ABS-CBN franchise renewal to bug its shares

The development on the at-risk franchise renewal of media giant ABS-CBN Corp. will dictate the movement of its shares this week.

Solicitor General Jose Calida filed a quo warranto against the media company before the Supreme Court last February 10 for allegedly violating rules outlined by the Congress.

This was not the first time ABS-CBN dealt with tirades from the government. President Rodrigo Duterte has been firing shots against the media firm for not allegedly airing his paid advertisement during the 2016 campaign season.

Should Calida succeed in nullifying ABS-CBN’s license, the Palace said that the media giant can still apply for a new franchise. Its current franchise is set to expire on Mar. 30, 2020.

“We should monitor the steps that the government is going to take in relation to ABS-CBN. Any threats coming from the government could again tilt sentiment to the downside,” Philstocks Financial Inc. senior research analyst Japhet Tantiangco said.

On the day the petition was filed, ABS-CBN shares dropped 30 centavos or 1.76 percent to finish at P16.70 apiece.

The media giant’s stocks, however, was able to recover some ground on the following days, ending the week with 1.42-percent uptick at P17.14 on Friday from the previous trading day. “This shows that investors are still hopeful with the franchise renewal of the broadcast network,” he said.

Year-to-date, ABS-CBN shares have grown 9.17 percent.

With ABS-CBN shares recently rising, Tantiangco added that there was “upward bias as hope builds up for the firm with respect to its franchise.”

Tantiangco sees the shares of the Lopez-led media firm trading within P16.40 to P18 range this week.

Timson Securities trader Darren Pangan, meanwhile, shared the same sentiment: “Its share performance [this] week may depend on how the developments in congress take place.”

Last week, Pangan said that ABS-CBN shares “did not move very much” because investors might already “priced in the events that have transpired the past few days.”

“We have to observe if support at P17 holds, and if it does hold, then whether or not it breaks the P17.50 area,” he added.

In a statement, ABS-CBN said that the allegations by Calida had no merit. “ABS-CBN complies with all pertinent laws governing its franchise and has secured all necessary government and regulatory approvals for its business operations,” it added.

ABS-CBN saw its consolidated net income rose by 53 percent to P2.27 billion in the first nine months of 2019 from P1.48 billion the year earlier on the back of robust revenue growth.

https://www.manilatimes.net/2020/02/17/business/stock-watch/abs-cbn-franchise-renewal-to-bug-its-shares/686487/