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Stockholders approve Now Corp. equity restructuring

LISTED TELECOMMUNICATIONS firm Now Corp. said its stockholders approved its equity restructuring plan, which is aimed to erase its accumulated deficit.
“At the Special Stockholders’ Meeting of Now Corp. held on Mar. 8, the stockholders unanimously approved (the) Company’s equity restructuring plan by reducing the par value of the common shares of stock of the Company and by applying the resulting additional paid-in capital to eliminate its accumulated deficit,” the company said in a disclosure to the stock exchange on Monday.
The Velarde-led company is reducing the par value of its common shares to 70 centavos from the current P1. This will decrease its authorized capital stock to P1.502 billion from P1.12 billion, which will be divided into 2.06 billion common shares.
This restructuring is expected to erase the company’s deficit of P389.789 million, based on an earlier disclosure in January.
Now Corp. must now seek the approval of the Securities and Exchange Commission for the amendments in its Articles of Incorporation.
In the same Monday disclosure, the company said it is putting on hold its plan from last year to increase its authorized capital stock within the range of P600 million to P700 million, as it proceeded with the conversion of advances made by shareholder Velarde, Inc.
“Only the conversion into equity of Velarde, Inc.’s advances in the amount of P264 million based on the adjusted conversion price range between P1.50 and P1.70 per share as well as the listing of additional shares resulting from the said conversion are approved and affirmed for implementation,” it said. “The contemplated increase in authorized capital stock…is deemed set aside.”
Now Corp. stockholders agreed in June 2018 to increase the company’s authorized capital stock in connection with the conversion of advances made by Velarde, Inc.
Meanwhile, the company also announced on Monday it has partnered with outdoor advertising firm Digital Out-of-Home Philippines (DOOH PH) for its connected electronic billboard to be distributed in the coming months.
“Having a reliable broadband connectivity that provides guaranteed speeds and available 24/7 is key in pushing our content to all our electronic billboards in Metro Manila…. Partnering with Now Corp. and its affiliates as a broadband and content provider in delivering the promise of pushing live content to all our billboards is another breakthrough in a changing world of consumer advertising,” DOOH PH President Alvin Carranza was quoted in a statement as saying. — Denise A. Valdez

DMWAI aims for completion of mixed-use project by 2021

D.M. WENCESLAO & Associates, Inc. (DMWAI) on Wednesday started construction of its mixed-use development, Parqal, within its flagship Aseana City project in Parañaque City, targeting its completion by 2021.
“We’re building office buildings, condos, retail, but this is one of the first developments, at least in this area, that’s committed to public space,” Delfin Angelo C. Wenceslao, chief executive officer of DMWAI, said during the groundbreaking ceremony for Parqal.
Parqal, whose name is a combination of “park” and “kalye,” is located on a five-hectare property occupying two blocks between Diokno Avenue and Macapagal Boulevard. It will have a gross floor area of 78,000 square meters (sq.m.) spread across nine independent four-storey buildings, which will be devoted to office and retail space.
“As you look around all the developments, not just in the Philippines, but in Asia, globally, livability is one of the major themes. We’re committed to this project not just because of the commercial value of it, but more so because of… how it promotes walkability, and connectivity in our urban developments,” Mr. Wenceslao said.
DMWAI will implement sustainable building practices at Parqal, as it aims to secure four to five star rating Building for Ecologically Responsive Design Excellence (BERDE) certification from the Philippine Green Building Council.
“What we’re building here is a mixed-use experience that will be located in the greenway of Aseana City. Originally, the concept here is it will provide green space, a lot of public space for the residents, office workers the visitors of Aseana City, but of course we want to take advantage of the area by providing retail offerings, as well as other commercial activities,” Julius M. Guevara, vice president for corporate planning of DMW, told reporters after the ceremony.
More than half or 60% of the whole area is dedicated to lush green spaces, and recreational facilities.
The open areas will have canopies made up of ethylene tetrafluoroethylene (ETFE), which would allow sunlight to still penetrate the roof but reduce heat. The company said this will still allow trees to grow even under the roof.
Mr. Guevara said Parqal is expected to attract families living in nearby areas such as Pasay, Manila and Cavite, as well as those occupying residential condominiums in Aseana City. Its proximity to the airport also makes it attractive for tourists.
“We would want to have a mix that would be attractive to those that would visit Aseana City and one thing that we would want is that we’re located in the Entertainment City… We would want to round that off by providing entertainment that would draw the family to visit the area,” he said.
“We’re very close to the airport. That would attract international travelers in the area and we want to provide a retail mix that would address their retail needs,” he added.
Parqal is just a stone’s throw away from DMWAI’s flagship Aseana City, which features projects such as Aseana One, Aseana Two, Aseana Three, and MidPark Towers.
“If you take a look at it holistically you could the entire vision for Aseana where you have a lot of high grade office spaces, premium residential condominiums, complemented by a very upscale retail and mixed-use experience on the very center,” Mr. Guevara noted.
Earlier this year, DMWAI said it is allotting P4 billion for capital expenditures after seeing a double-digit growth in 2018 due to strong demand for properties in the Bay Area. — Vincent Mariel P. Galang

