COVER SHEET FOR AUDITED FINANCIAL STATEMENTS SEC Registration Number 1 8 0 3 Company Name A B S - C B N C O R P O R A T I O N A N D S U B S I D I A R I E S Principal Office (No./Street/Barangay/City/Town/Province) A B S - C B N B r o a d c a s t i n g C e n t e r , S g t . E s g u e r r a A v e n u e c o r n e r M o t h e r I g n a c i a S t . Q u e z o n C i t y Form Type Department requiring the Secondary License Type, If report Applicable A A F S COMPANY INFORMATION Company’s Email Address Company’s Telephone Mobile Number Number/s [email protected] (632) 3415-2272 ─ Annual Meeting Fiscal Year No. of Stockholders Month/Day Month/Day 7,985 09/24 December 31 CONTACT PERSON INFORMATION The designated contact person MUST be an Officer of the Corporation Name of Contact Person Email Address Telephone Mobile Number Number/s Ricardo B. Tan Jr. [email protected] (632) 3415-2272 ─ Contact Person’s Address ABS-CBN Broadcast Center, Sgt. Esguerra Avenue corner Mother Ignacia St. Quezon City Note: In case of death, resignation or cessation of office of the officer designated as contact person, such incident shall be reported to the Commission within thirty (30) calendar days from the occurrence thereof with information and complete contact details of the new contact person designated. SECURITIES AND EXCHANGE COMMISSION SEC FORM 17-A ANNUAL REPORT PURSUANT TO SECTION 17 OF THE SECURITIES REGULATION CODE AND SECTION 141 OF THE CORPORATION CODE OF THE PHILIPPINES 1. For the fiscal year ended: December 31, 2019 2. SEC Identification Number: 1803 3. BIR Tax Identification No.: 000-406-761-000 4. Exact name of issuer as specified in its charter: ABS-CBN CORPORATION AND SUBSIDIARIES 5. Philippines 6. (SEC Use Only) Province, Country or other jurisdiction of Industry Classification Code: incorporation or organization 7. ABS-CBN Broadcasting Center, Sgt. Esguerra Avenue corner Mother Ignacia St. Quezon City 1100 Address of principal office 8. (632) 8924-41-01 to 22 / (632) 3415-22-72 Issuer's telephone number, including area code 9. Not applicable Former name, former address, and former fiscal year, if changed since last report. 10. Securities registered pursuant to Sections 8 and 12 of the SRC, or Sec. 4 and 8 of the RSA Title of Each Class Number of Shares of Stock Issued Common Stock, P1.00 par value 883,295,819 shares Preferred Stock, P0.20 par value 1,000,000,000 shares Short-term & Long-term debt (current & non-current) P26.025 billion 11. Are any or all of these securities listed on a Stock Exchange? Yes [] No [ ] If yes, state the name of such stock exchange and the classes of securities listed therein: Philippine Stock Exchange Common Shares 883,295,819 shares 12. Check whether the issuer: (a) has filed all reports required to be filed by Section 17 of the SRC and SRC Rule 17 thereunder or Section 11 of the RSA and RSA Rule 11(a)-1 thereunder, and Sections 26 and 141 of The Corporation Code of the Philippines during the preceding twelve (12) months (or for such shorter period that the registrant was required to file such reports); Yes [] No [ ] (b) has been subject to such filing requirements for the past ninety (90) days. Yes [] No [ ] 2 ABS-CBN CORPORATION ANNUAL REPORT PART I - BUSINESS AND GENERAL INFORMATION 4 1. Business Overview 4 1.1. Historical Background 4 1.2. Lines of Business 4 1.3. Subsidiaries 8 1.4. Significant Philippine Associates and Affiliates 11 1.5. Competition 11 1.6. Patents, Trademarks, Licenses, Franchises, Concessions, Royalty 15 1.7. Corporate Social Responsibility 20 1.8. Principal Competitive Strengths of the Company 21 1.9. Key Strategies and Objectives 22 1.10. Transactions with Related Parties 22 1.11. Risks Relating to the Company 23 2. Properties 23 2.1. Head Office 23 2.2. Local and Regional Properties 23 3. Legal Proceedings 24 PART II - OPERATIONAL AND FINANCIAL INFORMATION 27 5. Market for Issuer’s Common Equity and Related Stockholder Matters 27 6. Management’s Discussion and Analysis of Financial Condition and Results of Operations 27 7. Financial Statements 32 8. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 32 PART III - CONTROL AND COMPENSATION INFORMATION 33 9. Directors and Executive Officers of the Issuer 333 9.1. Board of Directors 333 9.2. Executive / Corporate Officers 37 10. Executive Compensation 43 11. Security Ownership of Certain Beneficial Owners and Management 444 12. Certain Relationships and Related Transactions 45 PART IV - CORPORATE GOVERNANCE 47 13. Corporate Governance 47 PART V - EXHIBITS and SCHEDULES 62 14. Exhibits and Reports on SEC Form 17-C 62 SIGNATURES 62 3 PART I - BUSINESS AND GENERAL INFORMATION 1. Business Overview 1.1. Historical Background ABS-CBN Corporation (“ABS-CBN” or the “Company”) traces its roots from Bolinao Electronics Corporation (BEC), established in 1946 as an assembler of radio