GMA Network defended its recent revenue claim covering the first quarter of this year stating that the company has achieved a sharp increase in net income as compared to last year.
Based on a report furnished by the network to various media outlets, including PEP (Philippine Entertainment Portal), GMA-7 has garnered a net income of P855 million—71 percent higher than the P501 million it netted for the same period last year.
The huge leap was attributed greatly to revenues incurred from political advertisements during the election period. But network executives also stressed that "revenue increase across all business units" helped tremendously in boosting the figures.
COMPARING NUMBERS. ABS-CBN Broadcasting Corporation chairman Eugenio Lopez III remarked recently, however, that GMA Network's gain increased significantly only because of the placed political ads.
The Lopez-owned network too has reported a considerable increase in revenue for the first three months of the year.
According to the data furnished by head of Investor Relations, Charles Gamo, ABS-CBN generated consolidated revenues of P7.75 billion from advertising and consumer sales.
The report also states that the core net income (profits) of ABS-CBN jumped nearly six-fold to P1.08 billion in the first quarter of 2010.
But other than the political ads, ABS-CBN credited its strong performance to the increase in advertising revenues, growth in cable TV subscriptions, and revenue returns from its movie projects produced and distributed by its film production arm, Star Cinema.
ABS-CBN president Charo Santos-Concio had previously stated that the network achieved its highest revenues "within the last ten years" dating back from 2009 because of "effective controls on spending."
STILL PROFITABLE. In an article published last June 6 in The Philippine Star, GMA-7 senior vice president for corporate services group and chief finance officer Felipe Yalong stressed that the network's total revenue income would still be solid even minus the political ads.
He went on to say that agency commission, value-added taxes, and income tax are still being subtracted from gross revenues, notably altering the net income numbers on paper.
"If we follow Mr. Lopez's overly simplistic basis of analysis of deducting the revenues derived from political ads from net income after tax, one could say that both networks lost money in the first quarter of 2010," Yalong said.
GMA Network chairman, president, and CEO Atty. Felipe L. Gozon voiced the same sentiment even during the time the company first announced its financial performance.
"I am satisfied with the network's performance for the first quarter," said Gozon. "Even without the political ads, we would still post modest gains in net income because of our operational efficiencies."