Lopez Holdings

 

Remarks of Carlo L. Katigbak, president and CEO, at the ABS-CBN Corporation Annual Stockholders’ Meeting on April 25, 2019
Dolphy Theater, ABS-CBN Broadcast Center, Quezon City
View Carlo L. Katigbak remarks on YouTube ---> https://youtu.be/-7mu6EQHKBY

 Mga Kapamilya,

Over the past 65 years, ABS-CBN has always aspired to improve the communities we serve. Seeing our audiences respond to our efforts is a real source of everyday inspiration. However, technology and audiences are changing at an exponential rate. This change will continue to expand and disrupt – and today, our industry currently finds itself in the middle of these winds. Our ability as an institution to continue to re-invent ourselves, while anchored on our mission to serve the Filipino, will be at the core of our longevity and success.

Last year, we accelerated our transformation program, with a view to becoming an organization better equipped to capitalize on new opportunities.  This program will deliver on five essential targets.

First is to accelerate the transformation to a digital organization. Second is to grow our experiences business.  Third is to expand our revenues and audiences beyond the Philippines. Fourth is to better serve our kapamilyas through public service efforts geared towards long-term transformation. And fifth is to continue to be the industry pioneer and leader in our core broadcasting business.

Digital Initiatives

We’ve made significant progress with our digital initiatives.  iWant was relaunched with over 95,000 hours of TV shows, movies and original productions - generating 60 million views in December 2018.  ABS-CBN.com continued to be the #1 Philippine-based website and ranked 3rd behind Google and Facebook among Philippine-based users.

ABS-CBN Entertainment’s Youtube channel became the first Philippine recipient of Youtube’s Diamond Creator Award in June for reaching 10 million subscribers. It ended 2018 with 15 million and is now the 8th most viewed channel in the world. ABS-CBN News is the #1 Youtube news channel in the Philippines with 3.9 million views and 5.6 million subscribers – ranking among the top 30 in the world.

A real adopter to the digital environment has been our Music group. Previously considered a sunset business, it is now a shining example of a successful transformation to digital. By embracing streaming platforms like Spotify as well as the expansion of its concert initiatives into digital, regional and international audiences, ABS-CBN Music has returned to profitability with digital sales accounting for 92% of total music revenues.

Across all these digital properties, ABS-CBN is attracting new audiences and new content creators both here and abroad. These efforts will continue to accelerate in 2019.

Our digital effort is supported by initiatives in growing our social media presence, developing our online ad sales capabilities and in various technology upgrades. We’ve made investments in big data and artificial intelligence. We have also doubled down on our digital innovation efforts across the company.

To better improve our capabilities on the advertising side, we are testing a cross-platform initiative that will provide solutions for advertisers who aim to reach their specific target segments across both our core and digital properties.   They will be able to do this in an environment that is safe for their brands and across a network of digital properties that are committed to protecting the data privacy of our audiences.

Digital is our fastest growing business today.  Our combined digital advertising revenues now account for nearly a billion pesos while total digital revenues represent 13% of total ABS revenues. 

International Expansion

The world has become a global market and we aim to make content a primary export of our company.  We are fueled by the belief that Filipino performing and creative talent is world class, and it is time we make Filipino talent shine on the world stage.  This is why international expansion to non-Filipino or international audiences is a critical driver for our growth.

We are starting off our efforts with three movies. Yellow Rose is headlined by two Filipinos - Tony Award nominee Eva Noblezada and Tony Award winner Lea Salonga, and is directed by Fil-Am Dianne Paragas.  The movie is one of the first awardees of a grant from ABS-CBN’s Cinematografo Festival. It was recently chosen as the opening film of the 35th Los Angeles Asian Pacific Film Festival.  Eerie, a co-production with Singapore-based CREATE, stars our very own Charo Santos-Concio and Bea Alonzo, and is directed by Mikhail Red. Quezon’s Game, is a movie about how President Quezon provided refuge for more than a thousand Jews fleeing the Nazi regime in 1939.  It has now garnered over 22 awards from various Film Festivals globally.

International demand for our traditional content also continues to grow. Overseas syndication efforts have resulted in revenues doubling from 2015 to 2018. Last year alone, syndication sales rose 30% year-on-year driven by Africa and overseas OTT platforms. In the coming years, we will be expanding our efforts into Latin America and Asia. Just last month, Showtime Indonesia - our first format sale in that market began airing on MNCTV. We will soon be investing in various co-productions not only for feature films but for TV series, documentaries, music, concerts, and lifestyle content.

Our international efforts will also see an expansion of TFC and our theatrical movie distribution into new territories. Last year, we generated P500 million in international gross receipts for our movies – 18% of our total box office revenues.

All told, our international initiatives accounted for 15% of total ABS-CBN revenues in 2018.

Growing the Themed Experiences Business

In 2015, Kidzania Manila became the 20th Kidzania location in the world. A dedicated play and learning space for Filipino children and families, Kidzania Manila welcomed its 1 millionth visitor in 2018 and is poised to turn a profit this year.

