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Consumer sales outpace ads to driveABS-CBN's first-quarter profitBy: Darwin G. Amojelar, InterAksyon.com May 16, 2014 8:09 AM

ABS-CBN president Charo Santos and chairman Gabby Lopez during 2014 stockholders meeting last May 14. Photo courtesy of ABS-CBN

InterAksyon.com means BUSINESS

MANILA - ABS-CBN Corp’s first quarter net income climbed in the single-digits on higherrevenues from its consumer business.

In a statement, the Lopez-led broadcast company said profit rose seven percent to P538 millionin the January to March period from P503 million in the same three months of last year.

Growth was driven by its film, global distribution, and pay TV businesses.

Revenues rose to P8.2 billion this year from P7.9 billion in the same period last year. Of thetotal, consumer sales amounted to P4.21 billion, outflanking advertising at P3.99 billion.

“We are off to a good start in 2014. I am particularly pleased that we were able to grow our netincome by seven percent considering that last year’s results included election-related revenues,”

Aldrin M. Cerrado, ABS-CBN's chief financial officer said.

“ABS-CBN is the clear leader in terms of national audience share, and we continue to capture a

relatively large chunk of total advertising expenditure in the country,” he said.

The network's cost and expenses amounted to P7.41 billion, up 2.8 percent from last year's P7.2

billion.

“I am confident that our company will deliver strong results this year. We are undertaking

various initiatives to generate revenues beyond advertising, as well as control our costs, and I believe we will reap the rewards from these efforts in the coming years,” Ronald Valdueza,

ABS-CBN Group chief financial officer, said.

The company targets a P2 billion profit this year.

http://www.interaksyon.com/business






“Our O Shopping channel, which we launched only last year, is likely to break even this year,

while our educational theme park, KidZania, is expected to open for business at the Fort

Bonifacio, Global City during the first quarter of 2015,” Valdueza said.

Shifting to consumer revenues

During Wednesday’s stockholders meeting, ABS-CBN chairman Eugenio Lopez III said half ofrevenues in 2013 was derived from consumer sales.

"We’re moving away from the reliance on advertising to consumer revenues. There’s only so

much growth you can get out of advertising, its limited to 18 minutes to an hour. And so, wewant to monetize our content beyond just advertising by directly relating it to what consumers

want," he said.

Last year, consumer sales amounted to P14.47 billion, up 13.58 percent from P12.74 billion in

2012. But ad revenues still climbed faster at 16.44 percent to P18.91 billion from P16.24 billion

over the same period.

"We expect that trajectory to continue in the future. We expect although our advertising

continues to grow in the next five to 10 years. It represents only 25 percent of our total revenuesand that majority of those revenues and profitability will come from the consumer sectors of our

businesses," he added.

The broadcasting firm's consumer portfolio include mobile, pay TV, movie, publishing,

merchandising, Kidzania and O Shopping.

"Anything that has to do with consumers paying us. In fact all the new businesses that we are in

are in the consumer side of the business," Lopez said.

He cited Star Cinema, which released 16 films last year with one movie making over P200

million at the box office and two movies breaking the P300 million level.

Valdueza said the company's focus into consumer sales is part of its diversification, whichstarted five years ago.

"The growth of the consumers will be faster than the advertising because you are talking aboutretail business. Look at the retail business. For example, the telco business, that's P250 billion

[revenue] when you’re talking about advertising between us, GMA and ABC 5, it’s about P30 to

P35 billion. The growth in the retail is exponential compared to the [advertising] airtime business," he said.

Globe Telecom reported a total revenue of P82.7 billion last year, while Philippine LongDistance Telephone Co (PLDT) had P164.1 billion.

Big potential

Astro del Castillo, managing director of First Grade Finance Inc said consumer business has a"big potential" for ABS-CBN given the technology available.

"I think they are looking at the model overseas. I think the potential is big," Del Castillo said.

