"For the whole of 2020, the network should register revenues of P16.875 billion and profits of P5.2 billion."
When ABS-CBN was shut down for good in May this year, the expectation was that its arch rival, GMA Network, would quickly take up the slack and reap the windfall of a near monopoly amid the worst health and economic crisis in a century.
In the first quarter of 2020, GMA Network, owner of Channel 7 and DZBB am radio, posted revenues of P3,531.98 million and profits of P583.4 million. In the second quarter, revenues were only P3,219.69 million, down 8.8 percent from the previous quarter. Profits reached P824.66 million, up a remarkable 41 percent despite a raging pandemic.
By the third quarter, GMA had rallied or fully recovered. Revenues leaped 83 percent from the second quarter to P5,905 million in the third; profits more than tripled (up 203 percent) to P2,501.3 million from the previous quarter.
For the whole of 2020, GMA should register revenues of P16.875 billion and profits of P5.2 billion. Compared with 2019, revenues could climb 11 percent but profits would rise even more dramatically, by 130 percent.
The 2020 slump began on March 15, 2020 after the government locked down the whole of Luzon island which accounts for 73 percent of national economic production or GDP.
The lockdown, said GMA, “affected most of the company’s business partners especially during the initial months of the lockdown as a wait-and-see strategy was observed, resulting in cutbacks in advertising spending.”
By June this year, “community quarantines (became) more encouraging for businesses to resume as health protocols started to ease up, allowing the economy to regain strength. More and more industries have started to adapt to the new normal set-up and resumed operations, albeit still on less- than-full capacity.”
GMA said it “continued to play an important role during these trying times, upholding its commitment of ensuring delivery of relevant news and information across the nation and even to Filipinos abroad. With some reformatting done to focus on News and Public information, the company’s top line was able to make a quick turn-around.”
To be sure, GMA conceded, “the closure of biggest rival, ABS-CBN, due to the expiration of their broadcast franchise last May 5 and the subsequent denial last July 10 by the House Committee on Legislative Franchises of ABS-CBN’s new application also contributed to the increase in sales due to the shift in some advertising placements. This development partly counterbalanced the general reduction in sales brought about by the slowdown in economic activities forced by the lockdown.”
For the first nine months of the year, consolidated revenues rose slightly, by 4 percent, to P12,657 million. The fourth quarter could be the best quarter of 2020.
GMA had a successful launch in June of its Affordabox, its trend-setting digital set- top box. More than 600,000 units were sold, resulting in revenues of P1 billion.
In 2019, revenues were boosted by a one-time windfall of P758 million in ad election ad placement. Without that windfall and the revenues from GMA Affordabox, recurring or revenues were up 7 percent y-o-y.
Consolidated advertising revenues (airtime, online, international) which comprised 91 percent total GMA revenues. The 91 percent amounted to P11,468 million, up two percent or P203 from the same period in 2019.
Without the P758 million poll windfall, nine-month regular revenues were actually up 9%. Most of the gains came from the third quarter which “wiped out the setback in the second quarter during the height of the pandemic.”
For January-September 2020, cash flow as measured by earnings before interest, taxes, depreciation and amortization (EBITDA) reached P6,502 million, a whopping 49 percent rise and a complete turnaround from the January-June EBITDA decline of six percent. It helped that the network cut back on expenses due to the lockdowns.
The bottomline, an awesome P3.909 billion in nine-month profits, a leap of 78 percent from P2.19 billion in January-September 2019 despite the absence of a one-time revenue generator like an election.
GMA Network, Inc. is now the Philippines’ unrivalled No. 1 radio-tv network. It is also the most trusted broadcasting company.
The company has 52 TV stations (47 VHF, 41 UHF, and 5 digital terrestrial stations) and 24 radio stations.
Nielsen TV Audience Measurement during the August – Sept. 12, 2020 period showed GMA with a reach of over 80 million Filipinos nationwide with 62.7 percent audience share in total Philippines.
A growth area is advertising revenues from online/digital sales. For the past nine months, online advertisements particularly from its websites, GMA News Online and GMA Entertainment Online grew 36 percent.
However, airtime advertising abroad through the company’s GMA Pinoy TV platform was down 9 percent in nine months. The company blamed “the absence of on-ground events abroad due to the COVID-19 breakout across the globe.”
Despite easing quarantine restrictions, GMA could not go full blast in producing in-house shows.
“The back and forth shift to GCQ and MECQ during 3Q caused uncertainties on how to tackle location tapings which would also involve mass gatherings,” GMA said. It was only towards the latter part of the quarter wherein tapings of soaps commenced, in a bubble set-up.
Hence, during the most part of the period, the Network continued to air mostly replays of Entertainment programs. Only News and select Public Affairs programs continued to air fresh episodes to fulfill the Network’s responsibility of delivering comprehensive news and information nationwide. Consequently, several subsidiary operations which were dependent on the Network’s activities also experienced slowdown.
Thanks to lockdowns, the share of production cost, talent fees and other direct costs went down to 39 percent by September 2020, from 50 percent.
At end-September 2020, GMA total assets stood at P21,642 million, up 32 percent or P5,295 million from end-2019’s P16,347 million.
Current assets --cash and cash equivalents of P3,003 million swelled by P748 million or 33 percent from end-2019 balance amounting of P2,255 million.
Higher profits, higher income taxes. Thus, total liabilities climbed 43 percent or P2,865 million as at end-September 2020 from P6,690 million inend-2019. Previously debt free, GMA had loans of P970 million by September, more than double the P400 million debts in end-2019.
The higher profits boosted equity of the parent company, to P12.02 billion by September 2020, up 25 percent or P2,434 million from December 2019.