AG&P now focusing on Philippine expansion

By Victor V. Saulon, Sub-Editor
AFTER ITS overseas foray, Filipino firm Atlantic Gulf and Pacific Co. (AG&P) is once again looking at the Philippines as an attractive site to provide its services as it plans to take part in local industrial projects with its skilled workers from its plants in Batangas.
“We wanted to take advantage of our decades of experience working for international projects and bring those to bear domestically and also to refocus AG&P domestically again,” said AG&P Chief Executive Officer Joseph M. Sigelman in an interview last Feb. 28.
“So we’re very excited. We’re working at big projects now in petrochemical, refining, power and now we’re also getting into infrastructure — transport infrastructure -— so airports, roads and so on as we move forward,” he added.
Through its manufacturing plants in Batangas, AG&P has provided modular business solutions for international projects in industries such as construction, mining, oil and gas, including a liquefied natural gas (LNG) import terminal in India.
“We’re not historically a civil works company. We generally deal with steel and electrical and so on, but where we have gaps we’re partnering with companies and approaching this collaboratively to bring a holistic solution to things,” Mr. Sigelman said.
AG&P, which has been operating for 119 years, has two manufacturing yards in Batangas: a 100-hectare facility with designated areas for assembly and shops for fabrication, and a 50-hectare leased waterfront property within the Philippine Ports Authority site. The two sites are 8.7 kilometers apart by land, and 6.8 kilometers by sea.
In 2016, AG&P invested P1.5 billion in advanced technologies, equipment and highly advanced automation. The upgrade allowed the company to offer capacity of up to 60,000 metric tons of structural fabrication, 600,000 dia-inch of piping fabrication and up to 125,000 MT of assembly, making the yards one of the largest facilities in the region.
AG&P is now hiring 5,000 skilled workers in addition to its more than 2,000-strong work force, to support its re-entry into the domestic heavy industry construction market. It is looking for engineers, welders, painters, cutters, fitters, electrical and instrumentation experts among others, to execute a broad range of services.
About 4,000 of the new workers are being hired for work on a petrochemical plant in Batangas. It is one of the largest employers in the province, having hired at least 3,800 workers between 2016 and 2018.
Mr. Sigelman said although the company has existed for more than a century primarily as a construction company, it has evolved through the years. It has retained its construction business, while growing its gas logistics business.
“On the construction side first, the modularization became a key element of our business. Since 2010, we sold and executed about over $1 billion worth of contracts with respect to modularization,” he said.
“With construction, one of the key drivers for us had been international growth — petrochemicals, refining and so on, oil and gas, mining, internationally. But then, even though AG&P for decades and decades had been the largest construction company in the Philippines, for the prior decade or so we had largely spent our time focusing internationally albeit using our yards south of Manila to build the modulars and send them abroad,” he added.
AG&P projects in countries such as Australia and United States used components built in the Philippines, where economic growth has been growing, Mr. Sigelman said.
Among the overseas projects is an LNG import terminal in Karaikal Port, Puducherry, India that will provide industries and communities access to cleaner, cheaper fuel. AG&P has a major investment in GAS Entec Co. Ltd., a specialist Korean gas engineering company focused on small- and mid-scale LNG infrastructure.
“We’re proudly Filipino, and from our perspective, this is probably the most exciting time for infrastructure. The country is going through a renaissance. It’s going through a transformation not just in terms of modernizing but expanding and also fundamentally changing the nature of industry, all at the same time. And so we’re absolutely privileged to be playing a part of that,” Mr. Sigelman said.

