ABS-CBN Corporation generated net income of P2.9 billion for the first nine months of 2010, as it sustained into the third quarter the strong growth momentum in regular advertising revenues in the first semester.

This profit level is more than double the net income of P1.3 billion in the first nine months of 2009.

Consolidated revenues for the first nine months of this year reached a record level of P24.7 billion, posting a 35% growth from a year ago. Advertising revenues accounted for 68% of consolidated revenues, while consumer sales accounted for the remaining 32%. Net of non-recurring political advertising revenues, the contribution share of consumer sales would be 35%.

Consolidated advertising revenues across all platforms and subsidiaries reached P16.9 billion, P6.2 billion or 58% higher than the P10.7 billion for the same period in 2009. Advertising revenues from regular advertisers grew by P3.9 billion or 37% to P14.6 billion. Non-recurring political advertising revenues carried over from the first semester amounts to P2.3 billion.

Total advertising minutes sold by Channel 2 from January to September jumped 46%. Advertising minutes sold to regular advertisers rose 36%, accounting for 93% of total minutes. Election-related advertising in the first semester contributed 7% of total minutes sold.

ABS-CBN maintained its national audience share and ratings leadership as total-day audience share averaged 41% in the third quarter, with a lead of seven percentage points over GMA7, going by Kantar Media figures.

Consumer Sales reached P7.8 billion, posting an increase of P160 million or 2% from a year ago, mainly from the contributions of Skycable and ABS-CBN Global.

ABS-CBN Global’s revenues rose by 8% year-on-year in US dollar terms but this growth slows to 3% in peso terms with the continued decline in value of the US dollar. The Philippine peso’s exchange rate to the US dollar has appreciated by 5% between the first nine months of 2009 and the first nine months of this year.

Strong double-digit subscriber growth in cable TV and IPTV subscriptions in Canada and in direct-to-home satellite subscriptions in Australia continued to drive growth in ABS-CBN Global’s overall viewer count by 7% year-on-year.

Skycable’s consolidated revenues from cable TV and broadband services grew 10% year-on-year in the first nine months of 2010, powered by a 77% increase in broadband service revenues. Broadband service subscriptions that carry higher ARPUs surged 46% year-on-year, while subscriptions to Skycable’s low-priced postpaid cable TV offering Sky280 has grown more than three-fold.

Total expenses in 2010 grew by P3.0 billion or 21% year-on-year to P17.4 billion, driven mostly by higher production costs and general and administrative expenses.

Total production costs in the first nine months of 2010 rose by P1.2 billion or 26% to P5.9 billion, as total programming hours of in-house produced primetime dramas, afternoon programs, and variety shows increased by 36% to meet viewer needs and advertiser demand. This pushed cash production costs higher by P1.3 billion or 36% year-on-year, mostly from increases in talent fees, and salaries and benefits of production personnel. New programs also raised equipment rentals and service fees, and other expenses for sets and set rentals, transportation and catering.

Cost of sales and services grew by only 1% or P49 million to P5.2 billion.

General and Administrative Expenses (GAEX) rose the highest with a 46% or P1.9 billion year-on-year increase to P6.1 billion, inclusive of P952 million one-time expenses for performance-based pay and non-recurring corporate initiatives. Setting aside these one-time expenses, recurring consolidated GAEX for the first nine months of the year amounts to P5.1 billion, and the corresponding year-on-year GAEX increase is only 24% for the period.

Reported EBITDA hit a record high of P6.9 billion, 33% or P1.7 billion higher than reported EBITDA in the first nine months of 2009.

With strong advertising revenue inflows and continuing financial discipline, the Company generated net income of P2.9 billion for the first nine months of the year, 115% or nearly P1.6 billion more than last year, and raising net profit margin this year by five percentage points to 12%.

Capital expenditures and film and program rights acquisitions for the first nine months of 2010 amounted to P2.5 billion, P367 million or 13% lower than the level of spending in the same period last year.

On October 29, 2010, the Company successfully signed a syndicated term loan for P10.0 billion. The loan is intended to refinance existing debt facilities totalling P6.6 billion and to fund working capital requirements.

The loan is unsecured and unsubordinated with interest at 3-month PDST-F plus 0.65% per annum for the floating rate portion and 7-year PDSTF plus 0.65% per annum for the fixed rate portion. The loan is amortizing with a final maturity of November 9, 2017.

According to ABS-CBN Chief Financial Officer Mr. Rolando Valdueza, this capital-raising exercise “takes advantage of prevailing low interest rates and the Company’s stronger financial performance in recent years to lower its cost of debt and fund its expansion requirements. Consequently, ABS-CBN’s effective interest cost on all its interest-bearing debt will go down by about two percentage points, from which the Company expects to generate savings in annual interest expenses of over P90 million. Apart from the savings that will be generated, the new loan agreement also incorporates more relaxed covenants.”

Mr. Mike Villanueva, ABS-CBN Treasury Head, disclosed that the Company availed of the first P6.9 billion from the loan facility last Tuesday, November 9, 2010, drawing equal portions from fixed-rate funds and floating-rate funds.