Industry analysis on ABS-CBN

Lopezfamily-controlled ABS-CBN Corp. give tongue to it expects profitability without the year with the support of its airtime revenue after gaining in the root quarter of the year. In a briefing, Geronimo C. Estacio, ABS-CBN forthicer in fool for Finance, verbalize profits for the full-year of 2006 may come from its airtime revenue, given the higher rating of the networks primetime shows. Estacio utter ABS-CBN posted a net income of P121 billion in the first quarter of the year from P132-million losses in the akin period in 2005.In the first three months of the year, ABS-CBN audience parcel of land averaged 32 part comp bed with 43 percent of its rival GMA channel 7. On primetime, ABS posted 35 percent share from 36 percent compared with GMAs 43 percent from 46 percent. The social club attributed its profit turnaround to the refuse cost base that resulted from last years manpower optimization and judicious production cost spending, as well as from clear fees for the m igration of North American DTH (direct-to-home) subscribers to DirectTVs platform. License fees from DTH amounting to P409 million were booked in the first quarter of the year.Total subscriber base of ABS-CBN Global grew by 22 percent year on year, which translates to 2. 1 million viewers ecumenic by-end March. The Lopez-led company in any case said airtime revenues, which accounts for 60 percent of the total, grew 4 percent to P2. 26 billion in the first quarter of the year from P2. 18 billion in the same period in 2005 as it go on to strengthen its primetime programs. Gross revenue rose by 14 percent to P3. 95 billion, driven by license fees from DirectTV and higher airtime revenues.When Kris Aquino proclaimed she and co-host Korina Sanchez might be in the United States late this year to magnetic tape some of their Morning Girls daily show, ABS-CBN International (NA) received lots of c anys for the limited dates. The response was amazing even if nothing has been firmed up, s aid Rene Encarnacion, senior vice-president for worldwide operations of ABS-CBN Broadcasting Corp. and managing director of ABS-CBN Global Ltd. ABS-CBN International is one of quadruplet subsidiaries of Global, which is, in turn, a wholly owned subsidiary of ABS-CBN Broadcasting.With access to 25% of total Filipino-American households, ABS-CBN International accounts for 70% of earn revenues generated by Global. The North American operations used to account for 85% of total revenues but that has merrily dropped as we follow Filipinos abroad. There are Filipinos working in all country in the world except Bhutan, said Encarnacion. Using a foodstuff yardstick of between 50,000 to 70,000 households, each household made up of five to six people, Global has presence in Asia-Pacific, the middle East, and Europe. In Asia, the company works with local partners.It operate Saudi Arabia and the United Arab Emirates through subsidiary, ABS-CBN Dubai and England, Ger more and Italy through another subsidiary, ABS-CBN Europe. The Filipino-American market is so huge, theres whitewash a lot of penetration to do. Just maintaining our 25% market performer were already growing. This is not a transient market they are in the US for good and they kick in large disposable incomes, said Encarnacion. Bundling Entertainment accounts for 65% of Globals product mix. The company maintains four impart, which are either directly beamed to the homes of subscribers or by satellite.These channels are segmented by content, offering 24-hour news, the best of Channel 2 shows, and Filipino movies as well as sports and culture. Global pays royalties to ABS-CBN Broadcasting and its content-producing subsidiaries. It similarly sources other suppliers of content, such as the Philippine Basketball Association. Global holds the internationalistic broadcast rights for the PBA games. In a classic bundling dodging, the company has create on its existing relationship with customers to push non -entertainment products, all of which are account through one cable statement. The nature of technology opens so many opportunities.We have become a distribution one-stop for everything from entertainment to courier services to retailing Philippine-made products to our customers. Its a convenient pipeline that other Philippine media companies have not yet fully exploited, said Encarnacion. Global also transports pre-paid US-to-the-Philippines cards which offer 60 minutes to 100 minutes of prognosticate use. The cards are offered to retailers for private labeling or sold in-house under the steel name, Sarimanok. Arms lengthGlobal was incorporated in the caiman Islands last year, although its North American subsidiary has been in business for the ago nine years. Consolidating ABS-CBNs international operation is part of the strategy to sell Global shares through an initial public offering two or three years from now. Part of the proceeds will pay off the $25 million advanced by A BS-CBN Broadcasting, mainly to put up the transmission infrastructure. We have an arms length relationship with our sustain company. Its important that we show we can and have been going it alone, said Encarnacion.The company generated in excess of $40 million in gross revenues in 2002, accounting for close to 70% of total revenues generated by all ABS-CBN subsidiaries. On a consolidated basis, subsidiaries accounted for 20% of ABS-CBNs total revenues in 2002. Money-makers This year, Global sees a 20% growth in gross revenues and a 30% growth in subscriber base through the three-pronged strategy of better programming, more non-entertainment products, and improved customer relationships.For one, programming for the American market will no longer be targeting solely first contemporaries immigrants but their children and their grandchildren as well. The first generation of Filipino-Americans are nostalgic active the Philippines and they want to keep abreast with what is happening ba ck home. The second and tercet generation understand and accept their Philippine heritage but they have their own distinct buyer preferences in terms of, say, what kind of practice of medicine they want to listen to. We want to secure more programs developed by Fil-Ams for Fil-Ams, said Encarnacion. For another, programs such as Balita Middle East developed for unknown audiences may soon be shown in the Philippines because of their relevance to Filipino viewers.Balita Middle East, which has a segment where overseas Filipino workers can interact with their families in the Philippines, is the second highest rated show in the 24-hour cable news channel, ANC. From a wider perspective, Global intends to balance its revenue stream and be less subordinate on the American market. It formally launches ABS-CBN Europe in Italy this month. It is also communicate itself whether or not it makes sense to continue its partnerships in Japan or Australia, which have been delivering on their bott om line commitments.