Avida’s Makati project targets ‘younger’ and ‘wiser’ millennials

AVIDA LAND Corp. is targeting young professionals and millennials with its latest project Makati Southpoint.
Ayala Land Inc.’s mid-range brand recently launched Avida Towers (AT) Makati Southpoint — a three-tower residential condominium development located on an 11,000 square meter (sq.m.) lot along Chino Roces Avenue in Barangay Bangkal.
“Our target market is the younger and the wiser,” Avida Land Business Area Head for Metro South Properties Reginald D. Alabe said during a media briefing on Feb. 27.
“We conducted a study with McCann and they found out that today 59% are below 30 years old, and the median age today is 23. Majority of the workforce is still below 30 years old. The same study found out that the workforce of the Philippines, major income earners are between the ages of 25 and 39,” he added.
Jonathan Fabricante, Avida Land Head of Innovation and Design Group, noted these young, working millennials are now looking to own their own homes, as part of their transition into adulthood.
“Millennials when they buy units, they realize they’re mostly at work… In the end, they realize they just need a space that is just right size, enough to sleep comfortably, with a good address, near places of work, malls, hospitals, entertainment areas, very walkable and easy to drive to,” he said during the same briefing.
To cater to the millennial market, Makati Southpoint offers units that are “just right” for their needs.
“For a mid-affordable development, it’s the right size with sensible amenities… We are designing it to complement the lifestyle of the millennials — fast-paced, round-the-clock lifestyle of young professionals,” Mr. Fabricante said.
The first tower of Makati Southpoint will have 924 residential units, 247 parking units and 10 retail units. The project will have a grand central lobby for all three towers.
For the first tower, unit sizes range from 23.3 square meters (sq.m.) for studio and junior one-bedroom to 38.2 sq.m. for one-bedroom. Prices start at P4.4 million for studio to P8.5 million for one-bedroom.
Mr. Fabricante said the units at Makati Southpoint are efficiently planned and well-thought out. Model units are available for viewing at the Avida Land showroom on the second floor of Glorietta 4 in Makati City.
Makati Southpoint’s amenities include a clubhouse, indoor gym, children’s play area, swimming pool, kiddie pool, a jogging path and a linear park.
“(Makati Southpoint) has collaborative spaces — a huge area with a lot of seats and tables where people can do group study, meetings. It’s a conducive place to hang out with friends and family, an extension of their living space,” Mr. Fabricante said.
The development also incorporates sustainable design features, such as rainwater harvesting, and sensor-controlled hallway and podium parking lights. Units will have water-efficient toilet fixtures, LED lights, and low solar heat gain glass windows.
Mr. Alabe noted Makati Southpoint’s location is a main selling point as it is “within three kilometers of eight major office buildings, seven schools, six commercial areas, six spaces for arts and culture, five hospitals and places of worship.” Aside from Makati central business district, it is easily accessible from EDSA, South Luzon Expressway, Pasay and Manila. — Cathy Rose A. Garcia

