With the non-renewal of its franchise, ABS-CBN Corporation said it will continue to operate in other businesses that do not require a legislative franchise.
The firm disclosed to the Philippine Stock Exchange that this includes international licensing and distribution, digital and cable businesses, as well as, continue with the syndication of content through various streaming services.
ABS-CBN said the non-renewal of its franchise significantly affects its Media, Networks, and Studio Entertainment (MNSE) operations, specifically the Company’s free-to-air business in the Philippines.
“For the unaudited period ended September 30, 2019, 68 percent of the revenues of this MNSE segment was free-to-air advertising, which revenue amounted to P15.9 billion as of said period,” the firm said.
On an unaudited consolidated basis, free-to-air advertising was approximately 50 percent of the Company’s unaudited consolidated revenue for the period ended September 30, 2019.
“To mitigate the impact of the denial of the franchise application and of COVID-19, the firm is taking 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.
The Company said it will focus on businesses that will generate growth in revenues and is reducing investments in non-core activities.
The Company has recently announced the closure of KidZania Manila due to conditions brought by the COVID-19 pandemic.
ABS-CBN said it is currently in discussions with its creditor banks with respect to its long-term debts.
The Company and its creditor banks are confident that with the proper security in place, the Company’s obligations to its creditor banks will be satisfied in accordance with the existing terms of, including payment schedules, under the relevant loan agreements.
ABS-CBN said it is 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 ABS-CBN 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 added.
The firm said it “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 do not necessarily involve broadcast only.”
It noted that, “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.”