By Denise A. Valdez, Reporter
MEDIA GIANT ABS-CBN Corp. said it will invest more to boost its digital business this year as the segment showed the fastest growth in 2018.
Aldrin M. Cerrado, the company’s chief financial officer, said its digital business may get a bigger allocation under this year’s capital expenditure (capex).
“If you look at our investment in the past, we’ve done a lot of investments (for digital). Our capex is about P6 billion in 2018. This year it’s about the same, but ang nangyayari lang, nababago ’yung mix on where we’re investing [but what changes is the mix of investment],” he told reporters after the company’s annual stockholders’ meeting Thursday.
“The capex starting this year and in the next five years mostly will pivot to digital and broadband,” ABS-CBN Group Chief Financial Officer Rolando P. Valudeza added.
The Lopez-led firm saw its net income attributable to the parent company fell 37% to P2.1 billion in 2018, from P3.33 billion in 2017. Total consolidated revenues slipped 1.4% to P40.13 billion, mainly due to the 3.4% drop in advertising revenues to P20.38 billion.
Mr. Cerrado said companies likely cut back on advertising expenses amid the challenging business environment last year, which saw inflation soar.
“If you’d notice, there was a softening of TV advertising in the last two years… We want our business to grow not just on advertising but on consumer. Most of the countries outside the Philippines have migrated from analog television to digital… Big digital companies…are the ones generating most of the advertising revenues. Although in the Philippines it may not be true yet, we want to be positioned if that happens in the future,” he said.
ABS-CBN’s digital segment generated P1.33 billion in revenues last year, 8.8% higher than in the previous year, led by its domestic streaming platform iWant which recorded an average of 2 million monthly active users.
Moving forward, Mr. Cerrado said they want to invest in producing more content for the digital platforms to attract more users.
“We know we’re not going to generate enough revenue yet… but there has to be a discipline on our part to wait as we want to develop the habit of Filipinos to go to our platform,” Mr. Cerrado said.
Meanwhile, ABS-CBN President and Chief Executive Officer Carlo L. Katigbak expressed confidence the company’s profits will bounce back this year.
“We are well-positioned for a rebound in market conditions. With stronger ratings in broadcast and continued growth in viewership on our digital properties, we are confident that there will be a full recovery of our profitability this year,” he said during the annual stockholders’ meeting on Thursday.
“It is clearly an uncertain time for ABS-CBN. We are faced with many threats from many directions: changing consumer habits, disruptive technologies, political headwinds and new competition. Our company has been through many periods of uncertainty in the past, and we have not only overcome challenges, but because of them, we have emerged a better, stronger and more relevant company,” he added.
ABS-CBN’s franchise is due to expire next year, but President Rodrigo R. Duterte threatened to block its renewal, accusing the company of not airing his political advertisement in 2016.
When a stockholder asked Mr. Katigbak on the issue, he said: “We have already filed for a renewal of all expiring congressional franchises. These are all pending with the House. We anticipate that we will have to refile them upon the reconstitution of the new Congress.”
Also during the meeting, ABS-CBN stockholders approved the company’s investments in Ever Bilena Cosmetics, Inc.; iBayad Online Ventures and The Chosen Bun, Inc.
ABS-CBN is forming a joint venture with Ever Bilena where it will hold 50% of the company with an authorized capital stock of P10 million. Ever Bilena will be in charge of the production development, logistics and distribution of cosmetics products, while ABS-CBN will handle marketing promotions and talent development.
For its mobile wallet business, ABS-CBN is entering a joint venture agreement with information technology firm iBayad, where it will hold 51% of the company’s shares with an authorized capital stock of P100 million.
The Chosen Bun will handle the food business of ABS-CBN.
Asked by reporters for the rationale behind the investments, Mr. Cerrado said the company wants to improve its retail business by using these ventures, banking on the idea of selling “experiences.”