MANILA, Philippines — Broadcast giant GMA Network Inc. felt the impact of ballooning inflation in the first quarter after advertisers placed fewer placements, causing both revenue and profit to fall.
GMA Network sustained a 72-percent drop in net income to P603.57 million in the first quarter from P2.12 billion a year ago, as expenses went up while revenue declined.
On the revenue side, GMA Network reported a 31-percent reduction in earnings to P4.02 billion in the first quarter due to high base effect as a result of political ads that were placed last year for the national elections.
Further, the firm received fewer placements from some of its advertisers who are involved in the production of fast moving consumer goods. These clients minimized their ad spending in the first quarter as consumers held back on spending to survive inflation.
In January, inflation swelled to a 14-year high of 8.7 percent on price increases in food, fuel and transport. Inflation moderated to 8.6 percent in February and 7.6 percent in March, but remained elevated against the government assumption of five percent to seven percent for the year.
“As a result, major fast moving consumer goods clients of the company, which largely banked on individual purchasing power, have likewise scaled down their ad spending,” GMA Network said in its financial statement.
Although main channel GMA-7 accounted for the bulk of revenue flow, it recorded a 37-percent decline in sales due to the absence of election materials that it hosted in 2022.
On the other hand, GMA Network saw expenses go up by six percent to P3.26 billion in the first quarter from P3.08 billion a year ago.
Production costs surged by six percent to P1.67 billion with the addition of fresh content like the National Collegiate Athletic Association Season 98. Likewise, GMA Network shot new episodes for its daily telecast, unlike at the height of the pandemic when it relied on replays.
Administrative expenses also grew by four percent to P1.49 billion on cost increases in personnel and facilities. GMA Network said facilities spending, in particular, rose by 30 percent to P162.12 million due to price hikes in fuel and power.
Down the line, GMA Network plans to keep spending at bay to mitigate inflationary impact, but vowed to maintain the quality of shows even with cost-cutting measures in place.