2018 1558437611.Pdf

AR2018_cover_new.indd 1 5/2/19 3:51 PM In 2018, GMA Network remained steadfast amidst the adversities it encountered throughout the year. The Network successfully kept its nationwide urban TV ratings lead and continued to become undisputed in the number one spot. Moreover, GMA was able to manage costs efficiently in order to minimize revenue shortfall. Coming from the developments in the previous year, the Company was determined to improve and produce more game-changing content not only in TV but also in various platforms in the digital space to cater to the Kapuso viewers’ shifting interests. More importantly, GMA focused on its digitization project which is expected to be fully implemented in 2019. The 2018 Annual Report will highlight GMA Network’s remarkable achievements during the year including TV ratings and revenues, as well as other noteworthy accomplishments such as the success of its online platforms, various awards, and its trailblazing projects. GMA NETWORK, INC. GMA Network Center, EDSA cor. Timog Ave., Diliman, Quezon City • Trunkline: (02) 89827777 • www.gmanetwork.com AR2018_cover_new.indd 2 5/2/19 3:51 PM 5 Purpose, Vision, Core Values 6 Chairman’s Message 9 Financial Highlights 10 President’s Message 13 Operational Highlights 14 Subsidiaries 16 Corporate Citizenship 20 Board of Directors 24 Officers 32 Awards 44 Corporate Governance 48 Financial Statements 148 Directory 7 n the face of today’s fast-paced digital evolution, the need for all I industries to constantly push boundaries in order to remain relevant has never been greater. We are confident, however, that GMA Network is fully capable to welcome digital disruption with open arms. Biggest proof of this is our investment amounting to over P1 billion to complete the second phase of our digitization project. This covers the production, post- production, content management, and distribution of all our programs on both GMA and GMA News TV; starting with the commissioning of the Digital Terrestrial Transmitters that provide high quality digital TV signal reach in major areas like Mega Manila, North Central Luzon, Cebu, and Davao. Also part of this are the various state-of-the-art upgrades being undertaken around the Network: upgrade of our Electronic Field Production capabilities that will elevate GMA Network’s output to true global standards; completion of the requisite enhancements to our Media Asset Management and Broadcast Automation Systems; upgrade of Post Production’s full equipment and software; upgrade of our Field News Gathering capabilities that will enable the transmission and delivery of HD-captured remote live events; and the commissioning of a new News Automation System that will provide our news teams with even greater speed and agility. Both our Entertainment and News and Public Affairs groups have also been producing programs that are specific to our digital platforms. And just recently, News and Public Affairs even received an innovation funding grant from the world’s leading online video website, YouTube, to produce the digital newscast “Stand for Truth,” which could very well be the prototype of the Network’s future newsroom. Set to play a significant role to all these is the Network and GMA New Media, Inc.’s partnership with PLDT-Smart, which marks the start of the full implementation of our digitization project. Through this partnership, we are looking to revolutionize the experience of TV viewing for all our Kapuso nationwide. These are all part of our commitment to produce world class programming for our viewers here and abroad, and in so doing, strengthen our position as the leading broadcast network in the country. 8 In spite of constant pressure from competition, we continued to lead in the National Urban Television Audience Measurement (NUTAM) ratings for full year 2018. The viewer-rich areas of Urban Luzon and Mega Manila remained as our bailiwicks, while initiatives and new program launches from Regional TV helped improve our numbers in Visayas and Mindanao. Worth mentioning as well are our programs Kapuso Mo, Jessica Soho; Pepito Manaloto; Magpakailanman and 24 Oras which were consistently among the top viewed programs across the country. Our strong ratings performance for the year enabled our company to deliver sound financial numbers despite challenging market conditions. Another highlight of 2018 was the launch of our new station ID dubbed “Buong Puso para sa Kapuso,” which celebrated the Network’s successful journey to becoming the country’s leading TV network. But more importantly, it emphasized on what being a true Kapuso means – pouring your whole heart into everything you do for the people you love because they deserve nothing less. Our new station ID also serves as our tribute to all our loyal Kapuso viewers here and abroad. We thank them for their unwavering support to GMA Network through the years. Our sincerest gratitude goes as well to our stakeholders, shareholders, officers, employees, and partners for