GMA-7 Q1 profit down 27% on soft airtime revenues

Katherine Visconti
Profits dropped 27% as revenues dropped and operating expenses rose

MANILA, Philippines – The 2nd largest media group in the Philippines, GMA Network Inc., saw net income slump 27% to P388 million in the first quarter of 2012 from P534 million in the same period last year, on the back of a dip in revenues and a rise in expenses. 

From GMA-7 presentation on May 16, 2012

Airtime revenues softened 6% to P2.7 billion in the first quarter from P2.87 billion in 2011. 

“They have captive advertisers. In the case of ABS they have Colgate, which gives all their [business] to ABS, I think at the expense of cheap rates. Now in the case of TV5, they have Smart, PLDT, Meralco…. In our case we don’t have any business connection, it is through sheer work that we were able to capture very early in this year 85% of sales projection for this year,” said GMA-7 Chairman Felipe L. Gozon at a May 16 press conference. 

At the same time, operating expenses crept up 3% in the first quarter. 

Gilberto R. Duavit explained that of the expected P679 million 2012 capital expenditure, P120 million is “allocated to the upgrading of existing digital facilities,” roughly P150 million to the construction of 2 new regional stations in Illocos Sur and Naga, about P100 million to the upgrade of the transmitter network, especially in rural areas.

He said the rest would go to various causes including: increases in post production capacity, launching the news channel to bigger markets internationally and adding satellite facilities to regional networks to increase the capacity to send live news content across the nation.

 

Despite the drop in revenue during the first quarter, the GMA-7 chairman expects yearly profit to be better than last year. “2.8 billion is the projection for bottom-line and top line is 14 billion plus, which is higher than last year’s P1.7 billion net income,” said Gozon. 

Gozon pointed out that the 2nd and 3rd quarters are typically stronger and that profits would be boosted by political advertisements that are already streaming in for the 2013 midterm elections.

He is also eyeing the international market as an area for growth. “We are seeing a very gradual, small growth in areas we are showing our international programs,” he said.
 
Gozon said, “The first quarter result is just what we call in Tagalog bumo-buelo (building up for something better).” – Rappler.com