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Bicol tops regions in economic growth

THE ECONOMY of Bicol Region grew the fastest among the 17 Philippine regions in 2018, exceeding the growth rate posted by the capital as well as the national average.

Preliminary results from the Philippine Statistics Authority (PSA) showed growth in Region V — also known as Bicol Region — grew 8.9% in 2018 from five percent in 2017, outpacing the National Capital Region’s (NCR) 4.8% and Philippine gross domestic product (GDP) growth of 6.2%.

The economic expansion of Bicol — composed of the provinces of Albay, Camarines Norte, Camarines Sur, Catanduanes, Masbate, and Sorsogon — was buoyed by the industry sector that grew 14.2% in 2018 from 3.5% in 2017. The sector accounted for 23.9% of its gross regional domestic product (GRDP).

Among the industry’s subsectors, construction grew the fastest in 2018 at 21.7% compared to the 4.9% logged in 2017. Mining and quarrying accelerated to 18.8% from the year-earlier 5.5%.

“[F]or the Bicol region, the mining subsector may have contributed via tax payments while construction linked to the public infrastructure buildup also gave the industrial sector a boost,” ING Bank NV-Manila senior economist Nicholas Antonio T. Mapa said in an e-mail.

“The services sector also helped boost growth with tourism gaining and education after the government’s subsidized program for education. Meanwhile, agriculture was able to recover as well, reflecting the better year for agriculture in 2018.”

In a separate e-mail, Rizal Commercial Banking Corp. (RCBC) economist Michael L. Ricafort cited “lower base/denominator effects” in explaining Bicol’s accelerated growth, noting the region recorded the fourth-slowest GRDP growth in 2017.

“Faster growth in Bicol in 2018 may be attributed to the increased flow of goods and services that passed through the region as the main route of the RoRo (Roll-on, Roll-off boat system) to Eastern Visayas and Mindanao, as well as an important gateway to Masbate and Catanduanes,” Mr. Ricafort added.

For Union Bank of the Philippines, Inc. (UnionBank) chief economist Ruben Carlo O. Asuncion, Bicol’s growth has been of a surprise, noting that the region “has been one of the poverty-stricken parts of the country.”

Aside from Bicol, 11 other regions recorded growth above the national average, namely: Davao Region (8.6%), MIMAROPA Region (consisting of Occidental Mindoro and Oriental Mindoro, Marinduque, Romblon and Palawan with 8.6%), Central Visayas (7.6%), Cordillera Administrative Region (CAR, 7.3%), Calabarzon (7.3%), Autonomous Region in Muslim Mindanao (ARMM, 7.2%), Central Luzon (7.1%); Northern Mindanao (seven percent), Soccsksargen (South Cotabato, Cotabato, Sultan Kudarat, Sarangani and General Santos City with 6.9%), Ilocos Region (6.5%) and Zamboanga Peninsula (6.3%).

On the other hand, Caraga had the slowest growth recorded in 2018 at 3.2%. Other regions that had below-average GRDP growth included Cagayan Valley (3.3%); NCR (4.8%), Eastern Visayas (5.9%) and Western Visayas (6.1%).

Davao’s 8.6% GRDP growth rate marked a slowdown from the 10.7% growth registered the previous year. In a press conference in Davao City yesterday, National Economic and Development Authority Davao Regional Director Maria Lourdes D. Lim attributed the result to the “slowdown in the realization of some government projects due to various factors, including road-right-of-way issues.”

ARMM — which has now transitioned into the Bangsamoro ARMM (BARMM) — saw its GRDP growth slightly dip to 7.2% in 2018 from 7.5% in 2017. In a mobile phone message, BARMM Chief Minister Murad Ebrahim said the region’s stable performance “proves that the Bangsamoro can be at par with other regions.”

Mr. Ebrahim also noted that since the establishment of the BARMM, investors have signified interest in venturing into the region.

“With the establishment of the new Bangsamoro government, numerous entities have trusted and [have shown] support in generating jobs for the Bangsamoro people,” he said.

