GMA7’s regional approach aims to capture more ad sales

MANILA, Philippines – There’s an old saying that all news is local.

Now GMA Network Inc., the operator of GMA-7, is buying into the idiom and offering more local news in the hope of capturing more advertising dollars aimed at localized markets.

In the past 2 months, the station opened two new stations in Luzon and is already eyeing more in Mindanao and the Visayas.

“Aside from the objective of deepening our affinity or relationship with the viewers in these areas towards the objective of strengthening our national ratings, part of the objective also recognizes and anticipates how ad money has started to shift,” said GMA-7 President Gilberto Duavit at a press briefing on August 22.

“You will see that the national advertisers are interested also in advertising locally, even if the programs are not shown nationally,” said GMA-7 chairman and CEO Felipe Gozon.

“The significance of that is that eventually, there will come a time when we can [unchain] our Mega Manila, or Luzon or Visayas or Mindanao programs from each other. And when that happens the advertisers will have to place their budget separately and differently,” added Gozon.

In a sum, the goal is more targeted news, more targeted advertising, and more revenue.

Fiestas and festivals

Last year the traditional model of deriving models was thrown into question as both major stations saw their net income drop amid lower ad spending particularly from the international arena.

GMA-7 has decided to focus inwards and increase its share of revenues from the Philippines but in areas outside the national capital region. The move represents a shift.

Currently, regional operations contribute less than 5% to overall revenue, said company CFO Felipe Yalong, admitting that “it’s not as big compared to total operations.”

GMA-7 President Gilberto Duavit hopes the new regional stations will let them cut into advertising revenue for specific local events. “We’re making reference here to north of 100 events a year from big fiestas to festivals,” he said.

“There is a growing percentage of advertising spend that is going below the line. In other words, towards events that are targeted to specific local areas. These stations enable us to not only participate with the advertising, airing them locally or in the area of interest but to exchange values… to propagate our brand,” said Duavit.

He added that they could expand the venues where they “identify and scout talent.”

On top of that, he said the local stations lets them harness local economies as a “springboard” for company growth.

“It’s a bet on growth of local economies growing forward,” he said.

Cutting into regional ratings and ad spend

The 2nd largest TV station in the country is starting by focusing on the TV-heavy Luzon market in two dialect-specific areas. GMA-7 opened a new originating station in Ilocos in June and another in Bicol in August.

Year-to-date, Yalong said they had set aside P115 million for the Ilocos project and close to P160 million for the Bicol project. The investment is seen as worthwhile because both are equipped with microwave and satellite facilities, and are capable of producing local programs, which represent opportunities for advertising.

“We decided we should start firstly in Luzon because as you know Luzon comprises 77% of total TV households. If we become very strong in our ratings in Luzon, our position as number one will become very very stable as we try to strengthen our ratings position in the Visayas and Mindanao,” said Gozon.

GMA-7 has already added 2 additional transmitter sites in Negros Island and significantly upgraded their facility on Mt. Kitanglad in Bukidnon, “which covers a significant area of northern Mindanao,” said Gozon.

Rival ABS-CBN still has a ratings advantage in Visayas and Mindanao, admitted GMA-7’s vice president for regional TV, Rikki O. Escudero, but she said GMA-7 is quickly closing the gap. “In Mindanao we were in a double digit ratings gap and now it’s single and we’re not going to stop,” she said.

“You get better public service, better coverage of events. I think competition is good. It makes broadcasters improve their products,” She said. Escudero added that they would try to mirror international models in the U.S. and India and mix local news with national news.

Expansion moving forward as if TV5 deal isn’t happening

The company is moving forward with the expansion despite talks of a merger with the third largest media player TV5. 

“If you were in our place and you were not sure that the deal is going to push through then wouldn’t you do the same thing,” said Gozon.

He added that he wanted to improve the “chances and ratings of the company,” which would also benefit them if they hold on to the company and sell it in the future.

Gozon said his and the other two families that control GMA-7 are willing to sell their entire stake in the network but said, “We are not disappointed if the sale doesn’t go through because the price of the company goes up over time.”

“Anyone who owns [GMA-7] later will benefit from what we’re doing,” he added. – Rappler.com