Metro Manila (CNN Philippines, May 6) — Media giant ABS-CBN has enough surplus funds to continue paying the salaries of its workers for at least three months, according to a financial analyst.
Even as the leading network is bound to lose a huge chunk of revenues following its shutdown, it remains to have “a healthy balance sheet,” the research head of COL Financial Group, April Tan, told CNN Philippines’ The Final Word on Wednesday.
The analyst noted that the network still has around ₱4 billion left, which should allow it to support its employees at least until August this year.
However, should ABS-CBN fail to secure a franchise from Congress by then, she warned it is likely that its thousands of employees will really be forced out of work.
“I think it will be very difficult to convince, say, the existing or new investors to pump fresh capital and even for the banks to lend money, because we don’t even know if they will be granted that franchise,” Tan said on the network’s other options for funding.
Following a cease and desist order issued by the National Telecommunications Commission on Tuesday, ABS-CBN currently faces an uncertain future, with a generous part of its revenues being generated from advertisements aired in channels no longer operational. The NTC has walked back on its commitment to issue a provisional authority to the network pending its franchise renewal.
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“[Surviving a shutdown] is going to be difficult, because for example, as of the first nine months of last year, ABS-CBN gets around 50% of revenues from advertising,” Tan explained.
“Aside from that, on an annual basis, they actually have a manpower cost of around ₱14 billion as of 2018,” she added.
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The trading of ABS-CBN shares was also suspended by the Philippine Stock Exchange a day after the corporation went off air.
The PSE required ABS-CBN to submit a full disclosure on the order’s impact on “the business, financial condition, operations, and prospects of the Company, as well as its business continuity plan, risk mitigation measures, and such other material information for the investing public.”
Citing “much uncertainty” on ABS-CBN’s franchise renewal, Tan advised the investing public to “stay on the sidelines first.”
“Most likely, if you can’t afford to wait, or if it’s a significant portfolio, there’s no choice but to cut your losses and stay on the sidelines first, because we don’t know how long this will drag on,” she said, addressing stockholders.
With the closure order and the trading halt in place, GMA Network has seen a surge in its shares, with over 20% increase on Wednesday, as more investors expect advertising spending to shift to the rival company.
The shutdown of the broadcast giant covers 42 TV stations, five AM stations, and 18 FM stations.