Filinvest Land to launch P30B worth of projects

FILINVEST LAND, Inc. (FLI) will be launching P30 billion worth of projects this year, as it maintains a positive outlook for the property sector.
This is almost double the P16 billion worth of projects FLI unveiled in 2018, according to a company statement issued on Monday.
“Our outlook on the property sector remains positive, with our 37% year-on-year growth in reservation sales in 2018. We continue to focus on the more stable end-user market in the residential sector,” FLI Chief Executive Officer and President Josephine Gotianun Yap said in a statement.
FLI’s residential projects primarily cater to the affordable and middle-income markets through the Futura and Aspire brands.
The listed firm’s positive outlook comes amid a four percent increase in its net income in 2018 to P6.08 billion, versus the P5.83 billion it posted in 2017. Revenues, meanwhile, grew by 10% to P22.21 billion, mainly due to a 27% increase in rental revenues to P5.61 billion.
“We allocate significant resources toward growing our recurring rental income business, which is on track to meet our target of contributing 50% of FLI’s net income,” Ms. Gotianun Yap said in a statement.
The company ended 2018 wth a gross leasable area (GLA) of 712,000 square meters (sq.m.) across 31 office and retail developments. It further has a pipeline of 21 projects that will add 500,000 sq.m. of GLA, in line with its target to have 1.6 million sq.m. in GLA by 2023.
FLI’s office developments are located mainly in Northgate Cyberzone-Filinvest City in Muntinlupa; Filinvest Mimosa+ Leisure City in Clark, Pampanga; and in Cebu City.
The company develops mixed-use estates alongside its parent, Filinvest Development Corp. (FDC). FLI owns 20% of the 244-hectare Filinvest City in Muntinlupa, and is also responsible for the industrial, residential, offce, and mall projects in the 201-hectare Filinvest Mimosa+ Leisure City in the Clark Special Economic Zone.
It is also partly developing industrial and logistics zone Filinvest Gaia New Clark City, which covers about 288 hectares with FDC.
On its own, FLI’s townships include 306-hectare Havila, 677-hectare Timberland Heights, and 60-hectare Manna East in Rizal, as well as Ciudad de Calamba in Laguna and City di Mare in Cebu.
Shares in FLI dropped 1.99% or three centavos to close at P1.48 each at the stock exchange on Monday. — Arra B. Francia

Construction on St. Luke’s Davao to start mid-2019

By Vincent Mariel P. Galang
Reporter
CONSTRUCTION ON the St. Luke’s Medical Center in Davao City is expected to start by mid-year, according to its president and CEO.
“In the middle of this year, we’re going to start construction in Davao City. Why we chose Davao because we got a good deal in Davao and we’re going to put up a facility because our market survey tells us that there is potential for serving a lot of people from Davao,” Dr. Arturo S. De La Peña, president and chief executive officer of St. Luke’s Medical Center, told BusinessWorld in a recent interview.
“Looking also at the number of patients coming from Mindanao, so we’d rather bring the hospital, the expertise, and the technology in Davao,” he added.
The new facility will rise within Ayala Land, Inc.’s waterside estate Azuela Cove in Lanang, Davao City. The 12-storey medical center will have 250 beds, expandable to 350 beds depending on demand. It is expected to open by 2022.
The Davao facility will be the first St. Luke’s Medical Center to operate outside of Metro Manila.
For St. Luke’s Medical Center in Quezon City, Mr. De La Peña said they are planning a new building for diagnostics, operating rooms, and the like.
“Ginawa ito [This was made], more than 60 years ago, and then it was expanded depending on the needs of the hospital… When you design a particular hospital now you will have to take into consideration patient flow, and touch points. Dapat [It should be] patient friendly, but in here because it was expanded in batches, hindi maganda ‘yung patient flow [patient flow is not good]… Meron kang [You have a] test, doon pa sa isang [still there in the other] building. Hindi isang diretso [It’s not linear],” he said.
“We’re going to redevelop this. At the back of this hospital, we’re going to build a new building. Ililipat naming lahat du’n ‘yung mga [We are going to transfer] diagnostics, operating rooms, and so on and so forth, and once that has become operational, ito ire-refurnish [this will be refurnished]… traffic flow will be redesigned,” Mr. De La Peña added.
However, he said the redevelopment of St. Luke’s Medical Center in Quezon City is still in the planning stage.
“We are now doing the concept design for Quezon City, and by second week of March, we might finish the concept design, which we are going to present to the construction committee, and once that is approved, we will begin construction,” Mr. De La Peña said.

