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MANILA – ABS-CBN Corp told the shares on Friday that it has “all the conditions and qualifications” to renew its franchise, adding that its closure would significantly affect media, network and studio entertainment operations.
The country’s largest entertainment and media company said it “has not committed a violation” of its franchise that merits its non-renewal or suspension of its broadcast operations.
On Wednesday, the House of Representatives passed a bill in second reading that would grant ABS-CBN a temporary franchise until October 31. This will give lawmakers time to deliberate on pending bills for a new 25-year license.
ABS-CBN signed on May 5, a day after its franchise expired, on orders from the National Telecommunications Commission. The NTC later apologized to the House for failing to notify lawmakers of the shutdown order.
MNSE or Studio Media, Network and Entertainment (MNSE) operations recorded revenues of P23.3 billion at the end of September 2019, of which P15.9 billion or approximately 68 percent came from free advertising, ABS-CBN said.
Free advertising transmitted half of the consolidated revenue for the same period.
“Even though the impact of the COVID-19 pandemic on the Philippine and global economy has not yet been fully realized, the Order will impose an additional financial burden on the company,” he said.
ABS-CBN is “exploring alternative means to reach its audience and substitute sources of income,” including expanding its digital footprint, according to the disclosure.
The network’s main newscast, TV Patrol, began airing on YouTube and Facebook, garnering millions of views.
The company will implement cost control measures to reduce overhead and streamline capital expenditures. It is also developing measures to protect the welfare and interest of its employees, according to the disclosure.
News.abs-cbn.com is the official news website for ABS-CBN Corp.
Below is the full text of the disclosure of ABS-CBN Corp to the Philippine Stock Exchange on May 15, 2020:
According to the Order, the Company was ordered to immediately cease and desist from operating its radio and television stations in Metro Manila and other regional stations (Channel 2, Sports and
Action, DZMM and MOR). On the same day, the Company informed its audience of the development and subsequently signed its radio and television stations on the air in accordance with the NTC Order.
The Order will have a significant impact on the Company’s Media, Network and Studio Entertainment (MNSE) operations. For the period ended September 30, 2019, revenue for this segment totaled Php23.3B, of which Php15.9B, or approximately 68% of MSNE’s revenue, was free advertising.
On a consolidated basis, free advertising was approximately 50% of the Company’s consolidated revenue for the period ended September 30, 2019. The actual impact on MNSE operations is difficult to estimate at this time as it will depend , among other things. , in the duration of the time that its television and radio stations are off the air, and its ability to generate alternative sources of income to compensate for the deficit.
Although the impact of the CoVID19 pandemic on the Philippine and global economy has not yet been fully realized, the Order will impose an additional financial burden on the Company. As developments on these still evolve and change rapidly from day to day, the Company believes that transformative scenarios make assumptions, assessments and projections challenging and not necessarily
be valid or accurate for future scrutiny. However, the Company has already undertaken and will continue to take measures to mitigate this impact and effect. So:
A. The Company continues to operate the following:
1. Media, networks and entertainment studio:
Content creation: entertainment, news, sports, movies, music, channels, other content.
Content Distribution: The Filipino Channel (TFC), ABS CBN News Channel (ANC), Teleradyo, Cinema One, Metro Channel, Myx, Cinemo, Jeepney TV and Yey
2. Cable, satellite and broadband: Sky Cable, Sky Broadband, Sky Direct and Sky on Demand
3. Digital and interactive media: iWant, abscbn.com, YouTube, Facebook and other digital platforms and other social networks
4. Products and consumption experiences: merchandise license and promotion, and
physical business experience
B. The Company is exploring alternative means to reach its audience and substitute sources of income, such as, among others, expanding its digital platforms and developing new products.
C. The Company will continue to implement cost control measures, reducing general administrative expenses (GAEX) or general expenses and rationalizing capital expenses.
D. The Company is formulating measures to protect the welfare and interest of its employees.
As of September 30, 2019, the Company’s long-term debts amounted to Php21,336B. In light of the Order, the creditor banks have been informed and know the situation of the Company.
