GMA 7 profits up despite absence of political ads

(Update) MANILA, Philippines - Airtime revenues from TV and radio propped up earnings of listed GMA Network, Inc. last year despite lack of political advertisements, the company said during an analysts’ briefing on Thursday. GMA Network Inc., which runs the Philippines’ first and third-ranking free television stations, saw a three percent increase in net income last year to P2.369 billion as consolidated gross revenues grew by four percent to P12.5 billion. Political ads, which contributed more than P500 million in 2007, did not make too much of a dent on TV and radio revenues, which managed to increase by three percent. "So far, what we have been seeing is the effect of the global crisis. In our case, we are not affected that much. We are projecting an increase this year. Gross revenues and net income will not be flat anymore," the company’s chairman and president Felipe L. Gozon said during the briefing. Operating costs grew by four percent to P7.2 billion from P6.9 billion in 2007 with production costs cornering the bulk at 56 percent in both years. Production costs have increased by three percent to P3.98 billion from P3.85 billion in 2007 due to the introduction of more in-house game shows. General and administrative expenses rose five percent to P3.18 billion from P3.02 billion. Revenues from international operations and other sources rose by 22 percent with GMA Pinoy TV and GMA Life TV having 207,000 and 45,000 subscribers, respectively. "Our international subscribers are still growing. We have not seen cancellation of subscribers. There are still areas we can grow," he said. Next: GMA Network gets more advertising minutes GMA Network gets more advertising minutes Data from The Nielsen Company Phils. indicated GMA cornered 35.8 percent of the 286,900-minute total advertising minutes including very high frequency (VHF) channels and Studio 23. GMA saw a 10.3 percent increase in advertising minutes in 2008 at 102,702 minutes from 93,074 while Lopez-led ABS-CBN Broadcasting Corp. inched up by 1.5 percent to 84,218 minutes from 82,968 minutes. In the fourth quarter, the industry’s commercial minutes declined by 8.3 percent to 72,445 minutes from 78,998 minutes. GMA, which cornered 35.17 percent, recorded a 2.1 percent decline in advertising minutes to 25,482 from 26,015 minutes in competitive loading. Advertising minutes of rival ABS-CBN decreased by 6.4 percent to 21,560 minutes from 23,027 minutes. "Fourth quarter is traditionally weak. The effects of the US financial crisis was felt in the Philippine setting during the fourth quarter," Gozon said. Data showed advertising minutes during January to March 19 dipped by 2.8 percent to 58,957 minutes from 60,643 minutes. GMA Network secured 31.26 percent of the total advertising minutes, growing by 1.4 percent to 18,435 minutes from 18,185 minutes. ABS-CBN posted a 20.2 percent decline to 14,192 minutes from 17,793 minutes. "Ad spend on the first quarter is not that bad although the reduction on ad load is higher. That justifies our estimated projection of growth in 2009," Gozon said. “First quarter is not a very good indicator since January to February are lean months given the effect of last quarter crisis. We saw an uptrend in March with the takeup of our programs for our advertisers." Manuel P. Quiogue, GMA Marketing and Productions President and Chief Operating Officer, said the company has announced a 10 percent increase in ad rates this year but this is part of the negotiating strategy with advertisers. However, he declined to divulge details. “You cannot have a generic approach [in dealing with advertisers]," Quiogue said. “Discount is no longer the most important but service and creating opportunities you offer to rise above the challenges." With the difficult economic conditions, Quiogue said different companies will view it either as a "time to be cautious" or as an opportunity. "Multinational companies, while there are exceptions, are cautious because their head offices are being hit. Personal care will be a little more cautious. There are food supplements companies that are going to be very aggressive," he added. Next: GMA releases cash dividends worth more than half of income GMA releases cash dividends worth more than half of income GMA will release P1.7 billion in cash dividends, which is more than 70 percent of the company’s net income in 2008. The board of directors approved the declaration of 35 centavos to stockholders as of April 21 payable on May 11, Gozon said. The dividend payout is 40 percent higher than the P0.25 per share, post IPO dividends in 2008. The network has been paying cash dividends even before the company’s IPO launch in 2007. Moreover, the network has spent P853 billion in 2008, its highest in three years, GMA vice-president for finance Ronaldo P. Mastrili said. Capital expenditures will hew to 2006 and 2007 levels of P515 billion and P628 billion, respectively, he said. Earnings before interests, taxes, amortization and depreciation (EBITDA) was flat P4.44 billion. This year, GMA will embark on upgrade of transmitters in San Jose, Occidental Mindoro; Virac, Catanduanes; Roxas City, Capiz; Santiago City, Isabela; and Tagbilarn, Bohol to 2 kiloWatts from 100 Watts. Other upgrades will be made in Ormoc City, Leyte and Dipolog, Zamboanga del Norte to one kW from 100 Watts. The transmitter in Ozamis, Misamis Occidental will be upgraded to one kW from 100 Watts. While the company does not see the need to spend more since it has accomplished in 2008, Gozon said GMA is "full steam ahead insofar as expansion is concerned." "We are not constrained by the budget. We can easily do that without having to borrow; the cashflow is more than sufficient," he added. GMA Network Inc.’s online subsidiary, GMA New Media Inc., owns Media Merge Corp., which in turn, runs GMANews.TV. Shares of GMA Network remained at P4.25 apiece during Thursday’s trading at the Philippine Stock Exchange (PSE). - GMANews.TV