"How did the network manage this phenomenal rise?"
"How did the network manage this phenomenal rise?"
On Jan. 5, 2021, GMA Network, Inc. began the new year with its share pricing closing at P5.95, down 5 centavos from its Dec. 29, 2020 closing price of P6. Within the first six months of 2021, the stock price of the Philippines’ largest broadcast network rose to a new high of P14.40 per share. The surge corrected a bit before scaling an unprecedented high of P16.66 per share on Oct. 4, 2021, closing at P16.06 that day.
At P16 per share, the 3.361 shares outstanding of GMA Network were valued at a whopping P53.977 billion, an increase of P33.811 billion or 167.66 percent in just nine months.
With 29.03 percent ownership, the GMA Network family holdings of the late Gilberto Duavit now led by GMA Network President Gilberto Duavit Jr. were suddenly worth P15.669 billion, up P9.8 billion.
GMA Network Chair and CEO Felipe L. Gozon has holdings of 27.07 percent. In late September, those became valued at P14.61 billion, an increase of P9 billion.
The third major owner, the family of Menardo Jimenez, has 27.81 percent. In late September, the equity was worth P15 billion, an increase of P9.4 billion.
GMA Network’s stock closed at P13.78 per share yesterday (Dec. 14, 2021), valuing the company at P45.84 billion. Of that, Gozon has stocks worth P12.42 billion, the Duavit family P13.3 billion, and the Jimenez family, P12.7 billion.
GMA Network has big plans at expansion and diversification into non-tv businesses. Those plans, however, will require careful and savvy execution. ABS-CBN used to generate a third of its revenues from non-tv businesses.
What did GMA Network do that enabled its three major owners to accumulate wealth at the rate of P1 billion per month for nine months straight, January to September 2021?
Four things:
One, GMA Network, Inc. has become a near-monopoly, following the closure of its arch rival ABS-CBN Broadcasting Corp. in July 2020.
Before ABS-CBN’s closure, its Channel 2 and GMA’s Channel 7 had 70 percent of the free tv market between them. With ABS-CBN apparently gone for good, GMA Network readily increased its market share to an unheard of 54 percent.
Two, GMA Network was already a hugely profitable cash cow even before the ABS-CBN’s closure which it had beaten handily in the ratings and market share game.
Out of its 2020 profits, GMA Network declared a whopping P6.56 billion in cash dividends on March 26, 2021—its largest ever cash dividend, eclipsing the previous high of P3.54 billion declared in March 2017 out of the 2016 profits.
In 2020, GMA Network reported its biggest profit in its 70-year history, a gargantuan P6.0 billion, more than double or 128 percent higher than 2019’s P2.639 billion, on the back of a 17-percent rise in revenues to P19.33 billion, of which P17.72 billion were tv advertising.
Three, even before ABS-CBN’s closure, GMA Network had been the No. 1 television station in terms of public trust and ratings.
GMA Network is the most trusted major tv network today, a tribute to the station’s evenhanded and balanced treatment of news, information, and entertainment—a valuable quality given the state of misinformation and disinformation in social media today.
From January to May 2020, GMA had an audience share of 33.8 percent, higher than ABS-CBN’s 30.2 percent.
Four, GMA Network has been extremely well-managed, if initially conservatively, under the tandem of Chair and CEO Felipe Gozon and President Gilberto Duavit Jr. The two have turned a once-sluggish behemoth into a veritable money machine.
Since 2011, when Gozon took over as CEO, and up to September 2021, the tandem has delivered P31 billion in cumulative profits on aggregate revenues of P162.26 billion—an unprecedented feat and far better than ABS-CBN’s profit performance when it was still around.
Now, Gozon is looking at bigger and different things.
GMA Network is pumping cash into GMA Ventures, Inc, which Gozon says will help the company deliver “more revenues and net income for our stockholders.” GMA Ventures will focus on non-core businesses outside of TV.
“If a good opportunity presents itself for the company to earn considerable revenues and net income, even if that will require the investment of a substantial amount, then [GMA Ventures Inc.] can invest in it. Provided not much risk is involved in the business to be invested on,” CEO Gozon told stockholders during a special meeting on Dec. 9, 2021.
The tv business will undergo a P2-billion “expansion of our digital transmission network, upgrading of our post-production capabilities, and of our content layout facilities, and expansion of our regional TV network, etc., etc. We have not yet started the construction of our new building and studios. And it does not include our investments in content and other investments.”
GMA’s stockholders approved an initial P100 million into GMA Ventures and authorized GMA Network’s executive committee to pump another P1 billion if needed.
“We have organized GVI and if a good opportunity presents itself for the company to earn considerable revenues and net income even if that will require the investment of a substantial amount then GVI can invest in it provided not much risk is involved in the business to be invested on,” Gozon told stockholders. He added that there are prospective targets for acquisitions.
“We have already made small investments in one or two so-called startup companies. But at this point we prefer not to identify them,” the CEO revealed.
Gozon assured stockholders that future cash dividend payouts will not be affected given that GMA has no long-term debts and cash flow remains “very healthy.”
For 2021, Gozon GMA will fall short of its revenue target but will exceed its income target. He hopes the COVID restrictions will be relaxed so the economy can recover.
For 2022, two things are going. One, the recovery in late 2021 will continue into next year; and two, the presidential elections will probably add five percent to revenues.
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