The BARMM was established following the ratification of the Bangsamoro Organic Law, which arises from the peace deal between the government and the Moro Islamic Liberation Front.

Meanwhile, Metro Manila remained the biggest contributor to economic growth in 2018 despite growth easing during that period.

NCR’s share in the national economy dipped to 36% last year from 36.5% in 2017.

Other regions with significant shares in the country’s output were Calabarzon (17%) national output and Central Luzon’s 9.8%.

NCR’s growth in the industry sector was flat in 2018 with 0.5% versus the 2% logged in 2017. Dragging NCR’s output was manufacturing, which posted a decline of 3.4%, a reversal from the 6.3% growth in 2017. On the other hand, its growth in the construction sector was 16.9% — a turnaround from the previous year’s 16.2% contraction.

Economists attributed easing growth in NCR to elevated inflation last year.

“The rapid acceleration in prices owing to the shortage of supply for basic foodstuffs and, to a lesser extent, the rising transport costs after all prices surged in mid-2018, sapped the overall growth momentum,” ING Bank’s Mr. Mapa said.

UnionBank’s Mr. Asuncion was of the same opinion: “Price level expectations may have affected expansion plans and other economic activities.”

“Construction growth, as mirrored by national GDP, was driven largely by the government’s investment in infrastructure development. Government spending grew and it has directly impacted both public and private construction,” Mr. Asuncion added.

In terms of per capita GRDP, NCR led all regions with P253,893, nearly three times the national average of P86,370 and up 3.8% from 2017.

Besides NCR, two other regions — Calabarzon and CAR — saw their respective per capita GRDPs exceeding the national average at P104,708 and P87,722, respectively.

On the other hand, the Autonomous Region in Muslim Mindanao had the lowest per capita GRDP of P14,657.

Looking forward, economists expect the country’s economic growth to pick up.

Fro ING Bank’s Mr. Mapa, growth will “remain resilient” this year with household consumption helping boost the services sector as inflation eases and government spending and capital formation “taking a backseat.”

For UnionBank’s Mr. Asuncion: “With the continuing decline of price levels (inflation) this 2019, it is expected that regional growth can and will continue to expand.”

“Barring all probable challenges to spending in infrastructure development and social sector needs, economic growth in the various regions are expected to grow this 2019.” — Lourdes O. Pilar in Metro Manila with Carmelito Q. Francisco in Davao City and Tajallih S. Basman in the Bangsamoro ARMM

Regional share in gross domestic product, 2018

MWSS sees rebate from Manila Water penalty reflected as early as June bill

THE METROPOLITAN WATERWORKS and Sewerage System (MWSS) wants the P600-million portion of the penalty it imposed on Manila Water Co., Inc. to be applied on the next water source project of the water concessionaire, possibly the 80-million-liters-per-day (MLD) Calawis-Wawa dam in Rizal province.

The regulator also wants the P534.05-million fine on the Ayala-led company to be applied as a deduction from the monthly bill of water users in June or as soon as the listed concessionaire for Metro Manila’s east zone will have completed its voluntary compensation for consumers.

“Ngayon nagde-deduct pa sila ng self-imposed [penalty] nila, so hopefully by June puwede na ‘yun, ‘yung P534.05 million,” MWSS Administrator Reynaldo V. Velasco said in an interview on Thursday.

If a consumer’s monthly bill is below the corresponding amount to be rebated by Manila Water, the amount to be returned should be carried over to succeeding months, he said.

These are some of the details disclosed by Mr. Velasco after announcing the other day a total of P1.134-billion penalty on the water company. He said the MWSS Regulatory Office had computed the amount to be deducted from the monthly water bill of Manila Water consumers. “Actually dalawang option ‘yun. ‘Yung isa P517 [million] ‘yung isa P534 [million]. We opted for the higher,” he said.