He said that maybe ABS-CBN is preparing for the eventual shift of advertising to the digital platform from the traditional media.



http://www.rappler.com/business/24316-abs-cbn-2012-profit-down-on-absence-of-one-time-gain

ABS-CBN 2012 profit falls

29% to P1.7-BThe consolidated net income of the country’s biggest media conglomerate fell 29% in 2012 to

P1.708 billion

Cai Ordinario

Published 2:29 PM, Mar 21, 2013

Updated 7:56 PM, Mar 21, 2013

LOWER. ABS-CBN's earnings are down 29% in 2012 due to the absence of one-time gain

MANILA, Philippines (UPDATED) – The consolidated net income of ABS-CBN Corp., thecountry’s biggest media conglomerate, fell 29% in 2012 to P1.708 billion from P2.42 billion in

2011.

In a media briefing on Thursday, March 21, the Lopez-owned company said the decline was

due to the absence of a one-time gain. In 2011, ABS-CBN booked additional income from the

sale of part of its stake in cable unit Skycable Corp.






Taking this gain out, ABS-CBN’s 2012 core net income rose 23% to P1.032 billion.

The company’s consolidated revenues meanwhile grew 13% to P31.7 billion in 2012, owing to

strong advertising revenues and consumer sales.

Ad revenues grew 8% to P19.1 billion, while consumer sales jumped 19% to P12.7 billion.

Total operating and other expenses increased 12% to P26.2 billion brought about by increases

in production costs, cost of sales and services, and general and administrative expenses.

ABS-CBN executives at the 2012 earnings report

2013 outlook

ABS-CBN sees better earnings for 2013, an election year.

This is despite a projected decrease in political advertisements following the Commission on

Election’s rule that limits candidates’ ads on all television and radio stations to 120 minutes. In

the 2004 and 2010 elections, candidates were given 120 minutes airtime per station.

ABS-CBN CFO Rolando Valdueza said the decrease would be offset by growth in regular ad

spending.



“If you look at the first 3 months of 2013, [earnings are] significantly better than the last quarter

of last year and the same period of 2012,” Valdueza said. “[Earnings are] being driven by the

growth in regular ad spending,” he said.

However, he said they would know the extent of the Comelec rule’s impact only by April. “Weexpect [pol] ads to come in by April next month right after Holy Week.”

Capital expenditures

Valdueza said ABS-CBN allotted P5 billion for capital expenditures in 2013, higher than the

P4.9 billion in 2012.

The budget will be spent for equipment replacement, transmission facilities, and film and

program rights acquisitions, among others.

The executive said the capex includes P2 billion for the operations of SkyCable.

He noted the capex would be funded through internal cash. “We continue to assess and weigh

our options with regards to our fund raising activities,” he said. – Rappler.com



Comparative Price –earnings ratio of ABS CBN and GMA network

Definition: Price –earnings ratio is an equity valuation measure defined as market price per share divided by

annual earnings per share

*PSE current Price –earnings ratio of GMA network: 24.6459 vs. ABS CBN: 10.3679

Legends and Interpretation

N/A A company with no earnings has an undefined P/E ratio. By convention, companies with losses (negative

earnings) are usually treated as having an undefined P/E ratio, even though a negative P/E ratio can be

mathematically determined.

0 –10 Either the stock is undervalued or the company's earnings are thought to be in decline. Alternatively,

current earnings may be substantially above historic trends or the company may have profited from selling

assets.

10 –17 For many companies a P/E ratio in this range may be considered fair value.

17 –25 Either the stock is overvalued or the company's earnings have increased since the last earnings figure

was published. The stock may also be a growth stock with earnings expected to increase substantially in the

future.25+ A company whose shares have a very high P/E may have high expected future growth in earnings, or this

year's earnings may be considered to be exceptionally low, or the stock may be the subject of a speculative

bubble.

GMA network: 24.6459

Interpretation: Either the stock is overvalued or the company's earnings have increased since the last earnings

figure was published. The stock may also be a growth stock with earnings expected to increase substantially in

the future.

ABS CBN: 10.3679

Interpretation: For many companies a P/E ratio in this range may be considered fair value

http://pse.com.ph/stockMarket/companyInfo.html?id=610&security=533&tab=0










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