Investors seek Congress clues as ABS-CBN shares resume trading
MANILA, Philippines — Investors will focus on how lawmakers will act on ABS-CBN Corp.’s franchise debacle as trading of the shuttered media giant’s shares resumes on Thursday, analysts said Wednesday amid uncertainties over the fate of the Lopez-led company.
ABS-CBN stopped airing their free TV and radio channels shortly before 8 p.m. Tuesday after the National Telecommunications Commission (NTC) handed down a surprise cease-and-desist order following the expiration of the network’s legislative franchise last May 4.
The Philippine Stock Exchange on Wednesday halted the trading of ABS-CBN shares for a day as it waits for the company’s report on the impact of the NTC’s order on its business, which heavily depends on traditional media revenues.
This was just the second time in history and first under a restored democracy that the network was closed down by the government. The first time broadcast was halted happened during dictatorship of Ferdinand Marcos Sr. in 1972.
“I think what investors want to see are indicators that will prove that they (ABS-CBN) will be allowed to operate again,” COL Financial Group Inc. Research Head April Lee-Tan said in a text message, adding that it is “hard to say at this point” how the company’s shares will perform tomorrow.
Beatrice Lopez, equity analyst at Manila-based brokerage firm Regina Capital Development Corp., agreed: “It's also likely that investors will be focused on how legislators will move forward with ABS's franchise.”
“I think that most of the investors have already made their moves and priced in the possibility of the network closing down,” Lopez said in a separate text message.
Shares in Lopez Holdings Corp., the parent of ABS-CBN, fell 3.92% on Wednesday. Meanwhile, ABS-CBN’s rival network GMA Network Inc. climbed 23.69% at the end of the trading day.
At least 12 bills seeking a new franchise for the network are pending at the House of Representatives that is dominated by political allies of President Rodrigo Duterte, who repeatedly accused the media company of bias during his campaign for the presidency in 2016.
In a Senate hearing last February, government officials from various agencies cleared ABS-CBN of tax, corporate and labor violations.
While the company could still survive as it still has other business segments like film and music production, among others, analysts earlier warned that the non-renewal of ABS-CBN’s franchise would still put a strain on the network’s balance sheet.
Last February, the Senate almost began its deliberations, but was called out by House Speaker Alan Peter Cayetano who said franchise bills should emanate from the Lower House. Nearly 24 hours since the network halted free TV operations, Cayetano has not spoken about ABS-CBN's closure as of press time.
In the same text message, Regina Capital’s Lopez said the major driver for the market on Thursday will be the release of the first quarter gross domestic product results in the morning. “This can serve as a gauge for how the economy is weathering the COVID-19 pandemic,” she said.
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