Mr. Velasco said the penalty is part of the report submitted by MWSS to the Office of the President, after Malacañang directed water stakeholders to explain the reason for the water shortage customers of Manila Water had to contend with starting on March 6.

He said his office submitted the report on April 6, but held off disclosing details in order not to pre-empt any announcement from Malacañang.

“ ‘Yung P600 million imposition ‘yan on future projects. Halimbawa, a very simple [example], P6.6 billion ‘yung cost ng project, sa capex (capital expenditure) nila ang puwede lang nilang i-charge sa tao is P6 billion. ‘Yung P600 million hindi nila puwedeng i-charge,” he said, adding the application of the amount is “prospective.”

Mr. Velasco said as far as he is concerned, an important project for MWSS is the Calawis-Wawa dam.

“I need the 80 MLD of Calawis-Wawa by 2020, so dapat maayos na kaagad ‘yun,” he said.

The project is a component of a bigger project being undertaken by businessman Enrique K. Razon, Jr. Mr. Velasco said he has not acted on the proposal of Mr. Razon because the businessman has yet to file a request to lift the restraining order on the water rights on which the Calawis-Wawa project depends. The MWSS administrator recalled that, during a recent presentation by Mr. Razon’s group, the businessman said he would withdraw the restraining order.

“But the board wants a specific [action], like even at least ‘yung motion to withdraw,” Mr. Velasco said.

“You have to show us proof that you are withdrawing it. And one proof is you have to file a motion to withdraw the case.”

The bigger Wawa project is the 500-MLD water supply facility at the Wawa catchment area in Rizal province that will traverse the municipality of Rodriguez and the city of Antipolo. Prime Metroline Infrastructure Holdings, Inc. (Prime Infra), a company Mr. Razon controls, is handling the project. — Victor V. Saulon

Energy dep’t assures power still sufficient even for elections

THE DEPARTMENT of Energy (DoE) has maintained that Luzon has sufficient power even on election day as fears persist about rotating brownouts after the grid operator issued a red alert notice on Thursday, running for four straight days after the Lenten break.

“We expect sufficient reserves especially on that day,” Assistant Secretary Redentor E. Delola said, referring to the May 13 mid-term elections.

“The worry that we’re having is the day after or the [vote]-counting day.”

His reassurance is the latest from the DoE after the department dismissed early in March fears of a possible adverse impact of a “weak” El Niño on the country’s power supply this quarter.

At that time, the DoE cited measures that are in place and the entry of new energy capacity towards the end of this semester.

The announcement was followed by Luzon’s first yellow alert for the year, the first of three for March.

At a hearing in the Senate on Wednesday, DoE Undersecretary William Felix B. Fuentebella said the department’s power supply and demand outlook was supplied by grid operator National Grid Corporation of the Philippines (NGCP).

Reserve energy in the Luzon grid fell below the required level on Tuesday, prompting the system operator to issue a “yellow” alert a day after the Energy department gave its assurance that power supply is sufficient in the dry months.

Luzon’s demand for power this year is expected to peak at 9,870 megawatts (MW), which will happen in May, placing the last week of April and all weeks in the succeeding month at a critical point for grid operator NGCP.

This year’s peak demand is expected to be higher by 1.48% over the previous year’s 9,726 MW, which happened in April or a month earlier than NGCP’s projection.

Peak load growth in May 2016 was 8.94% more than 2015’s 8,928 MW, which came in May.

Last year, NGCP made its projection using the demand pattern in 2010, an election year that coincided with El Niño’s extended dry spell. The same weather phenomenon struck in 2016.

On Thursday, NGCP issued a yellow alert notice from 8:00 a.m. to 10:00 a.m., and from 5:00 p.m. to 6:00 p.m., and from 9:00 p.m. to 11:00 p.m. A red alert notice was raised from 10:00 a.m. to P5:00 p.m. and from 6:00 p.m. to 9:00 p.m.

Yellow alert notices are issued by NGCP when reserve power thins as a result of the unscheduled outages of power plants. This prompts Manila Electric Co. (Meralco) to turn to the wholesale electricity spot market, where electricity prices higher, to cover the deficiency.