General Santos court denies Kapa-Community’s TRO petition

A GENERAL SANTOS City court has denied religious organization Kapa-Community Ministry International, Inc.’s petition for a temporary restraining order (TRO) against the investment advisories and cease and desist order (CDO) issued by the Securities and Exchange Commission (SEC).
In a decision posted on the SEC website Monday, Branch 58 of the General Santos City Regional Trial Court said it “cannot properly issue a 72-hour TRO to stop the implementation of an SEC Advisory and an SEC Cease and Desist Order” since the company can resolve the matter with the SEC itself.
The court explained that the parties involved may file a request to lift the order with the commission five days from their receipt of the order.
“(T)his court clearly sees that the present petition is not one wherein petitioner is appealing the SEC advisory or the CDO, it would appear that relief from the CDO issued by the SEC may be had with the SEC, and not with the Regional Trial Court,” according to the ruling.
The SEC had issued the CDO against Kapa-Community, its directors, offices, and representative Joel Apolinario last month, as it was found to be illegally soliciting investments from the public with the promise of 30% returns every month thereafter.
The commission also warned that the religious group has been operating under several names, such as Kapa Kabus Padatuon (Enrich the Poor), Kapa/ Kappa (Kabus Padatuon), Kapaco Convenience Store and General Merchandise, and Kapa Worldwide Ministry.
A report from the National Bureau of Investigation found that Kapa-Community has collected around P7 million from hundreds of investors at some point, most of whom were teachers in Bislig City, Surigao del Sur.
Prior to the release of the CDO, the SEC had already warned the public via an Oct. 3, 2018 advisory to stop investing in Kapa-Community and to take the necessary precaution when dealing with the entity and its representatives.
For its part, Kapa-Community said the advisory and CDO violated its exercise of freedom of religion, which includes the right of the religious organization to “receive donations from its members so that it could propagate its religious mission to provide for and support the needs of the members, and continue with its charitable activities.” — Arra B. Francia

New Cebu office project attracts BPO

BUSINESS PROCESS outsourcing (BPO) companies continue to flock to Cebu City, particularly new projects such as the 21-storey Johndorf Tower.
According to Leechiu Property Consultants (LPC) executive director Phillip Anonuevo, Cebu City is the second most preferred destination of BPO, after Metro Manila, due to its labor force, infrastructure, and independent electric network.
“This works well for BPO firms implementing redundancy plans,” Mr. Anonuevo said in a statement.
LPC also noted Cebu accounted for 8% of the country’s total office demand of about 1.5 million sq.m. in 2018.
Johndorf Ventures Corp. (JVC) is hoping to take advantage of Cebu City’s booming office market with its first office project — the Johndorf Tower within Cebu Business Park.
The developer started construction of Johndorf Tower last February, and expects to complete it within two years’ time.
Johndorf Tower has a gross leasable area of 17,860 square meters (sq.m.) and offers large floor plates that can cater to the needs of BPO firms.
“It is one of the few new projects in Cebu City that complies with the Fire Bureau’s new building density ratio of 1 pax:4.6 sq.m.,” the company noted.
Johndorf Tower also aims to secure the Leadership in Energy and Environmental Design (LEED) silver certification.
JVC is a residential developer with townhouses and condominiums across the Visayas and Mindanao region. — V.M.P.Galang