transmitting equipment. In 1952, BEC adopted the business name Alto Broadcasting System (ABS) and began setting up the country’s first television broadcast by 1953. On September 24, 1956, Chronicle Broadcasting Network (CBN), owned by Don Eugenio Lopez Sr. of the Lopez family, was organized primarily for radio broadcasting. In 1957, Don Eugenio Lopez Sr. acquired ABS and on February 1, 1967, the operations of ABS and CBN were integrated and BEC changed its corporate name to ABS-CBN Broadcasting Corporation. On August 16, 2010, the Philippine Securities and Exchange Commission (SEC) approved the change of Company’s corporate name to ABS-CBN Corporation. This change is a reflection of the Company’s diversified businesses in existing and new industries. ABS-CBN achieved many firsts since it started the television industry in the country in 1953. However, with the imposition of martial law in September 1972, ABS-CBN ceased operations as the government forcibly took control of the Company. ABS-CBN resumed commercial operations in 1986 after the People Power or EDSA revolution. Recovery after fourteen (14) years of absence was difficult as resources were scarce. Nevertheless, through relentless effort, ABS-CBN recaptured leadership in the Philippine television and radio industries by 1988. During the 1990s and the early part of the new millennium, the Company expanded and ventured into complementary businesses in cable TV, international distribution, mobile services, and magazine publishing among others. On 05 May 2020, the National Tecommunications Commission (“NTC”) issued an Order which directed ABS-CBN to cease operating all its radio and television stations throughout the Philippines (the “CDO”), and on 30 June 2020, the NTC likewise issued an Alias Cease and Desist Order which directed the shutdown of ABS-CBN’s Digital Terrestrial Television DTT) network (the “Alias CDO”). On July 10, 2020, the House Committee on Legislative Franchises passed and approved the Resolution which denied the franchise application of ABS-CBN to construct, install, establish, operate, and maintain radio and television broadcasting stations in the Philippines (the “Resolution”). Under the Resolution, the House Committee on Legislative Franchises adopted the findings and recommendations of a Technical Working Group (TWG), which under its TWG Report, recommended to deny the broadcast franchise application of ABS-CBN. The Resolution likewise stated that, pursuant to Section 49 of the 18th Congress Rules of the House of Representatives, all of the House Bills and House Resolutions relative to the grant or renewal of the franchise application of ABS-CBN are “laid on the table”, or effectively “killed”. Consequently, ABS-CBN is no longer authorized to operate as a broadcast company. 1.2. Lines of Business ABS-CBN is the Philippines’ leading media and entertainment company. The Company presents its operations into the following reportable segments: A. Media Networks and Studio Entertainment B. Cable, Satellite and Broadband 4 C. Digital D. Consumer Products and Experiences MEDIA NETWORKS AND STUDIO ENTERTAINMENT Media networks and studio entertainment is comprised of broadcast, global operations, film and music production, radio, digital terrestrial television, cable channels, publishing, and soundstage development and management. This consists of local and global content creation and distribution through television and radio broadcasting. Broadcast segment covers content creation and distribution mainly through free TV and radio with Channel 2 and DZMM as its flagship platforms. The content created is predominantly in Filipino and is aimed at the mass Filipino audience. The Company’s leading position in the Philippine television broadcasting industry was largely due to the popularity of its entertainment programs, including teleseryes, drama anthologies, situation comedies, variety, reality and game shows. On the other hand, news and public affairs programs have developed a reputation for the quality of news coverage that includes national, local and international events. While the NTC CDO issued on 05 May 2020 and the Resolution approved on 10 July 2020 have caused the Company to cease the operations of its television and radio stations nationwide and to be no longer authorized to operate as a broadcast company, ABS-CBN continues to produce programs and provide programming services in platforms other than broadcast media, such as Iwant and the recently launched its Kapamilya Channel. Global segment pioneered the international marketing and distribution of ABS-CBN content and media products in the United States 25 years ago through ABS-CBN International, with the main goal of bringing global Filipinos back to their roots through programs and products that reflect their needs, dreams, and aspirations.