Political ads assure ABS-CBN of P2-B profit in 2013

MANILA, Philippines – Political advertisements in the run up to the May 2013 national elections boosted the chances of media giant ABS-CBN to meet its 2013 earnings target.

“We will meet our profit guidance, which is P2 billion,” shared ABS-CBN chief financial officer Aldrin Cerrado to reporters on the sidelines of the “Rising Stars of the Philippines” forum organized by AsianInvestor and Finance Asia on Thursday, October 17.

ABS-CBN booked P1.2 billion worth of election-related advertising in the first 6 months of 2013, boosting the media firm’s net income by 44% to P1.34 billion from P927 million a year ago. (READ: Political ads boost ABS-CBN, GMA first-half earnings)

On the back of higher regular and election-related ads, revenues surged 23% to P17.06 billion from P13.838 billion a year ago. This pushed airtime revenues’ share to the media firm’s total to 59% from 56% a year ago. Consumer sales slid to 41% from 44%. (READ: ABS-CBN, GMA-7 benefit from politics)

In 2012, ABS-CBN total income suffered a 29% fall, reaching only P1.7 billion.

Strong economy

Moving forward, Cerrado said the company remains bullish about 2014 despite the lack of election-related advertising. He said the healthy 7.6% gross domestic product (GDP) growth in the first half of the year would fuel consumer spending, an indicator that most advertisers note to strategize their advertising spending.

“There will be no any political advertising next year. But with the GDP growing at that rate, hopefully consumers spending will be fueled by private spending and public spending,” he stressed.

Higher consumer spending would prompt multinational companies led by consumer-oriented companies to place more advertisements, he explained.

“Higher GDP will push consumer spending and then will help Uniliver, P&G to hit their revenue targets and they have to do a lot of advertising not just in ABS-CBN but also in other networks,” Cerrado said.

Global operations

Meantime, the global operations of ABS-CBN would continue to play a major role contributing about 15% to total revenues, he said.

ABS-CBN Global contributed about P4.5 billion of the company’s P29 billion total revenues in 2012.

Total revenues of of the global operations inched up 6% to $64.929 million in the first 6 months in January-to-June from $61.357 million a year ago. Main contributors were areas where overseas Filipinos abound, including the Middle East, Canada, Asia Pacific, Australia and North America — regions where

Cerrado said the company’s other ventures, such as the tie up with Mexican company Kidzania to put up a P1 billion park there, as well as the partnership with Ayala-led Globe Telecom Inc. to offer mobile services would contribute to the 2014 financial performance.

“We have a lot of business going on right now, other than our core business which is our broadcast business. We are very positive on our Kidzania as well as our mobile business next year,” he said. – Rappler.com