BROADCASTING GIANT GMA Network Inc. on Thursday reported a 10-percent growth in nine-month net profits over a year ago as higher revenues from airtime sales and international operations offset an increase in expenditures.
The company booked a net profit of P2.15 billion from January to September this year compared to P1.96 billion net profit in the same period last year.
For the third quarter alone, net income amounted to P788 million, 4 percent lower compared to P823 million a year ago, as expenses spiked up due to employee bonuses. This came as the company signed in July a collective bargaining agreement with its employees which called for a hefty signing bonus, costing GMA P150 million in extraordinary bonus expenses.
Gross revenues for the first nine months rose by 7 percent to P10.02 billion. Airtime revenues from television and radio contributed P9.24 billion while subscription fees from international operations and other revenue-generating activities of subsidiaries contributed P782 million.
The company has also benefited from an increase in advocacy or political spending ahead of the 2010 presidential elections. About P400 million in airtime sales was made from these political advertisements, P300 million of which came from private sector and the balance from the public sector.
Between November and the 90-day campaign period for national candidates before the May 2010 elections, however, these advocacy advertisements may dry up. After the Dec. 1 deadline to file candidacy, the politicians will henceforth be prohibited from campaigning and the broadcasting networks and movie houses will be prohibited from showing these ads, GMA Network president Felipe Gozon said.
“So after you file that, you become a candidate and because you are already a candidate you can no longer campaign before the 90-day period. Otherwise you will be guilty of premature campaigning,” Gozon said.
“But all is not lost. Through experience, what we’ve found out is that big volume advertisers cut back on their placements when these candidates put their ad spots because they don’t want to get lost in the shuffle of advertisements. So we’re banking that other advertisers that cut back will increase spending. Besides December and January historically are low advertising months because after Dec. 15 everyone is on Christmas holiday mode,” Gozon said.
Total operating expenses grew by 9 percent to P5.55 billion. Production costs alone increased by 2 percent year-on-year to P2.92 billion.
General and administrative expenses increased by 18 percent to P2.63 billion primarily due to the growth in personnel costs in the third quarter with the CBA implementation.
Meanwhile, the company’s cash flow as measured by earnings before interests, taxes, depreciation and amortization amounted to P3.71 billion for the nine-month period, up by 4 percent over a year ago.
Gozon said the company was on track to hit P2.8 billion in net profit goal for the full year. “We remain ahead of competition in terms of sales. Barring any major event that will affect the company’s performance for the remaining months, I think 2009 will be another breakthrough year for the network,” he said.
Subscription revenues for GMA International jumped by 54 percent over a year ago on steady growth in the subscriber base of two international channels—GMA Pinoy TV and GMA Life TV which are now available in the US, Canada, Europe, Middle East, North Africa, Australia, New Zealand, Japan, Guam, Papua New Guinea, Singapore and Hong Kong, among others.