During these unprecedented and challenging times, the Company is committed to meeting all existing obligations for the goods delivered and the services provided by its external suppliers.
Currently, we expect to pay all our bank debts according to the existing payment schedule.
The Company intends to follow such courses of action and must exhaust all available legal remedies to resume its transmission operations. On May 7, 2020, the Company presented
with the Supreme Court a Petition for Certiorari and Prohibition (the “Petition”), with urgent application of the issuance of a Temporary Restraining Order and / or a preliminary injunction (Case G.R No. 352119). In the Petition, the Company requested relief from the Supreme Court, as follows: (i) issuance of a Temporary Restraining Order, (ii) issuance of a Preliminary Amparo Order after the proceedings and while the Petition this slope; and (iii) later
additional procedures, the annulment and annulment of the Order and the declaration of permanent mandate, against the implementation of the Order. The following basic arguments were presented and widely discussed in the Petition in support of his sentence:
1. Direct recourse to the Supreme Court is necessary and justified given the urgency and the transcendental importance of the subject, and the serious and irreparable repercussions in the public interest caused by the issuance of the Order;
2. There is no simple, quick and suitable remedy available for ABS-CBN other than the Request;
3. Congress has the plenary power to grant and renew legislative franchises. Therefore, instead of issuing the Order, the NTC should have deferred to Congress;
4. The issuance of the Order deviated from previous practice and violated the Company’s right to equal protection of the law;
5. The Order also violates the Company’s right to due process because it was issued without due notice and hearing; violates the public’s right to information and restricts freedom of expression, in addition to causing serious and irreparable harm to ABS-CBN and
thousands of its employees. Therefore, the strong public interest and capital stock require that the Company be allowed to continue its operations.
While this Petition is pending, the Company is actively seeking renewal of its Congressional franchise and is ready to participate in any hearing or proceeding that may be scheduled at
anytime.
In the current (or 18th Congress), there are eleven bills, seeking the renewal of the ABS-CBN franchise, which are currently pending with the Committee of the Chamber of Legislative Franchises, as well as three (3) Resolutions in relationship with the renewal or extension of the ABS-CBN franchise.
As of May 11, 2020, the following events occurred in the House of Representatives:
to. included in its Business Order on that date, the first reading of House Bill No. 6694, entitled: A Law that grants the ABS-CBN Corporation (formerly ABS-CBN Broadcasting Corporation) a franchise to build, install, operate and maintain television and radio broadcasting stations in the Philippines and for other purposes.
yes. issued an Order, dated May 11, 2020, which requires the NTC and its Commissioners to explain why they should not be cited for contempt or prosecuted for issuing the Order.
C. three (3) congressmen filed a resolution seeking an investigation into the alleged violations of ABS-CBN Corporation of its legislative franchise. Then, on May 13, 2020, the Plenary Committee of the House of Representatives approved in second reading House Bill No. 6732 (HB 6732) or “A law that grants the ABS-CBN Corporation a franchise to build, install, operate and maintain radio and television stations in the Philippines and for other purposes “, whose bill grants the ABS-CBN Corporation a franchise
valid until October 31, 2020.
In the Senate, two (2) bills seeking the renewal of the ABS-CBN franchise, as well as a bill seeking to extend the franchise term, have also been submitted before and pending with the
Senate Rules Committee. Following the approval of HB6732 in
Third reading, the bill is expected to pass to the Senate for approval.
The Company trusts that it has not committed any violation of the terms of its franchise, permits and licenses or any applicable law or regulation to deserve the non-renewal of its franchise or the suspension of its transmission operations as a consequence.
Therefore, the Company believes that while a franchise is a privilege that is the exclusive prerogative of Congress to grant, it has all the conditions and qualifications to renew its franchise.
We are prepared to update this disclosure in due course and as soon as new developments emerge.
ABS-CBN, ABS-CBN franchise renewal, closure of ABS-CBN, ANC, ANC Top, Philippine Stock Exchange
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