Abs-Cbn Industry Analysis

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In Partial Fulfillment of the Requirements in

MGT 119 – Business Policies and Strategies

Industry analysis on ABS-CBN

Submitted By:

Domino Dondon V. Ragasa

Romeo Juanito Valdez

Jubelle Ujano

Submitted to:
Mrs. Gladys B. Solomon

July 10, 2009

LOPEZ family-controlled ABS-CBN Corp. said it expects profitability throughout the year with the support of its airtime revenue after gaining in the first quarter of the year.  In a briefing, Geronimo C. Estacio, ABS-CBN officer in charge for Finance, said profits for the full-year of 2006 may come from its airtime revenue, given the higher rating of the network’s primetime shows. Estacio said ABS-CBN posted a net income of P121 million in the first quarter of the year from P132-million losses in the same period in 2005. In the first three months of the year, ABS-CBN audience share averaged 32 percent compared with 43 percent of its rival GMA channel 7. On primetime, ABS posted 35 percent share from 36 percent compared with GMA’s 43 percent from 46 percent.  The company attributed its profit turnaround to the lower cost base that resulted from last year’s manpower optimization and judicious production cost spending, as well as from license fees for the migration of North American DTH (direct-to-home) subscribers to DirectTVs platform. License fees from DTH amounting to P409 million were booked in the first quarter of the year. Total subscriber base of ABS-CBN Global grew by 22 percent year on year, which translates to 2.1 million viewers worldwide by-end March. The Lopez-led company also said airtime revenues, which accounts for 60 percent of the total, grew 4 percent to P2.26 billion in the first quarter of the year from P2.18 billion in the same period in 2005 as it continued to strengthen its primetime programs. Gross revenue rose by 14 percent to P3.95 billion, driven by license fees from DirectTV and higher airtime revenues. FOLLOWING PINOYS ABROAD

When Kris Aquino announced she and co-host Korina Sanchez might be in the United States late this year to tape some of their "Morning Girls" daily show, ABS-CBN International (NA) received lots of calls for the specific dates. "The response was amazing even if nothing has been firmed up," said Rene Encarnacion, senior vice-president for international operations of ABS-CBN Broadcasting Corp. and managing director of ABS-CBN Global Ltd. ABS-CBN International is one of four subsidiaries of Global, which is, in turn, a wholly owned subsidiary of ABS-CBN Broadcasting. With access to 25% of total Filipino-American households, ABS-CBN International accounts for 70% of gross revenues generated by Global. "The North American operations used to account for 85% of total revenues but that has happily dropped as we follow Filipinos abroad. There are Filipinos working in every country in the world except Bhutan," said Encarnacion. Using a market yardstick of between 50,000 to 70,000 households, each household made up of five to six people, Global has presence in Asia-Pacific, the Middle East, and Europe. In Asia, the company works with local partners. It services Saudi Arabia and the United Arab Emirates through subsidiary, ABS-CBN Dubai; and England, Germany and Italy through another subsidiary, ABS-CBN Europe. "The Filipino-American market is so huge, there’s still a lot of penetration to do. Just maintaining our 25% market means we’re already growing. This is not a transient market; they are in the US for good and they have large disposable incomes," said Encarnacion. Bundling

Entertainment accounts for 65% of Global’s product mix. The company maintains four channels, which are either directly beamed to the homes of subscribers or by satellite. These channels are segmented by content, offering 24-hour news, the best of Channel 2 shows, and Philippine movies as well as sports and culture....
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