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Business

ABS-CBN cuts exposure in non-core businesses

Richmond Mercurio - The Philippine Star

MANILA, Philippines — ABS-CBN Corp. is reducing investments in non-core businesses and instead focusing on endeavors that will generate growth in revenue following the non-renewal of its broadcast franchise.

In a stock exchange filing, ABS-CBN cited various measures the company is undertaking to mitigate the impact of the denial of its franchise application and of the ongoing COVID-19 pandemic.

The broadcast giant said it plans to continue to operate in other businesses that do not require a legislative franchise, such as international licensing and distribution, digital and cable businesses.

It also seeks to continue with the syndication of content through various streaming services.

“The company takes into consideration the probable shift of consumer behavior in terms of accessing content, as well as, the ever-changing technology available to the public,” ABS-CBN said.

ABS-CBN said it has likewise adopted and continues to implement cost control measures, reducing general administrative expenses or overhead, rationalizing capital expenditures, and streamlining its manpower requirements.

ABS-CBN will implement a retrenchment program effective Aug. 31, affecting a significant number of workers.

“Given the reduced operations, the company is reviewing its current business models, structures, processes and systems, for a more agile, efficient and effective organization,” ABS-CBN said.

ABS-CBN is in discussions with its creditor banks regarding its long-term debts.

However, the company said its creditor banks are confident that with the proper security in place, its obligations will be satisfied in accordance with the existing terms of, including payment schedules, under the relevant loan agreements.

ABS-CBN is also confident that any payments or financial obligations that may arise under its customary or usual business agreements are manageable and will not have a material adverse impact on the company at this time.

“The company is committed to honor all existing obligations for goods delivered and services rendered by its third party suppliers and/or to negotiate new terms for these obligations, should it be necessary,” it said.

ABS-CBN 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 it said do not necessarily involve broadcast only.

“The denial of the franchise application of ABS-CBN to construct, install, establish, operate, and maintain radio and television broadcasting stations in the Philippines does not affect the primary franchise of ABS-CBN to exist as a corporation and does not affect the rights of its shareholders,” the company said.

ABS-CBN went off the air on May 5 in compliance with a cease and desist order issued by the National Telecommunications Commission following the expiration of the network’s franchise.

Last July 10, the House committee on legislative franchises denied the network’s bid for a new franchise.

ABS-CBN said the resolution significantly affects the company’s media, networks and studio entertainment operations, specifically its free-to-air business in the country.

Free-to-air advertising was approximately 50 percent of the company’s unaudited consolidated revenue for the period ending September last year.

Trading of ABS-CBN shares was suspended by the Philippine Stock Exchange last July 13, as the company was required to submit a full disclosure on the impact of the non-renewal of its legislative franchise on its business, financial condition, and operations.

ABS-CBN shares fell 30 percent to P10.36 as it resumed trading yesterday.

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