ABS-CBN in talks with banks on debts

A GUARD passes by a logo of ABS-CBN at the network’s entrance, a day it was shut down by the National Telecommunications Commission, May 6. — PHILSTAR/MICHAEL VARCAS

By Arjay L. Balinbin, Reporter

ABS-CBN CORP. is now in talks with creditor banks on its long-term debts, expressing confidence that it will be able to satisfy its financial obligations despite the impact of the non-renewal of its broadcast franchise on overall operations.

“We are not aware of other material contracts, nor have we received any claims or demands, the payment obligations of which will be adversely affected by the resolution (by the House Committee on Legislative Franchises),” the listed media company said of its discussions with banks.

Voting 70 to 11, the House of Representatives Committee on Legislative Franchises had rejected the application for a franchise renewal of ABS-CBN — a media company critical of President Rodrigo R. Duterte — saying the broadcaster was “undeserving” of the privilege.

ABS-CBN said the House decision “significantly affects” its media, networks and studio entertainment (MNSE) operations, particularly the free-to-air business.

“For the unaudited period ended Sept. 30, 2019, 68% of the revenues of this MNSE segment was free-to-air advertising, which revenue amounted to P15.9 billion as of said period,” the company noted.

“On an unaudited consolidated basis, free-to-air advertising was approximately 50% of the company’s unaudited consolidated revenue for the period ended Sept. 30, 2019,” it added.

ABS-CBN said it plans to continue to operate in other businesses that do not require a broadcast franchise, namely: international licensing and distribution, digital and cable businesses, and syndication of content through streaming services.

The company has carried out cost-cutting measures, which include rationalizing capital expenditures and streamlining manpower requirements.

“The company is likewise confident that any payments or financial obligations that may arise under its customary or usual business agreements are manageable and will not have a material adverse impact on ABS-CBN at this time,” the network said.

“They have lower overhead now so the savings from that could be used to make their payment obligations. The revenue from its other business units as well would go to payment obligations,” Luis A. Limlingan, head of sales at Regina Capital Development Corp., said in a phone message.

“If the business can focus on other platforms to generate revenue, mainly digital, that may help,” he added.

The company vowed to honor all its existing obligations for goods delivered and services rendered by third-party suppliers. It is also willing to negotiate “new terms” for such obligations when needed.

ABS-CBN said further it would pursue all “available remedies” while complying with relevant legal requirements “to be able to sustain its current and future business operations, which do not necessarily involve broadcast only.”

The Bankers Association of the Philippines said recently it was confident that banks could manage their credit portfolio in relation to the non-renewal of the ABS-CBN broadcast franchise.

Shares in ABS-CBN on Thursday closed 29.91% lower at P10.36 apiece.