GMA No. 1 even before ABS-CBN closure

"Felipe Gozon is not done yet."

At the annual stockholders’ meeting July 17 of listed broadcast giant GMA Network, the owner of Channel 7 and am radio DZBB 594, Chair and CEO Felipe “Henry” L. Gozon was asked by a stockholder, online, for his reaction to the closure of arch rival ABS-CBN Corp., also a public company.

Gozon demurred. “I prefer not to comment on that,” he said.

It was classic Gozon. The Yale-educated lawyer has always been a gentleman, in and out of corporate headquarters. A long-time corporate lawyer specializing in aviation before becoming active in the broadcast business, he is no stranger to business brawls and meeting competitors head-on. Invariably, in encounters with rivals, he uses nothing more than his brain, which is sizable (the family produces bar topnotchers), his training (UP Law and Yale), and his people skills, which are considerable.

Besides, Henry could not have gloated over a main rival’s untimely closure (last May 5, 2020), nor rubbed salt to its fatal injury. Silence is wisdom.

The crown jewel of President Rodrigo Duterte’s anti-oligarch campaign is ABS-CBN Corp., the country’s largest broadcast network, in revenues, and owner of the television station Channel 2 and the radio AM bandwidth 630 or DZMM.

On July 10, 2020, after 12 hearings that exposed ABS-CBN’s innards and practices to the public, the House Committee on Legislative Franchises rejected by an overwhelming vote of 70 to 11, the bid of the Lopez-owned network to renew for another 25 years its broadcast franchise, ending a half century of business that had given the Lopez family enormous wealth and formidable political clout.

The Franchises Committee backed its decision with a 27-page, 15,264-word report retailing the alleged nine franchise abuses and violations by ABS-CBN over the years.

The House committed cited nine grounds for the denial for a new franchise: the American citizenship of ABS-CBN top honcho Eugenio “Gabby” Lopez III (media must be 100 percent Filipino); issuance of virtual shares of stock called Philippine Depositary Receipts to foreigners, worth P8.6 billion; a 50-year limit on franchises; failure to follow the proper procedure in re-acquiring ABS-CBN from government in 1992; going into cable tv and pay-per-view tv which are outside of the franchise scope; block-timing for 23 hours Channel 23 which ABS-CBN owned 49 percent; unfair labor practices (only a fourth of 11,000 workers are regular); tax avoidance amounting to billions (ABS-CBVN paid only less than 17 percent in taxes paid by GMA despite the latter’s lower revenues; and political meddling and biased reporting.

In the past ten years, ABS-CBN’s Channel 2 and GMA Network’s Channel 7 carried on a bruising battle over being No. 1, fighting over a market, valued at $1 billion, in which each of the two channels had an almost equal share for a combined 70 percent.

In February 2020, two months before ABS-CBN was ordered to shut down, per NUTAM, GMA Network was the leader in both the main tv market, Mega Manila (NCR and nearby provinces) and nationwide. So ABS-CBN cannot claim GMA became No. 1 because the Lopez-owned channel ceased operations.

To be sure, the ongoing pandemic has had an enormous impact—on everyone. At the July 17 annual meeting, Gozon told stockholders:.

“The effects of the pandemic and the quarantine controls imposed to arrest the pandemic. GMA is similar to the effects in other companies. Foremost of which is because of the restrictions, we have to replay some of our high-rating programs. But with respect to our news and some public affairs programs like our top rating Kapuso Mo Jessica Soho, we continue to air them live not with replays. And of course, we also suffered the setbacks in revenues that went along with the closure of some of the business activities. Plus, lack of transportation, quarantine, lockdowns, etc. But lately, when the restrictions started to be eased we also started to liberate the showing of our programs in the sense that gradually we are airing and producing more and more live programs or not replays but on a limited basis to comply with the restrictions imposed by the government.”

In 1975, the trio of Gilberto Duavit, Menardo Jimenez and Gozon took over from Bob Stewart the smallish Channel 7.Change came in a big way in 2000 when Gozon became CEO. Almost in jiffy, by the magic of Gozon’s management wand, GMA became No. 1 in audience share, in TV ratings, in credibility, in profitability, in market value, in prestige, and in reputation.

Over the past 20 years, from 2000 to 2019, GMA Network chalked up cumulative revenues of P211 billion and cumulative net income of P37 billion. That also brought enormous fortune to the three families which control the network: the Gilberto Duavit family (which owns 30.57 percent of the company), Menardo Jimenez family (30.49 percent), and Gozon (27.84 percent).

The three families own 88.9 percent of GMA Network, which means P32.89 billion in profits were shared by them in the past ten years.

Gozon shepherded GMA Network to its unrivalled niche today through masterful strategy, savvy programming, first-rate marketing, and judicious cost control.  

This July, GMA finally launched its wireless or digital terrestrial transmission (DTT) service, the Affordabox. It converts analog tv signal into digital format. It was originally intended to compete with ABS-CBN’s TVPlus which the government shut down last June, opening for GMA immense market for wireless tv and all its limitless possibilities.

Despite now enjoying a monopoly, GMA Network has priced Affordabox at only P888, half of ABS-CBN’s when it launched TvPlus.

This year, Gozon fulfilled his promise to fully digitize GMA.

Digitization is the process of converting information (usually analog like an image, sound, document or signal) into digital format so you can project or feed it to infinitely more audiences and more forms of media.

Gozon changed the game of television. And he is not done yet, with or without ABS-CBN around.

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Topics: Tony Lopez , Chair and CEO Felipe “Henry” L. Gozon , GMA Network , ABS-CBN Corp.
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