ABS-CBN Shifts Focus to Growth Areas Amidst Franchise Denial

ABS-CBN said it will continue to “pursue all available remedies” while focusing on its other businesses that do not require legislative franchise to sustain growth moving forward as the corporation treaded water in the bid for franchise renewal.

The media conglomerate also noted that franchise denial does not affect ABS-CBN’s existence as a corporation.

“The denial of the franchise application of ABS-CBN to construct, install, establish, operate, and maintain radio and television broadcasting stations in the Philippines does not affect the primary franchise of ABS-CBN to exist as a corporation and does not affect the rights of its shareholders,” ABS-CBN said in a stock exchange disclosure.

The corporation also added that they have plans to mitigate the impact of the denial of the franchise application.

Businesses that do not require a legislative franchise will continue to operate as usual, such as international licensing and distribution, digital and cable businesses, as well as the continuation with the syndication of content through various streaming services.

The Company also takes into consideration the “probable shift of consumer behavior in terms of accessing content, as well as, the ever-changing technology available to the public,” giving them more means to continue with their media operations.

Free-to-air advertising services

The Resolution to deny of franchise application of ABS-CBN also severely affected the company’s free-to-air advertising business, which amounted to 50 percent of consolidated revenues as of end-September last year.

“The Resolution significantly affects the Company’s Media, Networks, and Studio Entertainment (MNSE) operations, specifically the Company’s free-to-air business in the Philippines. For the unaudited period ended September 30, 2019, 68% of the revenues of this MNSE segment was free-to-air advertising, which revenue amounted to Php15.9B as of said period.” Their disclosure further. stated

It also implemented various cost control measures, as well as rationalizing capital expenditures and streamlining manpower as added measures to mitigate the hampering of their free-to-air business.

On July 10, 2020, the House of Representatives legislative franchises committee voted 70-11 to deny ABS-CBN’s bid for a 25-year franchise to broadcast operations via TV and radio on various grounds such as the dual citizenship of chairman emeritus Eugenio “Gabby” Lopez III, employee regularization issues, alleged tax-avoidance schemes, and alleged biased reporting.

The National Telecommunications Commission also ordered the company to stop digital terrestrial TV network, resulting in retrenchments and job loss for ABS-CBN employees. (GFB)

You may read ABS-CBN’s full stock exchange disclosure HERE.