GMA NETWORK TO CUT SPENDING IN 2012 AFTER PROFIT FALLS 39% IN 2011!

The GMA-7 President sees the network tackling not only low ad growth but also the high spending that was hurt net profits in 2011.

He said GMA-7 would try to reduce programming costs by "no less than 3%."

On top of that reduction, capital expenditures will be toned down. After nearly P896 million in capital expenditures in 2011, Duavit said GMA-7 would eye only P650 million in capital spending for 2012.

He said that capital expenditure budget would primarily go towards funding 2 new stations. 1 would be located in Illocos to serve speakers of the local illocano dialect, while the other will be in the Bicol region. "The cost of each station is to be north of 50 (million)" he said.

According to Duavit, the rest of the funds would be funneled towards programmed upgrades including repairs to "production facilities which will allow (GMA-7) to move more consistently towards high definition programming and existing transmitter sites in more previously unconsidered rural areas." -

GMA Network Inc. said its net income in 2011 plummeted 39% to P1.72 billion from P2.82 billion in 2010 as less money came in from advertisers and more money was spent on operating expenses. 

"Our net income took a beating," admitted Ronaldo P. Mastrili, GMA's Vice President of Finance at a financial briefing for analysts and media on April 10.

"We experienced the lowest net income level of the past 5 years in the 4th quarter of 2011," said Mastrili.

Financially, it was a double whammy. First, total advertising revenue dipped 9% to P13.08 billion since locals spent less without the 2010 elections and multinational corporations cut back ad budgets because of the uncertain economic realities abroad. 

Second, operating expenses increased 8%, as GMA shouldered costs for the newly launched GMA News TV.

President and COO of GMA Network Inc. Gilberto R. Duavit Jr. stood by the P8.98 billion operating expenses in the name of making the channel more competitive.  

"The spending was driven by the desire to win in the national ratings last year," explained Duavit.

GMA representatives cited their 3.1-point lead in household audience share over rival ABS-CBN and 18.6-point lead over newcomer TV5. They cited ratings results provided by Nielsen TV Audience Measurement.  

Still, Duavit signaled there would be changes in GMA's financial strategies for 2012, given the direction the network had taken in 2011.

Rappler.com