MANILA, Philippines — Embattled broadcast giant ABS-CBN Corp. said Friday it will continue paying its debts to its creditors, while at the same time reducing costs as it faces revenue problems after the government forced its free TV and radio channels were forced off the air .
In a disclosure to the stock exchange on Friday, the Lopez-led media company said it will stick to the current repayment schedule for its long-term debts, which to date amounted to P21.3 billion. Banks with loan exposure to ABS-CBN have been informed about the company's situation.
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"During these challenging and unprecedented times, the company is committed to honor all existing obligations for goods delivered and services rendered by its third party suppliers," the network said.
Despite earlier assurances from the National Telecommunications Commission that operations will continue, ABS-CBN was shut down last May 5, a day after the network’s legislative franchise expired. The halt order had since been challenged before the high court, even as Congress deliberates on a temporary franchise to let ABS-CBN resume airing.
The closure marked the second time in history that the network was shut down by the government, the first of which was during the dictatorship of Ferdinand Marcos Sr. in 1972. Shares of the company halted trading a day after the closure and would just resume on Monday after the disclosure.
'Actual impact'
ABS-CBN said the stop order will "significantly impact" its media, networks and studio entertainments (MNSE) operations. Revenues from this segment, 68% of which came from free-to-air advertising, reached P23.3 billion in the third quarter of 2019.
Overall, free-to-air advertising accounted for approximately 50% of the company’s consolidated revenue in the third quarter last year.
To protect its balance sheet, ABS-CBN said it is exploring alternative means to reach its audience and substitute revenue sources through digital platforms and developing products, among other strategies.
While raising revenues, the TV giant also said it is "reducing general administrative expenses or overhead and rationalizing capital expenditures" to conserve cash.
"The actual impact on MNSE operations is difficult to estimate at this point since it will depend, among other things, on the duration of the time its television and radio stations are off-air, and its ability to generate alternative sources of revenues to make up for the shortfall," ABS-CBN told the local bourse.
"Even as the impact of the COVID-19 pandemic on the Philippine and global economy is yet to be fully realized, the order will put additional financial burden on the company," it added.
At least 12 bills seeking a new franchise for the network are pending at the House of Representatives led and dominated by political allies of President Rodrigo Duterte, who repeatedly accused the media company of bias during his presidential campaign in 2016.
Various groups at home and abroad condemned ABS-CBN's closure as a brazen attack on press freedom at a time access to reliable information is crucial amid the coronavirus outbreak.
Despite House Speaker Alan Cayetano insisting to hear supposed franchise violations before granting a fresh license, state officials from various agencies already cleared ABS-CBN of tax, corporate and labor violations in a Senate hearing last February.
"The company is confident that it is has not committed any violation of the terms of its franchise, permits and licenses or any applicable law or regulations," ABS-CBN said.
"The company intends to pursue such courses of action and shall exhaust all legal remedies available to it in order to resume its broadcasting operations," it added.