BTr makes full award of T-bills

THE GOVERNMENT raised P20 billion in fresh funds from Treasury bills (T-bill) yesterday, with rates sliding across all tenors as investors priced in recent pronouncements from the local and US central banks.
The Bureau of the Treasury (BTr) made a full award at its T-bills auction on Monday as tenders from investors reached P31.771 billion, well above the amount it wanted to raise. However, it was slightly lower than the P31.802 billion in tenders received a week ago.
Broken down, the Treasury accepted P6 billion as planned for the 90-day papers out of the P6.745 billion in offers from banks and other financial institutions. The average rate declined by 1.7 basis points (bp) to 5.716% from the 5.733% quoted in the previous offer. Last week, the BTr opted to reject all bids for the three-month tenor.
The government also made a full award of the 182-day debt notes it placed on the auction block, borrowing P6 billion as planned versus tenders amounting to P11.945 billion. The average yield slipped 3.9 bps to 5.936% from last week’s 5.975%.
The BTr likewise fully awarded the 364-day T-bills, accepting P8 billion out of bids totalling P13.081 billion. Its average yield also slid by 3.4 bps to 6.018% from the 6.052% tallied in the previous successful auction, as the government also rejected all bids for the one-year papers last week.
At the secondary market on Monday, the three-month, six-month and one-year papers were quoted at 5.488%, 5.878% and 6.044%, respectively, based on the PHP Bloomberg Valuation Service Reference Rates.
Following the auction, National Treasurer Rosalia V. De Leon said rates went down as market participants priced in “what they heard from the Governor saying that there’s now room for monetary easing,” referring to Bangko Sentral ng Pilipinas (BSP) Governor Benjamin E. Diokno.
On Friday, Mr. Diokno said the central bank can now consider cuts in policy rates.
“Given the decelerating inflation in the Philippines, there’s an opportunity for monetary easing but as I’ve said, that would be dependent on the data that will be given to us by our technical staff,” Mr. Diokno said last week.
Benchmark interest rates currently range from 4.25-5.25%, reflecting the cumulative 175 bps increase in policy settings last year meant to arrest rising inflation expectations.
Inflation came in at 3.8% in February, easing for the fourth straight month due to milder price increases in food and non-alcoholic beverages, and landing within the 2-4% target band of the government until 2022.
“At the same time, [US Federal Reserve Chair Jerome] Powell also had interviews and he was also saying again the usual that he will be patient…and they would also be looking for data,” Ms. De Leon added.
Mr. Powell, in a televised interview, reiterated the Fed’s position that it will be patient in adjusting monetary policy, adding that the decision will be based on data and not on political considerations.
Sought for comments, a trader said the rates of the T-bills are “still high” compared to rates at the secondary market, even as yields slid across the board during the auction.
“The rates were slightly lower from previously awarded, but based on the secondary, it’s still high,” the trader said in a phone interview.
The government is set to borrow P360 billion from the domestic market this quarter. Some P240 billion will be borrowed through 12 weekly T-bill auctions, while P120 billion worth of Treasury bonds will also be issued through six fortnightly auctions.
Ms. De Leon said the government will continue to look for funding options at home to meet the 75-25 borrowing mix in favor of local sources for this year, as it is looking at returning to the Chinese and Japanese bond markets this year.
“We will continue to look for financing options. If there’s good liquidity, we can do another [RTB offering] like similar to what we did in 2017,” she said.
The government held two retail Treasury bond (RTB) offerings in 2017, selling P70 billion worth of three-year bonds to institutional and individual investors in March and P255.4 billion worth of five-year papers in November that year.
Economic managers earlier adjusted the borrowing ratio to 75-25 in favor of domestic sources for this year until 2022 from the 65-35 ratio in 2018.
For this year, the state plans to borrow P1.189 trillion to help finance its spending plan, higher than the P783.23-billion borrowing last year. Of this year’s total, P891.7 billion will be sourced locally and P297.2 billion from external creditors.
Ms. De Leon said the government is looking at offering renminbi-denominated “panda” bonds in April, as well as yen-denominated “samurai” bonds “if ever” in August. She said last month that the government is eyeing to raise $300-500 million in panda bonds and another $1-1.5 billion in samurai bonds.
The country’s economic team will head to China for a Philippine Economic Briefing in Beijing on March 20, followed by non-deal road shows in Nanjing, Fuzhou, Suzhou and Xiamen. — Karl Angelo N. Vidal