We furthered our investment in themed experiences with the launch of the ABS-CBN Studio Experience in Trinoma, Quezon City. ABS-CBN Studio Experience offers visitors 15 different attractions.  Noteworthy is the Kapamilya Theater – home to the country’s first and only 4-dimensional production, “ASAP 4D” which immerses audiences in the all-star show as if the performances were happening live.

Concerts, Mall Shows, and many other pocket events complete our themed experiences initiatives. In 2018, our integrated events business orchestrated 500 events both here and abroad. In turn, these events delivered 53% in revenue growth from 2017, 460,000 face to face engagements and close to P1.6 billion in revenues.

Strengthening our Core

Our core media platforms are expected to continue delivering substantial contributions that will help fund our transformation. ABS-CBN dominated ratings across all time blocks in 2018 and remained the #1 network in the Philippines. As of last year, close to 7 million homes now have TV+ boxes.  Seven out of 10 non-cabled homes in Metro Manila and 6 out of 10 non-cabled homes in the suburbs are now watching television on TV+ boxes.  Cinemo and Yey!, our TV+ channels, are now the #3 and #4 free to air channels in the country.

To further improve the production of our TV programs, we inaugurated our first two soundstages in December 2018. Alongside the inauguration, we have been investing in the training of our teams, guided by our Hollywood-based consultants, to evolve into a stronger creative organization.

ABS-CBN News continued to produce the most watched news program in the Philippines via TV Patrol, while DZMM held on to the number one spot on AM radio. In FM, MOR remained the number one station in Metro Manila and various parts of the country

ABS-CBN Films has continued to perform well. The House of Us is now the all-time Philippine box office record-holder with P700 million in local gross receipts and over US$2 million in international revenues. Fantastica ended the year with P400 million in domestic receipts while Exes Baggage did over P350 million in global box office receipts.

Sky Direct – our DTH service, ended the year with 937,000 subscribers. It crossed the 1 million subscriber mark in January 2019 – barely three years after its launch. As 2018 ended, Sky Cable started its broadband expansion program to address the growing demand for broadband products and faster speeds.

In the Service of the Filipino

All our efforts have always been guided by a call to be of service to the Filipino – telling their stories, inspiring and entertaining them, advocating on their behalf, and assisting them during challenging times.

After reviewing our efforts, we’ve decided to focus our resources on seven key areas – Overseas Filipino Welfare, Health and Wellness, Child Welfare, Humanitarian Relief and Rehabilitation, Education, the Environment, and Livelihood and Employment.

Through the support of individuals and partners who have trusted ABS-CBN with their donations, we served close to 10,000 kapamilyas through our Tulong Center and close to 17,000 patients through our medical and dental missions. Bantay Bata assisted close to 8,000 children.

Operation Sagip provided relief support to 32,000 families.

Finally, our environmental efforts continued in the La Mesa Watershed and Ecopark and in various other communities.

The Year in Review

This was a difficult year for the advertising business.  We estimate that total industry TV ad sales declined by 6% from 2017.  We believe that the businesses of many of our advertisers were adversely affected by the impact of high inflation and the increased sugar tax.  Consequently, our total advertising revenues for 2018 declined by 4% to P20.3 billion.

Sky also faced a challenging year as continued cord-cutting drove down its cable revenues by 13% to P4.1B which was mitigated by the growth in broadband and DTH. This resulted in total subscription revenues for Sky staying flat.

Excluding DTT box sales, expenses remained flat versus the previous year, but not enough to mitigate the effect of lower revenues.  In 2018, our net income was at P1.9 billion, 40% lower than the previous year.

We are well positioned for a rebound in market conditions.  With stronger ratings in broadcast, and continued growth in viewership on our digital properties, we are confident that there will be a full recovery of our profitability this year.

Our Commitment

It is clearly an uncertain time for ABS-CBN.  We are faced with threats from many directions:  changing consumer habits, disruptive technologies, political headwinds, and new competitors. 

Your company has been through many periods of uncertainty in the past, and we have not only overcome challenges, but because of them, we have emerged a better, stronger and more relevant company.

Allow us to thank all of you for standing by us and supporting us throughout these difficult times.  Your trust is a pillar of strength for those of us that have had to deal with these challenges day-to-day.

Regardless of what the future holds, our commitment is to continue serving our audiences and our public, in any way we can. This is our calling - one that will never dim. This is why we exist. And this is why we can face the future with a confidence that comes from believing that what we do matters to the people we serve.

Maraming salamat po.

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Lopez Holdings Corporation 
16/F North Tower, Rockwell Business Center Sheridan, Sheridan St. corner United St., 1550 Bgy. Highway Hills, Mandaluyong City, Philippines

  • Trunkline: (632) 8878 0000
  • Fax: (632) 8878 0000 ext 2009