Digital Dividends

New digital terrestrial channels, targeting segmented demographics, should broaden ABS-CBN’s base of TV advertisers, shoring up free-to-air revenues for the foreseeable future. One of the main beneficiaries from the end of analog broadcasting, likely to roll out in the second half of the decade, will be Channel 2, which currently suffers from poor reception in Manila, the country’s richest city, giving a metropolitan advantage to archrival Channel 7. Longer-term however Santos-Concio also wants to exploit digital’s two-way functionality to extract non-advertising revenues from the new channels too. “We are still hoping that ad revenue will come in for digital channels, but we want it to be more interactive,” she says. “There is an opportunity there for interaction with our consumers in the digital arena.”

Consumer-based revenues will become increasingly important for ABS-CBN to offset rising production costs, as the broadcaster diversifies into more genres while pushing up quality standards to make sure viewers keep watching TV. Some primetime soaps on Channel 2, for example, are now being made in HD.

Restless Audience

TV ratings overall are dipping, notes Pico Roberto Jr, deputy MD in the Philippines for MediaCom, one of the country’s biggest media agencies. “Digital is really growing at a fast rate – that’s the culprit,” Roberto adds. “People are tuning in less to television and going to digital more. But when you negotiate with ABS-CBN in particular, they are very tough. They still want rate increases.” Digital distractions are becoming a reality in the Philippines, with about a third of the population able to go online, though broadband that is strong enough to carry video is only available to an affluent few. For the wider internet population, social media is the online diversion of choice, though that can complement as well as compete with the most popular shows.

ABS-CBN is, and will remain, a content company at heart, Santos-Concio notes, but stresses that production spend will only rise in tandem with revenues. While developing new talent can help rein in costs – with up to 70% of production budgets going on big-name stars – consumer revenues also have to expand to support ABS-CBN’s digital content ambitions. “We have already diversified into multimedia,” Santos-Concio says. “We look for creative opportunities, and opportunities to make money in every platform. We produce an action adventure on Channel 2, and we can tap into consumer licensing of our products. These are opportunities for growth.”

A former TV and movie producer, Santos-Concio understands the inherent risk in the content business, attuned to fiscal discipline while conscious that financial oversight can be a poor environment for creating hit shows. These must keep coming, for ABS-CBN’s digital evolution to succeed. “When we’re making creative decisions, we keep the business people out, because then you only look at P&L,” she says. “We will never have the guts to experiment and innovate if they come back to us and tell us we cannot do it, because these are the numbers. When I have an idea, I say: ‘Can we just do it!’”