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With ABS-CBN’s franchise denied, what happens now?

“They (ABS-CBN) will rehire the workers, definitely, [that’s the] promise.”

These words come from Mark Raywin Tome, a promotion specialist for media network ABS-CBN, in an interview with The LaSallian as he shares his wishes for a return to normality in the company’s operations.

Last May 5, the National Telecommunications Commission (NTC) had issued a cease and desist order against the media giant after its 25-year franchise expired the day prior. By August’s end—almost four months since the company went off the air—hundreds, if not thousands, of Tome’s coworkers are set to lose their jobs amid the continuing COVID-19 crisis.

Franchise blockade

The shutdown of ABS-CBN did not come abruptly; as early as February, Solicitor General Jose Calida filed a quo warranto petition to halt ABS-CBN’s broadcasting, claiming that the network committed gross violations. These supposed violations were later brought up by lawmakers in a series of hearings in the lower house. Despite government agencies denying wrongdoings on ABS-CBN’s part, the House of Representatives ultimately stood firm in voting to reject their franchise renewal bid.

“Call it [a] newsman’s instinct, but my sense [is that] since we were shut down last May 5, the franchise renewal campaign was doomed from the very beginning,” ABS-CBN News Chief Ging Reyes tells The LaSallian. “I have not changed my mind from that.”

For television and radio broadcasters to operate, they must first secure a franchise from Congress as required by law. Article XVI, Section 11 of the 1987 Constitution limits the ownership and management of mass media corporations to Filipino citizens and mandates Congress to “regulate or prohibit” monopolies in commercial mass media if required by public interest. 

Previously, Republic Act 7966 was what granted ABS-CBN its 25-year franchise. 

Now that it has lapsed without renewal, the media company is barred from making free-to-air television and radio broadcasts. The network’s digital transmissions under its TV Plus product were also put on hold by the NTC.

But the company is not yet wholly helpless. Atty. Carlos Raphael Francisco, a partner at Picazo Buyco Tan Fider & Santos, a law firm whose range of expertise covers mass media, explains that ABS-CBN can still legally operate online. “There is no separate franchise for [online content] because it’s really content provided by Facebook or by YouTube,” he elaborates.

Another business line that emerged unscathed is Sky Cable, the company’s paid television subsidiary handling its cable, satellite, and broadband services. NTC Commissioner Gamaliel Cordoba explained during the congressional hearings that the line was spared from closure due to Executive Order No. 205, which removes the legislative franchise requirement for cable television operators.

Business at stake

However, the main caveat with the alternatives is the significantly reduced revenue compared to television broadcasts. “If they (ABS-CBN) continue operating through Facebook and YouTube—limited operations—then there are serious implications for their business,” Francisco says.

According to ABS-CBN’s annual report for 2019, the company’s consolidated revenues stood at some P42.83-billion. Slightly over half of this total amount is advertising revenue, at 54 percent or P22.94-billion. Earlier figures from 2018 mention that more than 80 percent of the company’s advertising revenues come from advertisements based on its free-to-air television broadcasts.

The remaining 46 percent, worth P19.89-billion, is derived from the company’s consumer sales, mainly coming from subscriptions for Sky Cable and ABS-CBN Global, the corporation’s business line for overseas Filipinos which includes The Filipino Channel. The company’s theme park businesses, such as KidZania and the ABS-CBN Studio Experience, form a minor part of its consumer sales segment, but is set to permanently close by August 31 as ongoing quarantine measures make business impossible.

Reyes attests that ABS-CBN’s current operations are sustained only by online talk shows and interview programs. “Dahil wala na kaming free-to-air platform, naging napakaliit na ng aming revenue at kailangan na namin magtipid,” she says.

(Since we no longer have a free-to-air platform, our revenue has become very small, and we need to save funds.)

The company’s latest report shows that total revenues fell to P13.32-billion for the first half of 2020, compared to P20.8-billion over the same period in 2019. Advertising revenues stood at P5.2-billion, a sharp decrease from the P11.29-billion generated in the first half of 2019. This resulted in ABS-CBN racking up a staggering net loss of P3.93-billion for the first half of 2020.

The media network, nevertheless, is set in shifting its operations online. “We hope that we could continue our good performance in terms of audience engagement, being the number one news digital property in the country,” Reyes shares.

Programs and shows from the inactive ABS-CBN Channel 2 are available via ABS-CBN Entertainment’s YouTube and Facebook pages, dubbed Kapamilya Online Live, as well as its cable-based Kapamilya Channel.

While its operational strategy has pivoted, the media company still needs “revenue-generating concepts and ideas” to keep it going, Reyes acknowledges, adding that the company will “continue to produce and gather news” as it is essential to their identity. 

Once the pandemic is over, ABS-CBN plans to create additional programs apart from TV Patrol and produce more online video content. “Gusto namin i-rebuild ang current news affairs lineup sa future, at gusto namin gumawa ng mga documentaries lalo na ngayon wala masyadong entertainment ang mga kababayan natin,” Reyes says. 

(We want to rebuild ABS-CBN’s current news affairs lineup in the future, and we want to make documentaries, especially now that our countrymen do not have much media entertainment.) 

Downsizing

The closure of several business arms heralds difficult decisions. In a statement released on its nightly news program TV Patrol, ABS-CBN announced that it will begin retrenching workers by August 31. 

“The other departments organized groups where employees can submit their resumes. Even the bosses linked some employees to other companies so they can be absorbed because the employee is having a hard time, especially during a pandemic. A team was also formed to settle arrangements for separation pay and backpay,” Tome narrates in Filipino.

Tome himself was initially set to be retrenched, but his superior had vouched for him. Despite this, job security remains a pressing concern for him, as rumors of a takeover of ABS-CBN’s properties abound.

With these challenges and uncertainties, the uphill march continues for the media giant. Reyes hopes that media institutions will continue fulfilling their duty, saying, “Is there a future for journalism? Yes, because we are living in the worst of times and those are the best of times to be a journalist.”

By Oliver Barrios

By John Robert Lee

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