ABS-CBN lowers profit outlook due to falling ad revenues

MANILA, Philippines - ABS-CBN Broadcasting Corp. has cut profit expectations this year, warning that advertising revenue may be lower in 2008 and shrink in 2009. Earnings may reach P1.4 billion this year, lower than the P1.5 billion originally projected, Rolando P. Valdueza, ABS-CBN chief financial officer, told reporters. From January to September, profits reached P1.2 billion, P70 million shy of its full year earnings last year. Revenues for the period rose 15 percent to P16.54 billion from P14.43 billion. During the same period, advertising revenues hit P10.13 billion, three percent more than the P9.87 billion reported in 2007. “We are looking at 1 percent to 5 percent negative growth [in airtime revenue] scenario next year. [But] we're still finalizing our numbers," Valdueza said. Although advertising spending has stayed flat, Vivian Tin, ABS-CBN research and business analysis head, disclosed that the company’s direct sales have been growing. Direct sales from July to September surged 73 percent to P2.54 billion, boosted by strong results from ABS-CBN Global, prompting Tin to say that the company will be able to weather the crisis in 2009. The company has allotted P1.6 billion to acquire film rights and bankroll network improvements. In a related development, ABS-CBN Global Ltd. bought 2,524,488 shares of Series P Common Stock in Multiply, Inc. at a purchase price of $1.9806 per share, a transaction worth $5 million. ABS-CBN may buy as much as 10 percent of Multiply within two years, according to the stock purchase agreement. Its Multiply investment “will complement, enhance and upgrade ABS-CBN’s and its subsidiaries’ television and radio broadcasting, content production and distribution, and internet and online businesses through organic and unbiased marketing and promotion of its programs, products and services generated by and through the Multiply website," ABS-CBN said. Shares of ABS-CBN was unchanged at P13.25 apiece during Monday’s trading at the Philippine Stock Exchange (PSE). ABS-CBN is a rival of GMA Network Inc., the Philippines’ leading broadcast company. GMA, which runs the country’s first and the third-ranked TV channels, owns Media Merge Corp., the company managing GMANews.TV. - GMANews.TV