MANILA, Philippines—In March of last year, a 6.1-magnitude earthquake shook Northern Mindoro.
The tremors, which hit just after lunchtime, were felt 140 kilometers away in Metro Manila, sending office workers rushing out of their buildings and on to the streets of the capital’s business districts.
Lawyer Felipe Gozon, chairman of GMA Network Inc., was at the top floor of the company’s headquarters in Quezon City, presiding over a press conference about the broadcast giant’s financial performance, when the entire building started to shake.
The 14-story structure swayed from side to side for several seconds, threatening to topple the chandeliers from the ceiling.
While everyone in the room, mostly members of the press and stockbrokers and analysts, was on the verge of panic, Gozon sat still and simply said, “Don’t worry everybody. This building can withstand up to magnitude 8.”
It is this stern yet energetic composure that Gozon has employed in almost every aspect of managing GMA Network, which has risen from a far second a decade ago to the leading television station in the country today.
The comfortable duopoly between GMA and its main rival ABS-CBN Corp. was hit by a metaphorical earthquake last year as Associated Broadcasting Corp. (ABC) was reborn as TV5 under the leadership of business mogul Manuel V. Pangilinan.
Pangilinan, who controls some of the country’s biggest and most profitable companies, had said that he planned to “break” the local industry duopoly.
The television industry has been shaking side to side ever since, but just as he was that fateful March afternoon, Gozon has remained calm.
Unfazed
“They have to beat one of the two (ABS-CBN and GMA) in order to make money. But they’re not beating us,” Gozon says, noting that he has no reason to be nervous. On the contrary, Gozon has every right to celebrate.
Nielsen’s National Urban Television Audience Measurement (Nutam) data showed an average of 33 percent of households tuned into GMA for the month of January. This is higher than Lopez-led ABS-CBN’s 31.6-percent audience share in the same period.Manuel V. Pangilinan’s Associated Broadcasting Corp., which runs the station TV5, had an audience share of just 15 percent.
Gozon says GMA has and will continue to invest in expanding its network reach to cover every part of the country.
GMA has consistently held on to its ratings lead in the viewer-rich Metro Manila area for several years.
But Gozon says the distinction of being the leader in nationwide ratings has always been a goal for the company, not just for the bragging rights.
He says the company would naturally be the first choice of advertisers now that it had the lead in nationwide ratings.
“[Not leading nationwide] was the last argument that advertisers had against us,” Gozon says.
GMA’s recent success did not come without countless sleepless nights and, by Gozon’s own admission, many outbursts directed at employees who may not have been able to deliver results as fast as the chairman wanted them to.
Last year, Gozon says the company was forced to make several tough decisions in order to lay down the foundation for what GMA is today—a strong building that moves to tremors but does not break.
He says the company decided to raise its advertisement rates last year, to the disdain of some of its big corporate clients that tried to fight the change by boycotting GMA for several months.
Gozon says the rate hike had to be done to bring its prices closer to rival ABS-CBN.
He says offering rates below its rival meant GMA had to sell more ad placements just to match ABS-CBN’s profit levels.
Selling more commercial placements had made its programs cluttered with interruptions, making them less appealing to watch.
As a result, despite 2010 being an election year, which is usually a good time for media outfits that make windfalls from political advertisements, GMA saw its profits drop at some point.
The company earlier reported that profit dropped to P583 million in July to September of 2010, or 26 percent, from P788 million in the same quarter the previous year, partly due to the boycott of one of its corporate clients.
Gozon says the company also suffered a slight deterioration in its ratings during the third quarter of last year, also contributing to the profit decline.
“They (ABS-CBN) did better than us and we also became a bit complacent so they were able to get better ratings,” he says.
Another tough decision was the closure of QTV, a venture by GMA to create a second channel that simply competed against ABS-CBN and GMA itself. Maintaining a secondary channel, Gozon says, led to yearly losses of as much as P300 million.
“What we learned was that it’s hard to compete against ABS-CBN and GMA,” he said. QTV has since signed off and replaced with GMA News TV.
“It’s a good thing that it was an election year or else our full year profits would have declined,” he says, “But we were able to recover in the fourth quarter.”
Record high
The company has not yet announced its full-year financial results for 2010, but Gozon says GMA’s fourth quarter was one of the best in its history and that 2011 would likely be historic for the company.
“We’re very optimistic in 2011 because all the problems we had, we were able to solve last year,” he says.
What sets GMA apart is that it is the only TV network that built itself from the ground up to where it is now.
Gozon says ABS-CBN relied mostly on its financial muscle to “pirate” talents from other networks to become a major player in the industry. This same strategy is being employed by TV5 under Pangilinan.
“They are like students that get high marks simply because they copied,” Gozon says. “But we all know that if a student studies on his own, he can get higher grades than everybody else … that’s what we did.”
Part of this continuing learning process is GMA’s drive to find new markets that can drive its revenue growth. One such area is its international broadcasting operations to reach the over eight million Filipinos working abroad.
Overseas market
But the company would not only eye the overseas market but also maximize the potential of the domestic landscape.
“In the long term, our plan is to decouple major markets in the provinces from Manila. This will differentiate our sales in Manila and our sales in areas like Cebu and Davao,” he says.
This means that GMA plans to sell advertisement placements for specific areas in the country, instead of national commercials that are not as targeted.
“If you buy an ad for Mega Manila, it won’t be shown in Cebu or Davao. For those areas, an advertiser will have to pay separately,” Gozon says.
By Paolo Montecillo
Philippine Daily Inquirer
03/06/2011
