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Wednesday, April 11, 2012

GMA NETWORK'S 2011 PROFIT DROPS 39% DESPITE DOUBLE NO.1 NATIONAL RATINGS CLAIM!

MANILA, Philippines - GMA Network Inc. said its net income in 2011 plummeted 39% to P1.72 billion from P2.82 billion in 2010 as less money came in from advertisers and more money was spent on operating expenses.

"Our net income took a beating," admitted Ronaldo P. Mastrili, GMA's Vice President of Finance at a financial briefing for analysts and media on April 10.

"We experienced the lowest net income level of the past 5 years in the 4th quarter of 2011," said Mastrili.

Financially, it was a double whammy. First, total advertising revenue dipped 9% to P13.08 billion since locals spent less without the 2010 elections and multinational corporations cut back ad budgets because of the uncertain economic realities abroad.

Second, operating expenses increased 8%, as GMA shouldered costs for the newly launched GMA News TV.

President and COO of GMA Network Inc. Gilberto R. Duavit Jr. stood by the P8.98 billion operating expenses in the name of making the channel more competitive. 

"The spending was driven by the desire to win in the national ratings last year," explained Duavit.

GMA representatives cited their 3.1-point lead in household audience share over rival ABS-CBN and 18.6-point lead over newcomer TV5. They cited ratings results provided by Nielsen TV Audience Measurement. 

Still, Duavit signaled there would be changes in GMA's financial strategies for 2012, given the direction the network had taken in 2011.

Election-spending, production costs in 2011

"We lost P2 billion in airtime revenues in 2011," said Mastrili, referring to revenues from election-related ads from the 2010 national polls.

With the 2013 mid-term elections on the horizon, Duavit said they anticipated that "policital advocacies would come out as early as the 4th quarter."

However, profit actually hit a historic low in the last quarter of 2011.

Duavit also cited the poor economic climate abroad in 2011. "It should also be noted that we received very clear indications from the advertisers that there would be cutbacks because of the global financial environment that existed at the time," he said.

He speculated that the cut in ad spending internationally likely affected all networks and not just GMA.

The network also realized an 11% increase in production costs last year.

Duavit explained that bulk of the hike in production costs came from transforming Channel 11 from a day-time drama platform into one that provides news and current affairs content.

"If not for the news channel, we would have seen an increase in production costs in the mid-single digit levels," Duavit said.

Early bird scheme for advertisers

GMA-7 has decided to sign up more advertisers at the start of the year with an early bird scheme.

Thus although the economic climate abroad remains rocky, Lizelle G. Maralag, the head of the network's marketing and productions, said that as of April 10 GMA-7 had "already met 85% of 2012 revenue targets where ad spend is concerned."

Duavit added, "We are seeing double digit growth in ad spend this year.... We are looking at a guidance figure of P2.8 (billion) for ad [revenues]."

Bolstered by the positive preliminary figures, Duavit shot down one analyst's idea to emulate TV5 by pirating big talent to attract more advertisers.

"It used to be the norm that the stars created the program and the network was measured in terms of who its stars are. We would prefer to see it the opposite way that it is the programs that make the stars and the network that creates the programs and the opportunities," the company president said.

Spending plans for 2012

The GMA-7 President sees the network tackling not only low ad growth but also the high spending that was hurt net profits in 2011.

He said GMA-7 would try to reduce programming costs by "no less than 3%."

On top of that reduction, capital expenditures will be toned down. After nearly P896 million in capital expenditures in 2011, Duavit said GMA-7 would eye only P650 million in capital spending for 2012.

He said that capital expenditure budget would primarily go towards funding 2 new stations. 1 would be located in Illocos to serve speakers of the local illocano dialect, while the other will be in the Bicol region. "The cost of each station is to be north of 50 (million)" he said.

According to Duavit, the rest of the funds would be funneled towards programmed upgrades including repairs to "production facilities which will allow (GMA-7) to move more consistently towards high definition programming and existing transmitter sites in more previously unconsidered rural areas." - Rappler.com

15 comments:

Anonymous said...

for sure 39% ang gma.....nasa 45% ang ABSCBN- minus skycable income kasi...

Anonymous said...

Judging by this blog post and profit drop, GMA is getting poorer and poorer...

mOST wanTED said...

"GMA NETWORK'S DOUBLE NO.1 IN 2011 RESULTS TO A 39% PROFIT DROP!"

TALAGA????????????????????

ok sabe nyo eh..tama lng yan pang bawi s 1st qtr movie nyo n FLOP..

s beloved nyo n inatras dhil mgaling si marian KUNO...

Anonymous said...

15% Drop lang kaya sa ABS compare sa GMEEw na 39% bwhahaha For Sale na yan lol

Anonymous said...

wow..i guess its safe to say that we should not expect any quality programs from gma this year. haha

Anonymous said...

QUALITY PROGRAMS SA KANGUNGI KAILAN??? PANSIN KO LANG ANG MGA SHOWS NA SINISIMULAN NG ABSCBN MAY OUT OF THE COUNTRY EPISODES...BONGGA TALAGA

Anonymous said...

POOR KANGUNGI asa na lang sa movies... See sa both ratings tinalo ng movies ng GME ang PBBTE4 kick-off... So unfair for me...

marian rivera said...

15% Drop lang kaya sa ABS compare sa GMEEw na 39% bwhahaha For Sale na yan lol
April 11, 2012 4:18 PM

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kakatawa ka naman who ever you are wala pa ngang nilalabas ang abs ng net income nila hahah kung ilan man yun ibawas ang sale ng sky cable

LNL15 said...

nakakaawa naman ang linyang:

"The spending was driven by the desire to win in the national ratings last year," explained Duavit.

At akalain mong sinisi pa ang international market kasi may international crisis... lol.

ABSCBN FTW!

Anonymous said...

it has been said time and time again

GMA's TV Ratings DOES NOT translate to PROFIT!

why?
walang purchasing power ang audience nila kaya hindi magbubuhos ang advertisers ng pera!

proof?

flop ang movies nila pero pag pinalabas sa free tv, langit ang taas ng rating!

mOST wanTED said...

^
^
^
malaking TAMA..........

Anonymous said...

4 me wla nmn tlgng silbi mga talents gma,so pan0 ki2ta yn?

mOST wanTED said...

MA IBA LNG:

hot news:si nora aunor gusto na makipagbati kay charo santos?

pero teka s listahan daw n gustong makabati ni ate guy eh hnde ksama si
CRISTY(TSUGI) FERMINATA.

http://pinoytvpolice.blogspot.com/2012/04/nora-aunor-gusto-nang-makipagbati-kay.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+PinoyTvPolice+%28PINOY+TV+POLICE%29

Anonymous said...

MAGALING MAMIRATA ng TV programs ang GMA! Yung mga pinaglumaan ng ABS-CBN at ng ibang networks ay kinukuha ULI para lang PASIKATIN ULI, pero napagsawaan na!

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