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MANILA, Philippines [UPDATED] – Media conglomerate ABS-CBN Corp. posted a net income of P306 million in the first 3 months of the year, reflecting a 69% drop from the earnings in the same period in 2011 when there was a one-time gain.
The decline was attributed to the absence of P674 million in realized gains from the sale of Philippine Depository Receipts (PDRs) of cable unit Skycable in the first quarter in March 2011.
That was when the Lopez group, which controls Skycable, gained P3.9 billion when it sold a non-voting 40% stake and convertible bonds to STT Communications Ltd, a unit of Singapore’s Temasek Holdings.
PDRs are equity instruments that transfer economic rights over an asset, such as dividends, without transferring voting interest.
Without the Skycable transaction, ABS-CBN would have registered a paltry 1% increase in its 2012 first quarter bottom-line.
In a statement, ABS-CBN said it enjoyed increases in broadband subscribers, revenues from global viewers, and advertising revenues during the first 3 months of 2012.
Revenues shot up 8% to over P7 billion with P4.2 billion coming from the 4% increase in advertising revenues and P3 billion coming from the 15% increase in consumer sales.
Unit ABS-CBN Global had double-digit growth in subscribers in Canada and single digit growth in other markets, except Japan and Europe. However, revenues increased only by 3%.
On the other hand, Sky Cable’s revenues grew 12% to P1.2 billion.
However, overall costs increased faster. Total operating and other expenses were up 10% year-on-year to P6.1 billion. The media firm cited higher costs for production, sales and services, as well as general and administrative expenses.
ABS-CBN chief finance officer Rolando Valdueza said they are working on keeping the company’s and its units’ costs down for the rest of the year. “The production cost increased 25% last year, and now 10%, and the challenge is to keep it really in single digits for our costs.”
Despite these, he said its full year 2012 net income target of P1.3 billion stays, despite challenges.
“In terms of airtime, we are up 1% but the challenge is our lunchtime slot. [Also,] the industry-wide ad spending is down by double digit,” he added.
Below are some graphs from the presentation during ABS-CBN’s May 14 briefing. – Rappler.com
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