their continued dedication and hard work. Buong puso ang pasasalamat ko sa inyong lahat, mga Kapuso. FELIPE L. GOZON Chairman and CEO 9 * Amounts in Million Pesos ** Amounts in Pesos *** Amounts in Million Pesos and attributable to Equity holders of the Parent Company 11 n the whole, the year that passed has been a good one for us, despite O the slight reduction in our top and bottom lines. While advertising spending was adversely affected by the implementation of new tax measures (via TRAIN) in the earlier part of the year, comparative ad revenue growth was realized in the latter months as the business environment in general started to adjust and normalize. Our continuing efforts as well as the investments made within the year to address the changes in our business space yielded benefits. While our main channel, GMA-7, led in the Nielsen Mega Manila, Total Luzon and National Urban (NUTAM) ratings against our closest competitor in all day parts in Non-Digital TV homes, it is gratifying to note that GMA-7 also closed the year as the top channel in the National Urban (NUTAM) ratings in combined Non-Digital and Digital (DTT) homes; with the full commissioning of our initial set of Digital (DTT) transmitters. Separately, our second free to air channel, GMA News TV (GNTV) continued to maintain its outright dominance over all the local news channels and remains to be the only news channel presently broadcast free to air to both Non-Digital and Digital (DTT) homes as of this writing. Our other broadcast business segments also closed the year well. Radio lead stations DZBB (AM) and DWLS FM continued to maintain their commendable ratings and revenue growth. Regional TV (RTV) on the other hand, gained audiences in Urban Visayas and Urban Mindanao – while similarly ending the year with increased revenue from both local and national advertisers. Most immediately affected by the continuing global shift in content consumption from the traditional pay platforms (Direct-to-Home/DTH and Cable) to OTT, IP based sites and options was our International business – with the combined subscription revenues of our linear channels GMA Pinoy TV, GMA Life TV and GMA News TV International declining by two percent (2%) year on year. While this shift continues moving forward, we foresee the revenue decline correcting itself in the coming year as we continue to enter into OTT carrier agreements which now include Title or Program based Video on Demand (VOD, both subscription and advertising based) aside from the linear delivery of our channels. Our other numerous and collaborative efforts towards better exploiting the advantages presented by the digital space took steps forward – resulting in expanded audiences, extended engagements and a deepening affinity between the Network, our programs and talents and the growing, fragmented digital audience. Through the social media, streaming as well as our proprietary sites we are getting to know the audience better as we continuously look at the feasibility of increasing the volume of our produced, digital platform exclusive content in the future. While digital advertising rates have remained relatively low, we closed 2018 with double digit digital ad revenue growth, as we have in previous years. The digital world we now live in provides greater opportunities both locally and internationally for content producers such as ourselves; as we are now able to reach not only the Filipino audience worldwide but also the global audience as well. As we look towards leveraging on these, we are returning to feature film production and will be increasing our music creation and production output in the coming year. In parallel, the additional front and back end upgrades that will enable us to produce all our proprietary content, including our Entertainment, News and Public Affairs programs in full conformity with updated global technical standards will be in 12 place and operationalized within 2019 – allowing content releases and distribution across all venues and platforms here and abroad; regardless of the technical terms of reference. In January 2019, the Network signed a Technology, Content and Distribution agreement with the PLDT-Smart group that, in tandem with our continuing Digital Terrestrial TV (DTT) transmitter roll-out, will further extend the reach and availability of both GMA-7 and GNTV to the local audience while offering bundled products of interest and value to the consumer. As we meet these challenges and opportunities, we work to diversify and further develop the skills and competencies of our people - with the aim of bringing Filipino produced content to even higher standards and broader audience appeal both here and abroad. Surely lofty objectives but certainly achievable as we put our hearts and minds behind them. Maraming salamat sa patuloy po ninyong pagtitiwala, suporta at pagtatangkilik, mga Kapuso. We look forward to an even better year ahead. GILBERTO R. DUAVIT, JR.

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