GMA-7 ends 2010 with “revenues of P14.299 billion’; closes February with 34.2 points vs ABS-CBN’s 32 points in NUTAM ratings

Broadcast giant GMA Network, Inc. (GMA) remained steadfast as it capped financial performance in 2010 with revenues of P14.299 billion, half a billion higher than a year ago.

Net profits likewise registered a slight improvement at P2.821 billion, inching up 2009 profit level by P2.576 million or 0.1 percent. The Company still managed to post bottomline growth amid a slew of difficulties it encountered last year.

Consolidated airtime revenues from all platforms climbed four percent to P13.193 billion backed mostly by political advertisements during the election period, which totaled P2.054 billion as against the P636 million booked in 2009. Revenues from international and subsidiaries operations, meanwhile, grew three percent to P1.107 billion.

Flagship business unit Channel 7 chalked in the biggest revenues worth P12.213 billion, P334.06 million or three percent over the preceding year’s P11.879 billion. GMA Radio inked its success story with revenues worth P535.60 million, or a sales hike of 43 percent as against 2009.

GMA International brought in subscription and advertising revenues worth P925.37 million, eight percent up from 2009′s P855.18 million on strong sales in the US, Canada, Middle East, North Africa, Asia Pacific and Europe.

Total operating expenses (OPEX) were up by P619.45 million or eight percent year-on-year to P8.461 billion. Production costs went up by eight percent or P338.53 million on account of the non-recurring election coverage as well as additional in-house produced programs in the weekday late afternoon grid and the weekend flagship entertainment variety program Party Pilipinas. The weekday primetime programs also had higher programming costs relative to their counterparts from a year ago.

General and administrative expenses (GAEX) were kept at a single-digit growth of eight percent to P3.733 billion. More than one third of the hike in GAEX was due to the spike in advertising and promotions to support the blitz in the regions and to hype the Company’s 60th anniversary.

The year finished with earnings before income, taxes, depreciation, and amortization (EBITDA) worth P4.711 billion, four percent behind 2009′s P4.889 billion. But the drop in non-cash expenses drove the net income to settle at P2.821 billion.

The Company paid out cash dividends to its shareholders amounting to P1.215 billion in December. It was the second payout of dividends for 2010–the first of which amounted to P2.187 billion disbursed in May. The Company need not rely on foreign loans or external funds to run its operations–it has enough reserves and remains debt-free to-date.

GMA Chairman and CEO Atty. Felipe L. Gozon, coming from a roller-coaster-like-ride in 2010, looks forward to a much more profitable year ahead with 58 percent of revenue targets already signed at the closing of last year.

Due to the proactive stance of its marketing arm, GMA Marketing and Productions, Incorporated (GMPI) headed by President and COO Lizelle G. Maralag, the Company already booked more than P7 billion worth of sales for 2011 as of December 2010.

GMA proved it can withstand the tests of times. I am confident the hard days are over and we can look forward to better times ahead. The entire organization—with footprints in regional, national, and international markets—is upbeat to exceed the records made in 2010 this 2011,” said Gozon.

GMA’s international channels—GMA Pinoy TV (GPTV) and GMA Life TV (GLTV)—both recorded double-digit growth in subscriptions by end fourth quarter 2010. GPTV’s subscribers were over 273,000 as of the mentioned period, up 16 percent year-on-year. Of this number, 125,000 are also subscribers of GLTV, increasing subscription rate by 17 percent from 2009.

On the other hand, GMA’s syndication sales and acquisition arm, GMA Worldwide, Incorporated (GWI), sold a total of US$687,629 worth of programs in 2010 to countries in Africa, Europe, and Asia.

On television, GMA surpassed ABS-CBN in national television ratings, based on the most recent data of Nielsen TV Audience Measurement—the broadcast industry’s more trusted ratings service provider.

According to the full February data [February 27 to 28 based on overnight ratings], GMA went further by 2.2 points in household audience shares in National Urban Television Audience Measurement [NUTAM] with 34.2 points versus ABS-CBN’s 32 points. GMA was also ahead of TV5 even if the latter’s 14.9 is doubled.

In Urban Luzon, which made up 77 percent of total television households nationwide, GMA ranked ahead of competition by huge margins. It finished its February programming with 37.9 household share points, 12.9 points away from ABS’ 27 points; and 21.2 points higher than TV5′s 16.7.

In viewer-rich Mega Manila, which has expanded coverage to include Batangas and Laguna since January 2011 and now comprise 58 percent of total television households nationwide, GMA had 39.4 share points, or a 14.3-point margin over ABS’ 25.1 points; and 22.1 points higher than TV5′s 17.3.

The Nielsen TV Audience Measurement used by GMA is used by 21 companies including two other local TV networks, namely, TV5 and Solar Entertainment; Faulkner Media; CBN Asia; 13 advertising agencies and three regional clients. On the other hand, ABS-CBN is the only local network reportedly subscribing to Kantar Media, formerly known as TNS.

GMA Engineering Group, meanwhile, administered the renovation of Studio 5 at the GMA Network Center to suit the studio requirements of GMA News TV (GNTV). GNTV is the first and only free-to-air news and public affairs channel on VHF (Very High Frequency). Because it is on free TV, viewers do not need to pay a cable service provider to get the latest news and information.

The Group also provides the technical backend in the Company’s on-air operations. Just recently, it began the site preparations to run the media asset management system (MAMS)—by far the most sophisticated filing system in local broadcast bought at US$4 million. GMA Engineering likewise reinforces the Network’s regional presence thru constant improvement of the signals of its 21 television stations in Luzon, 12 in Visayas, and 13 in Mindanao.

In the 2010 Metro Manila Film Festival (MMFF), GMA Films with Imus Productions produced the top grosser Si Agimat at Si Enteng with box office receipts of about P175 million.

pep.ph

March 11, 2011

GMA’s Gozon not lonely at the top

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