The DoE said that, as of 3 p.m., a total of 990 MW was lost because of the forced outages of units 1 and 2 of GN Power Mariveles Coal Power Plant, and units 1 and 2 of SMC Consolidated Power Corp. plant in Limay, Bataan.

At the same time, unit 3 of Pagbilao Energy Corp. declared only 210 MW or 50% of its 420-MW total installed capacity because of an ongoing assessment of the condition of its boiler.

During the hearing, Sen. Sherwin T. Gatchalian, who chairs the Senate energy committee, said existing rules have no “disincentive” for the power producers to force the to avoid the plant outages.

“Consumers are being penalized for unplanned outages,” he said.

Agnes VST Devanadera, chairman of the Energy Regulatory Commission, said based on data gathered by the agency, the outages could be blamed on the country’s aging power plants. “There is a direct connection between the age of the plant and the outages,” she said.

Victorio Mario A. Dimagiba, president of consumer group Laban Konsyumer, Inc., said demand for power continues to grow in Luzon but supply is not catching up. “Because of this, consumers are now experiencing red alerts, also known as, rotating brownouts. The yellow and red alerts also cause spike in [power] prices, especially in the spot market,” he said.

He called on the Senate energy committee to look into the bidding behavior at the electricity spot market before, during and after the alert notices “to see who has been taking advantage of the supply deficiency.” — Victor V. Saulon

Ayala Land prices seven-year bonds at 6.369%

By Arra B. Francia, Senior Reporter

AYALA LAND, Inc. (ALI) has priced its P8-billion fixed rate bonds at a coupon rate of 6.369% per annum, a top official said Wednesday.

“We are actually quite pleased with the reception of the market,” ALI Chief Financial Officer Augusto Cesar D. Bengzon said in a press briefing after the company’s annual shareholders’ meeting in Makati Wednesday.

“We have a total of eight investment banks. It was the largest underwriting syndicate, and they were able to secure the pricing at the tightest end of the range,” he added.

ALI engaged BDO Capital & Investment Corp., BPI Capital Corp., China Bank Capital Corp., First Metro Investment Corp., PNB Capital & Investment Corp., SB Capital Investment Corp., East West Banking Corp., and ING Bank N.V., Manila Branch as joint lead underwriters and bookrunners for the offering.

The seven-year bonds will be issued on May 6, after which they will be listed at the Philippine Dealing and Exchange Corp.

ALI aims to raise P7.89 billion from the offering to finance several hotel, office, and retail projects.

The issuance represents the first tranche of ALI’s P50-billion debt securities program. The company is scheduled to issue about P15-20 billion from the registration this year.

“We will be tapping the shelf throughout the year. But of course we also have funding coming from our banks so it will be a combination of loans. And we will just tap whatever market is beneficial for the company,” Mr. Bengzon explained.

The fund-raising activity will partially finance ALI’s planned P130-billion capital expenditure (capex) for 2019, as the listed property developer continues to expand its residential, office, mall, and hospitality projects.

ALI President and Chief Executive Officer Bernard Vincent O. Dy said 95% of the overall capex will be used for projects in the Philippines.

“We believe that there are still a lot of opportunities in the Philippines. We’re not anticipating large investments overseas at least for 2019,” Mr. Dy said in the same media briefing.

The company is currently developing a mixed-use project on a four-hectare property in Kuala Lumpur’s Klang Valley. It is being undertaken by Malaysian firm MCT Bhd., where ALI has a majority stake.

“After that we have been looking for opportunities in the region. Our approach has really been more focused on finding in specific cities that we feel share a lot of similarities with Metro Manila: high urbanization, population growth, GDP per capita in the ten thousand (dollar) level,” ALI Strategic Landbank Management Group Head Anna Maria Margarita B. Dy said.

ALI’s net income rose by 16% to P29.2 billion, after consolidated revenues also grew by 17% to P166.2 billion.

