Lopez- controlled ABS-CBN Broadcasting Corp. lost more than a P1 billion a month and slashed over 40 percent of its workforce in 2020 following the non-renewal of its franchise.
ABS-CBN bled P13.5 billion in 2020, or five times more than the P2.645 billion it lost in 2019 (which included P5.9 billion impairment losses arising from the franchise expiration and impact of COVID-19 on its theme park business).
Following Congress’ rejection of its franchise application in July last year, ABS-CBN retrenched 4,552 (including 2,672 regular staff) which cost P1.1 billion in additional separation benefits to the company. It had 5,932 employees (4,012 regular) remaining as of end-2020.
Revenues plummeted 50 percent to P21.42 billion as P16 billion in advertising revenues were wiped out (down 69 percent to P7.061 billion) after the National Telecommunications Commission took Channel 2 off the air following the expiration of its franchise in May last year.
ABS-CBN’s consumer sales also plunged by 28 percent year-on-year to P14.359 billion as the loss of its franchise forced it to cancel direct to-home services of its subsidiary Sky Cable and sale of digital TV receivers (TV Plus).
ABS-CBN had to book P1.274 billion in impairment losses from its assets and TV Plus in 2020.
Management made a strong pivot to digital but revenue gains from these platforms were just a fraction of its lost TV revenues. Its “Kapamilya Channel” generated only P1.01 billion revenues (mostly in the fourth quarter) despite reaching a combined 40 million subscribers for its entertainment and news channels on social media.
The only bright spot in ABS-CBN’s portfolio is Sky Cable which posted P9.6 billion in revenues and a P14 million net income despite losing its DTH services.
For the second straight year, SGV & Co. raised doubts on ABS-CBN’s ability to continue as a going concern in its 2020 full year audit, citing its massive losses, huge net cash outflow of P2.4 billion and net current liabilities of P9.7 billion amid the loss of its cash cow and the pandemic ravaging the economy.
SGV said ABS-CBN’s towers, transmission and other broadcasting equipment (P974 million) and program rights (P3.2 billion) have been impaired by the loss of the TV franchise.
“The core operation of the company depended on the legislative franchise and therefore is a key determinant of the company’s ability to continue as a going concern. The denial of the franchise application significantly affected the company’s free-to-air business,” said SGV.
But management led by president Carlo Katigbak assured that it was capable of maintaining a healthy cash position and paying off its liabilities for the whole of 2021.
“The company continues to explore and intends to pursue all available remedies and courses of action, and will comply with relevant legal, regulatory and contractual requirements, to be able to sustain its current and future business operations, which do not necessarily involve broadcast only,” said ABS-CBN management.