Streaming costs pile up as media giants try to be like Netflix

MEDIA giants are realizing what Netflix, Inc. already knows: Streaming is expensive.
The costs are adding up as Walt Disney Co., WarnerMedia, and Discovery, Inc. build their own online video services to make up for shrinking cable and DVD businesses. Those investments, coupled with efforts to pull back content from Netflix and other online services, mean revenue and profit will be under pressure for years.
“Starting a direct-to-consumer service takes an incredibly strong stomach for losses,” said BTIG analyst Rich Greenfield. “If you want to win, it’s very expensive.”
Deep-pocketed buyers like Netflix and Amazon initially helped media companies survive the decline in DVD sales and rentals by providing a new outlet for movies and TV shows. But now they’ve become a threat — luring customers away from lucrative cable subscriptions — and have forced major media companies to develop their own online services.
Disney lost just under $100 million on streaming in the first quarter and expects to lose an additional $200 million on its online video efforts in the second quarter, mostly to develop ESPN+, its subscription sports channel. The company will also surrender about $150 million in operating income after cutting off licensing to competing services, executives said on a February call. Captain Marvel, a superhero blockbuster that opened Friday, is the first Disney movie in years that won’t eventually show on Netflix.
Michael Nathanson, a media analyst with MoffettNathanson, expects the Burbank, California-based entertainment giant to lose more than $1 billion this year and another $1 billion next year by forgoing licensing deals and investing in its online video business, including Disney+, which will be the TV home for the company’s movies when it debuts later this year.
AT&T, Inc., which bought Time Warner Inc. for $85 billion last year, is looking at a minimum of $1 billion in new annual costs for added programming it wants from HBO, the premium cable network. The phone company sees streaming as a way to attract wireless customers and take revenue from Netflix. HBO spent about $2.2 billion on programming in 2017, and AT&T has said it will boost the network’s budget by 50%
Meanwhile, Discovery expects to sink $200 million to $300 million into its digital efforts in 2019. The company, owner of HGTV and Animal Planet, recently created an online video service for golf fans and has hinted at starting a subscription video channel dedicated to Chip and Joanna Gaines, the stars of Fixer Upper. It also streams live matches in Europe on its Eurosport Player, which it calls “the Netflix for sports.”
In January, Viacom, Inc. sunk $340 million in Pluto TV, an advertising supported multichannel TV services that operates online.
It takes deep pockets to be like Netflix, which will spend about $14 billion on content this year.
CODE WRITERS NEEDED
For starters, you need to invest large sums in technology. Disney bought tech expertise by acquiring a majority stake in BAMTech, which handles the back-end infrastructure for the company’s streaming offerings. Media companies also need to hire engineers to ensure their video services don’t crash on different platforms like Roku, Amazon, and Apple, said Needham & Co. analyst Laura Martin.
“You need code writers who are very expensive.” Ms. Martin said. “It’s not like the old days when a signal bounced off a satellite and everyone gets it on a set-top box.”
But the biggest cost is creating exclusive shows and films for those services. CBS Corp. has launched several original series exclusively for its online $5.99-a-month channel, CBS All Access. One of them is Star Trek: Discovery, which costs on average $8 million per episode, making it one of the most expensive shows in TV history, according to Variety.
“All these companies are really splurging on new shows,” Bloomberg Intelligence analyst Geetha Ranganathan said. “With all the different options available today to the consumer, content becomes the true differentiator.”
Besides the upfront costs, there’s also the lost income by no longer selling hits to rivals. On an earnings call last month, Discovery Chief Executive Officer David Zaslav said his company has “purposely left meaningful revenue dollars on the table” by not selling past seasons of its shows to streaming services.
Building a global streaming service is “risky” because media companies are trading a sure thing — licensing revenue — for a business model where “no one has actually generated material free cash flow yet,” Mr. Nathanson said. Netflix expects to have a negative free cash flow of $3 billion this year as it spends eye-popping sums on shows and movies.
Media companies will hit “peak spending” this year as they invest to get their streaming services off the ground, Mr. Martin said. Most will add enough customers to break even after their third year, she predicts. Disney said last month that ESPN+ now has 2 million paid subscribers, double from five months before. CBS and Showtime combined have over 8 million online subscribers, while HBO has about 8 million online-only subscribers, though many of them watch through Amazon and Hulu, giving those companies control over valuable viewer data, according to Mr. Greenfield.
Not everyone is willing to accept the trade-offs. While Disney plans to keep its movies and shows for its own properties, Comcast Corp.’s NBCUniversal plans to continue licensing programs to others — and then keep the rights to some shows for its new streaming service, which is expected next year. AT&T’s WarnerMedia just renewed a licensing deal with Netflix for reruns of Friends, despite plans to start its own streaming channel later this year.
Mr. Nathanson summed up their thinking this way: “Strategy is nice. Money is nicer.” — Bloomberg