Shares in ALI gained P1.50 or 3.12% to close at P49.50 each at the stock exchange on Thursday.

AC Education-iPeople to complete merger in May

THE Ayala and Yuchengcho groups will finalize the merger of their education units this May, after securing the final clearance from the Securities and Exchange Commission (SEC) yesterday.

In a disclosure to the stock exchange Thursday, Ayala Corp. (AC) said the SEC has approved the plan and articles of merger between its unit AC Education, Inc. and listed Yuchengco-led firm iPeople, Inc. (IPO) on April 24.

AC said the merger will take effect on May 2.

IPO will be the surviving entity after the merger, and will then be valued at P15.5 billion. Its parent, House of Investments, Inc. (HI), will have a 51.3% stake in the firm while AC will own 33.5%.

Given the SEC’s approval, IPO and AC Education will conduct a share-swap transaction worth P5.19 billion. This involves IPO’s issuance of 295.33 million common shares out of its authorized and unissued capital stock in exchange for 1.99 billion AC Education shares.

AC will subscribe to 132.79 million AC Education shares, after which it will acquire an additional 54.5 million shares from exiting affiliates of HI.

“The merger involves an exchange of shares between iPeople and AC Education, which translates to an exchange ratio of 6.75 shares of AC Education for every one share of IPO,” according to IPO’s disclosure.

The transaction will place the seven educational institutions throughout the full education cycle held by AC Education and IPO under one roof. The combined student population following the merger is seen to reach almost 60,000.

Institutions under IPO include Mapua University, operated by its subsidiary Malayan Education System, Inc. Mapua is recognized as a leading engineering and technical university in the country with the most number of Centers of Excellence in Engineering awarded by the Commission on Higher Education.

IPO also operates Malayan Colleges in Laguna and Mindanao, as well as Malayan Science High School in Manila.

Meanwhile, AC Education brings to the table APEC Schools, the largest chain of private stand-alone high schools in the country. It has 23 sites located in Metro Manila, Cavite, Rizal, and Batangas with about 16,000 students.

AC Education also operates the University of Nueva Caceres — among the largest and oldest universities in Bicol, and the National Teachers College, a private tertiary school that specializes in teachers’ training.

HI and AC approved the merger of their educational arms back in October 2018. The transaction was also given clearance by the Philippine Competition Commission.

Shares in IPO were unchanged at P11.02 apiece, while shares in AC were up 0.11% or a peso to P885 each at the stock exchange on Thursday. — Arra B. Francia

GrabPay can now be used at SM Cinemas

GRAB Philippines said its mobile wallet arm GrabPay can now be used to pay for tickets at SM Cinemas as part of its continued expansion in the country.

The technology start-up, which previously only allowed digital transactions through its ride-hailing and courier services, said it wants to grow the use cases for GrabPay in the country by forging more partnerships with merchants.

“What we’re doing, based from now until end of this year, is we look to enable 5,000 outlets with GrabPay,” Huey Ooi Tyng, GrabPay Managing Director for the Philippines, Singapore and Malaysia, said in a media briefing late Wednesday.

Aside from the QR payments at SM ticketing booths, the company said it will also allow users to transact through GrabPay when buying tickets from the SM Cinema website.

GrabPay entered a strategic partnership with SM Investments Corp. in November, from which Ms. Ooi said more use cases are expected to arise within the year such as QR payments in SM supermarkets and department stores.

Grab Philippines President Brian P. Cu said aside from SM, the company also intends to expand the use cases for GrabPay within Grab’s own services.

“Right now, the use case of GrabPay has been limited to transport and GrabExpress. With this, we’re expanding the use case. Soon we’ll be allowed to pay GrabPay with GrabFood, within the quarter,” he said.

GrabPay said it recorded a 130% growth in monthly active users since the first quarter of 2018, with an average 30% quarter-on-quarter growth.

Mr. Cu said the company’s target is to grow the base “by at least the same amount” by the end of the year, or another doubling in active users.

