don't know. All I'm saying is we can use that if we think it’s beneficial—high-tech. We're applying high tech now, dini-digitize ko na eh, kaya lang affordability ang problema. Mahal yung TV set, so, in the meantime, we are selling these boxes that enable you to receive digital transmission in an analog TV set.

“You know, in the US, there was already a mandate, 1996 pa, kailangan digital na. Now when did it happen? Ten years from 1996. U.S. na yan. Eh alam mo naman dito sa Pilipinas, ang problema dito pera. That costs money. Magpunta ka sa U.S. ngayon, wala ka na mabibiling analog TV set.

“Why do you think people are buying the box? Kasi yung TV nila hindi puede ma-receive yung digital transmission, pero ang dami pa ring analog, kaya ang taas ng rating namin.

“But we are investing in digital. Ilang istasyon yun nilagay namin all over the Philippines? I think more than 20 yung aming digital investments kasi nilalagyan mo ng equipment na digital eh. Tsaka we have four na digital stations: I-Heart Movies, Hallypop, Heart of Asia, and Pinoy Hits. Digital lahat yun. You cannot receive analog.

“We have been transacting with Netflix now, hindi lang Netflix—Viu, Amazon, everybody. Eh yung sa iba, they are publishing that because that's all they can do, pero sa amin, collateral lang ito eh. Main namin is TV. 

“We have strategies now and they are well in place and, if I may say so myself, we are succeeding. I will be surprised if in the next 10 years, anyone of them can beat us. It’s all set.”