ABS-CBN incurs P3-billion loss after franchise rejection

ABS-CBN CORP. on Thursday reported an attributable net loss of P3.16 billion for the second quarter of the year, swinging from a profit of P695.80 million in the same period last year, after Philippine lawmakers rejected its bid to secure a 25-year broadcast franchise.

“Advertising revenues suffered a sharp decline in the second quarter of 2020 following the issuance on May 5, 2020 by the National Telecommunications Commission (NTC) of a Cease and Desist Order (CDO) to the company, prohibiting its continuing broadcast operations effective immediately,” the network said in its quarterly report.

ABS-CBN did not indicate the details of its advertising revenues for the second quarter, but it reported a 53.9% decline for the first half of the year to P5.20 billion from P11.29 billion in the same period last year.

The network’s advertising revenues for the first three months went down 20.8% to P4.28 billion from P5.40 billion a year ago. Its first-quarter consumer sales also dropped 12.1% to P4.38 billion from the previous year’s P4.95 billion. For the first half, the network reported a 14.2% decline in consumer sales to P8.12 billion from P9.52 billion.

ABS-CBN’s total revenues for the second quarter dropped 55.17% to P4.68 billion from P10.44 posted.

The network further trimmed its production costs for the quarter to P2.13 billion from the previous year’s P3.43 billion.

The NTC’s issuance of a cease-and-desist order against ABS-CBN’s broadcast operations in May and a separate order in June against its digital TV transmission in Metro Manila added to the impact of the coronavirus pandemic on the company’s financial performance during the quarter because such events “drove down both the advertising and consumer revenues of the company,” the network said.

ABS-CBN announced in July that it would implement a retrenchment program effective at the end of business day on Aug. 31.

The company’s theme park business, KidZania Manila, will permanently close starting Aug. 31.

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

Shares in ABS-CBN on Thursday closed 0.41% higher at P7.28 apiece.