“GrabPay, as we see it, is a business that can support a lot of the other businesses (of Grab),” Mr. Cu said. “It’s not a major driver revenue for sure… What GrabPay does, instead of driving revenue, is it drives access to all the other services.”

The company is also eyeing to allow bills payment through GrabPay by the third quarter, and to allow users to shop with points by the fourth quarter. — Denise A. Valdez

Superheroes and a king may set movie records for Disney

LOS ANGELES — The final chapter in a decade-long superhero saga and the remake of a big-screen classic could topple box-office records during a summer movie season expected to be dominated by Walt Disney Co.

Avengers: Endgame from Disney’s Marvel Studios kicked off Hollywood’s parade of potential blockbusters on Wednesday. Ticket sales in China hit $107.2 million, the highest opening-day total in the country’s history.

Industry experts say Endgame will likely deliver the biggest opening weekend ever in the United States and Canada, where it opens on Thursday night.

Then in July, a new version of Disney hit The Lion King has a shot at dethroning Avatar as the highest-grossing film in Hollywood history, according to box office analysts.

Those movies and others are giving theater owners hope for a turnaround after a sluggish start to 2019. Ticket sales so far are running 16% below last year’s bonanza, data from measurement company Comscore showed.

Studios used to reserve their big-budget films for summer, making it Hollywood’s most lucrative season, but now spread them throughout the year.

“I counted over 30 huge movies coming out this year,” said Adam Aron, chief executive of AMC Entertainment, the world’s largest theater operator. Aron said he now considers summer film season to be “March 1 to Dec. 31.”

Possible heavy hitters include Detective Pikachu and Godzilla: King of the Monsters from AT&T, Inc’s Warner Bros, The Secret Life of Pets 2 from Comcast Corp’s Universal Pictures, and Sony Corp’s Spider-Man: Far from Home.

STRONGEST FILM SLATE
But Disney’s lineup is seen as the most formidable. The company’s other 2019 releases include Toy Story 4, a remake of Aladdin, Frozen 2, and Star Wars: The Rise of Skywalker.

“Disney has probably the strongest film slate in the history of the industry this year,” Cowen & Co analyst Doug Creutz said.

The new Lion King tells the well-known story of the plucky cub Simba through computer-generated imagery designed to look like live action. A trailer released at Thanksgiving generated 224.6 million views within 24 hours, a Disney record.

Even so, it will not be easy for the king of the jungle to reach the top of the box office mountain. Avatar grossed $2.8 billion after its 2009 release and is one of only four movies ever to cross $2 billion.

Lion King boosters noted the original film hauled in $968.5 million way back in 1994, with lower ticket prices. This time, it will play in a booming Chinese movie market that has grown to the world’s second largest, positioning it to take in far more than the original’s $5 million in the country.

Plus, the story of Simba’s challenges and triumphs has wide appeal.

“That is a movie that will travel very, very well,” said Vue International cinemas CEO Tim Richards. “It has common themes that hit a chord with all of our audiences internationally. It’s for all ages.”

ENDGAME IS CULMINATION
Endgame, the culmination of 22 Marvel films since 2007, has generated huge buzz. Website Fandango said Endgame sold five times as many tickets as last year’s Avengers: Infinity War over its first seven days of advance US sales. Theaters were adding show times to meet demand.

Infinity War holds the current opening weekend record, generating $257.7 million domestically over its first three days. The movie ended with an epic cliffhanger that will lure fans back to theaters in droves for Endgame, said Paul Dergarabedian, senior media analyst at Comscore.

He predicts between $250 million and $275 million for Endgame, which wraps up the story started by Iron Man, Thor and four other Avengers.

“I don’t see how anticipation could be any higher,” Mr. Dergarabedian said. “Audiences have developed an ongoing relationship with these characters and these stories. It’s a must-see movie.”

The movie earned rave reviews from critics and is expected to draw huge crowds as it debuts in the rest of the world this week.

