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MANILA, Philippines – Media giants GMA Network and ABS-CBN were not spared by rising prices of goods as advertisers scaled down advertising spending and hurt the networks’ bottom line.
GMA reported a 31% drop in advertising revenues in the first two quarters of 2023 at P7.75 billion, down from P11.3 billion during the same period a year ago. Advertising revenues were the “lifeblood of the company,” comprising 90% of the network’s total revenue pie.
“Over the past first six months of 2023, especially the earlier part, household spending, which is one of the biggest contributors and key drivers of growth in the local economy, has weakened amid elevated inflation and rising borrowing costs, according to analysts. As a result, major fast-moving consumer goods (FMCG) clients of the company, which largely bank on individual purchasing power, have likewise scaled down their ad spending,” the company said.
GMA noted that the decline happened in the absence of political ads, which boosted 2022’s top line.
Meanwhile, the Lopezes' ABS-CBN ended the first semester with advertising revenues dipping 9.1% to P2.99 billion and consumer sales falling 6.3% to P5.8 billion. Consolidated revenues fell by 7.2% to P8.8 billion.
ABS-CBN also attributed the lack of election-related placements to the dip, but noted an increase of 13% in "regular advertising revenue."
Unlike GMA, ABS-CBN's revenue mix comprised more of consumer sales (66%) than advertising revenues (34%). The company now gets more revenues from licensing and syndication of its content.
"As economies began to open up, the company restarted staging events and releasing movies in various countries worldwide," ABS-CBN said.
Costs and expenses
ABS-CBN continued to lower costs and expenses, though not enough to narrow its losses in the first half of the year.
Total costs and expenses amounted to P10.6 billion, a reduction of P826 million or 7.2%. General and administrative expenses were also lower by P592 million or 14.5%.
"This is mainly attributable to the employee stock plan (ESP) provided last year. The company implemented ESP, wherein company stocks were given to its employees to compensate for the voluntary pay cuts they took to help the company in the previous year. The facilities-related expenses of cable and broadband business also contributed to the decrease," the Kapamilya network said.
Meanwhile, GMA's operating expenses inched up by 4% to P6.94 billion. General and administrative expenses and production costs marginally increased amid producing more fresh episodes of various shows and more face-to-face activities.
"Management has made a concerted effort to keep spending at bay given the economic challenges, albeit ensuring the commitment of the company to its viewers in terms of providing superior entertainment and responsible delivery of news of information remained at the forefront," the Kapuso network said.
GMA's cost of sales grew by 25% as it ramped up the sale of its digiboxes.
It also significantly increased its rentals and use of outside services by 51%, while program rights amortization went up by 30% due to overall growth in charges of rented programs for its channels. Additionally, the amortization license for Voltes V: Legacy's remake contributed to the increase.
ABS-CBN incurred losses of P2.2 billion in the January to June period, higher by P765 million or 52.2% compared to last year.
But after adjusting for non-recurring and one-time gains last year amounting to P1.19 billion from political ads, asset sales, and one-time expenses, net loss actually decreased by P426 million or 16.1% compared to last year, brought about by better ad sales and lower costs.
GMA posted a sharper drop of 71% as its net income fell from P4 billion in the first half of 2022 to P1.18 billion in 2023.