ABS-CBN Corp. may not achieve financial recovery this year due to declining advertising revenues and low investor confidence, according to analysts.
“Given the drop in consolidated revenues and the ongoing strain from lower advertising income, ABS-CBN is unlikely to see a significant financial boost this year,” Globalinks Securities and Stocks, Inc. Head of Sales Trading Toby Allan C. Arce said in a Viber message.
Last week, the company announced it would retrench 100 employees, or 3% of its total workforce, due to the ongoing decline in advertising revenues.
“The TV industry as a whole has been hurt by lower consumer spending, which translated into lower advertising spends. The company is also being affected by the global decline in the pay TV business,” it said.
Despite this, the company reported significant improvements in its television ratings and music business.
First Grade Finance, Inc. Managing Director Astro C. del Castillo said the company’s decision would likely spur mixed reactions from investors, while many would view the layoff announcement negatively as it is likely a sign of deeper financial troubles.
“This sentiment could lead to a decline in stock prices as investors sell off shares to mitigate potential losses,” Mr. Del Castillo said.
On the other hand, some investors might see the retrenchment as the company’s cost-cutting move and streamlining options to help improve its overall financial health, he added.
“While there are promising developments in digital platforms and content production, the overall outlook for ABS-CBN continues to be challenging,” Mr. Del Castillo noted.
During former President Rodrigo R. Duterte’s administration, lawmakers aligned with him denied ABS-CBN’s franchise renewal application. The House of Representatives committee on legislative franchises deemed the broadcast network critical of Mr. Duterte and “undeserving” of the privilege.
ABS-CBN’s attributable net loss widened to P1.18 billion for the second quarter from a loss of P965.28 million in the same period last year, according to its financial statement.
This is attributed to lower revenues for the period, which fell to P3.71 billion, lower by 18.1% from P4.53 billion a year ago.
“The broader industry decline and persistent losses suggest that ABS-CBN’s financial burdens may continue in the near term rather than showing signs of a full recovery,” Globalinks Securities’ Mr. Arce said. — Ashley Erika O. Jose