As of Wednesday morning, 97% of Endgame reviews collected by the Rotten Tomatoes website were positive. — Reuters

Melco Resorts PHL board approves reverse stock split

MELCO RESORTS and Entertainment (Philippines) Corp. (MRP) is reducing the number of shares in its authorized capital stock alongside the decrease in its shareholder size.

In a disclosure to the stock exchange on Thursday, the operator of City of Dreams Manila said its board of directors approved the increase in the par value per share of its common shares to P500,000 each from P1 apiece before.

At the same time, the board also moved to decrease the company’s total number of common shares to 11,800 from 5.9 million previously.

Should any fractional shares be created from the reverse stock split, MCO (Philippines) Investments Ltd. — MRP’s largest shareholder — has proposed to acquire them all at a price of P7.25 per share.

MCO Investments currently owns more than 90% of MRP’s outstanding capital stock, after conducting a tender offer to buy out its shareholders. A total of 1.34 million shares were tendered by the public out of the total 1.57 million shares they held.

The tender offer was conducted for MCO Investments to consolidate its shareholdings in the company. Prior to the tender offer, MRP disclosed its plan to delist from the stock exchange, citing its inability to raise funds through the local market despite efforts to maintain its listed status.

The company withdrew its application for voluntary delisting after complaints from several market participants of the low tender offer price.

Trading of shares in MRP have since been suspended as the company no longer complied with the minimum public ownership rule of 10% after the tender offer. This makes it eligible to be removed from the local bourse through involuntary delisting.

MRP’s net income attributable to the parent stood at P2.66 billion in 2018, soaring 654% from the P353 million it reported in 2017. — Arra B. Francia

Netflix, streaming services win Oscars cinema rule fight

IN A WIN for Netflix, Amazon, and other internet streaming services, the Academy of Motion Picture Arts and Sciences has voted not to change its rules for winning an Oscar, Hollywood’s top prize.

The decision follows a battle over how long a movie must play on the big screens in theaters before being launched on the internet, DVD, or other mediums that put it on the small screen.

The Academy’s Board of Governors said on Tuesday that the existing rules, which say a movie has to run in a theater for only seven days in Los Angeles to qualify, had won.

“We support the theatrical experience as integral to the art of motion pictures, and this weighed heavily in our discussions,” Academy President John Bailey said in a release.

Some theater owners say short runs at a theater means more people will stay home to watch movies.

And movie producers including Steven Spielberg have said movies that are shown primarily on the small screen should only compete for television awards, such as the Emmys.

In February, Netflix won three Oscars for Roma, which streamed three weeks after a limited theatrical debut.

Netflix tweeted that it “loved cinema” but also supported access for people who cannot afford, or do not live close to, theaters.

Shorter windows would keep some customers at home, Greg Marcus, chief executive of The Marcus Corp., owner of the fourth-largest US theater chain, earlier told Reuters.

“If you damage the business and take away 10% of our customers, we won’t be able to reinvest in the theatrical experience,” Mr. Marcus said. “That would ultimately hurt content providers.”

Others said consumers are happy with the current system.

Ticket sales in 2018 reached a record $41 billion globally and $12 billion in the United States and Canada, even as Netflix released about 90 movies for streaming.

“We’re not talking about something that’s broken,” Vue International cinemas CEO Tim Richards said in an earlier interview with Reuters.

The Academy’s Mr. Bailey said the rule could be revisited next year.

“We plan to further study the profound changes occurring in our industry and continue discussions with our members about these issues,” he said. — Reuters

Influencers distrust means employees could be next wave of brand ambassadors

By Denise A. Valdez
Reporter

EMPLOYEES are being positioned as possible ambassadors for their companies’ brands, after a recent study found increasing interest from Filipino consumers in knowing about a company’s workings before patronizing its products and services.

Communications firm Havas Ortega Group said in a report, “The Future of Trust,” that 61% of Filipino respondents are willing to listen to a company’s employees in the process of building trust in a brand.