Cebu Pacific adds flights from Clark

CEBU PACIFIC said it is adding new flights from its hubs in Clark and Cebu this year amid increasing demand.
In a statement on Monday, the budget carrier said it is preparing to launch three new routes out of Clark in the second half of the year which will link to Iloilo, Bacolod and Puerto Princesa.
For Cebu, the airline is eyeing a connection to mainland China.
“There’s still a lot of opportunity for expansion within the Philippines-interisland connections from key cities like Clark and Cebu…. Creating direct links between domestic destinations and our other hubs will spur tourism and movement of goods and investments, whilst doing away with having to pass through the main hub in Manila,” Cebu Pacific Chief Operations Officer Michael Ivan S. Shau was quoted as saying.
The daily flights from Clark to Iloilo and Bacolod will start on Aug. 9, and from Clark to Puerto Princesa on Oct. 9. The route connecting Cebu to mainland China is still being finalized.
The Gokongwei-led company earlier said it wants to increase capacity at its Cebu hub by about 20% this year, with destinations in the North Asia such as China, Korea and Japan being eyed.
“The Philippines is the closest tropical destination from North Asia…. It’s a logical choice to be our ‘beach hub’ with easier access to world-class beaches, dive spots and resorts,” Mr. Shau said.
Aside from Clark and Cebu, Cebu Pacific also operates hubs in Manila, Kalibo, Iloilo, Davao and Cagayan de Oro (Laguindingan) where it serves flights to 37 domestic and 26 international destinations. — Denise A. Valdez

Tenants start moving in to Fairway Terraces

UNIT OWNERS have started moving in at Fairway Terraces in Villamor Air Base, Pasay City, according to DMCI Homes.
In a statement, DMCI Homes said construction of the 19-storey tower along South Luzon Expressway was completed, and began welcoming its first batch of residents in February.
Among Fairway Terraces’ amenities are a Sky Lounge, lap pool, kiddie pool, garden area, fitness gym, lounge area, kids’ playground, game area, audio-visual room, and sky garden.
The Balinese architecture-themed structure’s atrium gardens and single-loaded corridors are said to “make the hallways airy and create a wide open feel to the building interior.”
Fairway Terraces is a project of DMCI Homes, the country’s first Quadruple A real estate developer known for building quality resort-inspired communities in Mega Manila, Baguio City, Boracay and Davao City.

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