Franchise woes loom over ABS-CBN shares

Uncertainties over its legislative franchise slumped ABS-CBN Corp.’s shares as it resumed trading last week, shedding over 10 percent from its last price prior to the trading suspension.

ABS-CBN saw its shares close to P15.72 apiece on Friday, down 18 centavos or 1.13 percent amid the 1.17-percent shed of the benchmark Philippine Stock Exchange Index (PSEi) on the same day.

The PSE suspended trading of the shares and deposit receipts of ABS-CBN on May 6 — a day after the National Telecommunication Commission (NTC) issued a cease-and-desist order (CDO) against the local broadcast network.

The order was released after the network’s legislative franchise expired on May 4.

The trading suspension was only lifted on May 18, after the Lopez-led firm fully disclosed the impact of the order to its operations. Its shares opened down to P15 each on May 18, which also was the stock’s current 30-day low.

“The plunge in [ABS-CBN’s] share price comes as investors price in the media company’s daily forgone revenues caused by the shutdown of its franchise operations,” Philstocks research associate Japhet Tantiangco told The Manila Times.

ABS-CBN has been forced to go off-air since the night of May 5, following the release of the CDO.

“Despite Senate Resolution 40, the House of Representatives’ committee on legislative franchises’ letter, the guidance of the Department of Justice and the sworn statement of NTC Commissioner Gamaliel Cordoba, the NTC did not grant ABS-CBN a provisional authority to operate while its franchise renewal remains pending in Congress,” ABS-CBN said in a statement on May 5.

Tantiangco also attributed ABS-CBN’s poor market performance last week to uncertainties surrounding the firm’s franchise renewal.

“The company’s future remains hanging in the balance given that there’s still no decision from the government, primarily from the Congress, regarding its legislative franchise,” he said.

Diversified Securities Inc. trader AnicetoPangan told The Times that the shares of the media conglomerate would “continue to slump” until its franchise has been renewed.

“As they are losing P30 million to P35 million [everyday that they are off air], they’ll continue to slump until there is a clear direction on when they’ll be able to start again on renewed 25-year franchise,” he said.

Likewise, Tantiangco said ABS-CBN’s share price would depend on the progress of the deliberation of its franchise renewal.

“For now, we’re seeing a downward bias for the share since the opportunity losses, primarily the forgone revenues, are to continue given that the company’s radio and TV broadcasting operations remain shut,” he noted.

“Ultimately, the impetus that could drive ABS’ shares up would be an affirmative decision from the government with respect to its franchise. For now, the trading range for ABS is set from P15.00 to P16.50,” Tantiangco further said.

Pangan also said a “clear direction of a renewed 25-year franchise within the near term or a temporary restraining order from the Supreme Court” would help boost investors’ sentiments towards ABS-CBN shares.

https://www.manilatimes.net/2020/05/25/business/stock-watch/franchise-woes-loom-over-abs-cbn-shares/727062/