The study surveyed nearly 10,000 “progressive consumers” from 27 countries in the fourth quarter of 2018, 250 of which are from the Philippines.

One of the findings was that 57% of so-called “prosumers” trust a brand that opens its doors to reveal the inner workings of a company — whether that be its physical operations such as its factory, or its work environment through its people.

A prosumer is an amateur enthusiast who seeks out near-professional quality goods. The segment is a prominent market for home improvement equipment, cooking products and electronics, particularly camera products, and many companies configure their strategies to sell to the demanding and highly-engaged “prosumer” market. The alternative meaning of “progressive consumer” acknowledges increasing interest in how companies that produce goods are run.

“There is an emerging trend. From our last study (in August 2018), we saw a shift towards what we call meaningful consumption. While people are concerned about the quality of things that they buy, the quality of services that they get from brands or business, they’re also concerned about how those services and brands and products came to be,” Philip V. Tiongson, Havas Ortega’s head of data analytics, said in a media briefing on Wednesday.

The recent prosumer report, which Havas Ortega said it has been conducting for more than 10 years to predict trends in the mainstream consumer market in six to 18 months, focused on what the firm described as an “eroding” notion of trust.

It said 51% of the respondents find themselves “less and less trusting” as they grow older, despite efforts from technologically-advanced companies to build peer-to-peer platforms that heavily rely on for consumer engagement.

Among these companies, Mr. Tiongson said, are Airbnb, Grab, Wikipedia and TripAdvisor — which all built their competencies in the peer-to-peer economy.

“Technology was supposed to usher in a new age of trust… (But) everything can be gamed. The technology that was supposed to be founded on trust, that was supposed to inherently make trust a foundation in society, can actually be gamed and (drive people to distrust),” he said.

The survey found that 57% of the respondents find it dishonest when the people they follow on social media advertise products. It also said only 49% are convinced to buy products that influencers promote on social media.

The report said 78% are more likely to trust a company based on how well it treats its employees. It added, 71% trust brands better when they could admit mistakes and show attempts to correct them.

“(Business leaders) will have to look at their businesses not just in terms of numbers, not just in terms of profits and losses. They will have to start thinking about governance… in terms of how they are contributing to the environment, to the society or the communities where they are physically. Consumers are demanding that businesses be involved and be more transparent,” Mr. Tiongson said.

ABS-CBN shifts focus to digital, broadband

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.”

R. Kelly’s accuser wins judgment in suit singer failed to answer

A WOMAN who accused R. Kelly of sexual abuse has won a civil case by default against the singer, after he failed to respond to her lawsuit and was a no-show in court.

The woman, who accused Mr. Kelly of repeatedly having sex with her when she was 16 years old, filed the case in Chicago in February, a day before Mr. Kelly was arrested on 10 charges of sexual abuse.

She is one of four accusers — three of whom were underage at the time of the alleged crimes — at the center of the criminal case against Mr. Kelly, according to her lawyer, Jeffrey Deutschman. She is identified as “H.W.” in criminal court filings.

A Chicago judge on Tuesday entered a default ruling against Mr. Kelly, according to court records, after he did not respond to the lawsuit and missed the hearing.

The judge, Moira Johnson, will hear from the victim at a hearing next month before determining how much Mr. Kelly should pay in damages.

Mr. Kelly’s criminal defense attorney, Steve Greenberg, said he was not involved in the civil litigation and declined to comment.

Prosecutors say Mr. Kelly, 52, sexually assaulted three teenage girls as well as a woman. Mr. Kelly, who has faced similar allegations for decades, has pleaded not guilty to the charges and denied any wrongdoing.

He was acquitted of child pornography charges in 2008.

The lawsuit said Mr. Kelly first met the woman when she was 16 years old and initiated a sexual relationship that lasted for more than a year.

Mr. Kelly, whose first name is Robert, is an R&B star known for hits like “I Believe I Can Fly” and “Bump N’ Grind.” — Reuters

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