MANILA, Philippines – The fallout from a weakening global economy and intense competition were cited among the reasons for lower net income expectations for 2011 by broadcasting firm ABS-CBN Corp.
At a press briefing on Monday, officials said the company is looking to post lower net income, ranging from P2.4 billion to P2.6 billion, compared to 2010’s P3.17 billion.
Rolando Valdueza, chief financial officer, said intense competition and the impact of the global economic malaise on the local economy, are among those behind the lower expectations.
For the first time in years, the country’s strongest investment and trade partners---the United States, Europe and Japan—have been simultaneously experiencing weaker recovery, a debt crisis and, in Japan’s case, slower production as a result of natural disasters. On Monday, Japan reported modest growth for the first time, however, indicating it was on the road to recovery.
The Middle East and North Africa, which host millions of Filipino workers, have also been problematic since early this year, with unrest sweeping, and regime change happening, in several countries.
According to the ABS-CBN statement, in the third quarter alone, net income declined to P562 million from P635 million year on year. This pulled down its nine-month profit to P2.2 billion from the P2.9 billion recorded in the same period last year.
“October is high double-digit decline. Hopefully, November will be a small decline. December could still be [a decline] although it may seem single digit. If you look at the scenario this year, the local economy is down but we are hopeful that the improvement in airtime sales that we are seeing this month will go on until next year,” Valdueza said at the briefing.
ABS-CBN said it is looking at major improvements this year to bring the company on track again. “We are banking on next year as we will pursue to be more aggressive. We are going to fix our noontime and after-noontime shows,” Valdueza added.
ABS-CBN’s statement said January-September revenues reached P21.1 billion, or 15 percent lower than a year ago. With lower revenues from political advocacies and advertisements compared to last year, consolidated revenues declined by three percent year-on-year.
The company posted advertising revenues of P13.4 billion, or 21 percent lower than a year ago, which was an election year. Less the revenues from political advocacies and advertisements, advertising revenues declined by 4 percent year-on-year. The company traced this decline to a slowdown in advertising spending by corporates.
In contrast, the network’s cable arm, Sky Cable, saw revenues rising 10 percent to P3.2 billion, driven mostly by the increased take up of its broadband service subscriptions which grew 21 percent year-on-year.
Meanwhile, the company reported total operating and other expenses declining by P1.4 billion or eight percent year-on-year to P16 billion.
Capital expenditure and film and program rights acquisition for the nine-month period reached P3.2 billion, or 30 percent higher than the level of spending the previous year.