Non-renewal threat drags ABS-CBN shares

Investors sold off their positions last week as President Rodrigo Duterte once again fired shots against network giant ABS-CBN Corp. for alleged bias, threatening non-renewal of its franchise.

Following President Duterte’s Threats, ABS-CBN’s shares touched a low of P16 on December 4 from previously trading between P17 to P18 weeks earlier.

It recovered some ground on Friday, with shares climbing by 58 centavos or 3.46 percent to end at P17.36 apiece amid the 0.14-percent rise for the benchmark Philippine Stock Exchange index.

The latest trade price is 30.42-percent weaker from its year-to-date peak of P24.95 notched in January 25 and higher by 3.46 percent from December 5’s year-to-date low of P16.78.

Year-to-date, ABS-CBN shares have gone down by 13.42 percent.

“The price drop can be attributed to President Duterte’s threat to stop the renewal of the company’s franchise,” Philstocks Financial Inc. research associate Japhet Tantiangco said.

This was not the first time that ABS-CBN received such allegation from President Duterte. Such claim was prompted by alleged non-airing of his campaign advertisement in 2016 despite rendering payment.

ABS-CBN’s franchise is set to end by March next year. An approval from Congress and the President is needed to facilitate extension.

“The franchise is crucial to the company’s broadcasting operations. Taking this away will have a great negative impact on how they do their business,” Tantiangco said.

“It’s going to be a rough road if their franchise is not renewed but with their multiple revenue streams, we think that the company is going to make it through,” he added.

Enumerating some of them, he noted digital content, film, music, cosmetics and financial technology.

But for now, Tantiangco believes ABS-CBN’s franchise will still be renewed despite the controversy.

Diversified Securities trader Aniceto Pangan agreed that investor sentiment towards ABS-CBN dipped following President Duterte’s threat.

“Investors never place their investments when there are uncertainties as they are expose to risk,” he explained.

Pangan added the net income of ABS-CBN would be affected should it fail to secure franchise renewal, which lies on the hands of the “congressional majority allied with the President.”

Should ABS-CBN’s franchise cease, Regina Capital Development Corp. head of sales Luis Limlingan, meanwhile, suggested it could “probably use someone else’s franchise for their content.”

The network giant saw its consolidated net income rise by 53.2 percent to P2.27 billion in the first nine months from P1.48 billion the previous year on the back of 9-percent growth in revenues.

https://www.manilatimes.net/2019/12/09/business/stock-watch/non-renewal-threat-drags-abs-cbn-shares/662662/