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Web-only Exclusives
November 30, 2000

From Our Correspondent: Hirohito and the War
A conversation with biographer Herbert Bix

From Our Correspondent: A Rough Road Ahead
Bad news for the Philippines - and some others

From Our Correspondent: Making Enemies
Indonesia needs friends. So why is it picking fights?

Asiaweek Time Asia Now Asiaweek story

'We'll Be Number One'

How a Manila TV station finds profit in values

By Sangwon Suh and Antonio Lopez / Manila


WHEN A CHINESE ROCKET launched Agila II, the Philippines' first satellite, last August, it also brought Menardo Jimenez to heaven. And it seems the president and CEO of broadcasting company GMA Network has yet to come down to earth. "Our stake in the $243-million project is only 2%, but it will enable us to leapfrog over the competition," beams the 65-year-old former accountant. "We will eventually be No. 1."

That would be a comeback for GMA's Channel 7, the top station until the People Power Revolution in 1986 resurrected ABS-CBN, the country's largest network until the Marcos regime closed it in 1972. Its restored owner Eugenio Lopez Jr. got back its sequestered facilities, obtained loans for new equipment, and poached Federico Garcia, then Channel 7's hotshot TV programmer and executive vice president. Today, ABS-CBN's Channel 2 claims to have more than 40% of viewers nationwide -- topping GMA's 23% -- and a similar share of TV ad revenues.

Jimenez isn't scared. After all, under Marcos, he took on the government station and Channels 2 and 9, then in the hands of crony Roberto Benedicto. A modest affair with only two small studios and mainly imported programs, GMA-7 deftly packaged itself as an upscale channel. It also gained from being seen to be more independent than the state and crony networks.

Even after it slipped to second place, Channel 7 continues to turn in the strong numbers. From 1992 to 1996, profits grew by an average of 33% a year. Last year, growth slackened: profits inched up 5% to 280 million pesos ($8 million at end-1997 rate), on turnover of 2.17 billion pesos ($62 million), up 14%. Jimenez hopes that despite the regionwide economic downturn, GMA's good numbers will hold up into the second half of the year, when it plans to go public.

On ABS-CBN's dominance, Jimenez claims that current TV surveys are flawed. He says he does not want to chase higher ratings by following Channel 2 into the realm of "tabloid programming" -- sex, crime, violence and gore. "We serve God and humanity through programs that promote faith and values in the communities we serve," he says. Adds GMA executive vice president Roberto Barreiro: "We try to strike a balance between profit and responsibility." The network has won the Philippine Movie Press Club's award for most balanced and responsible network for nine consecutive years. In 1997, it also bagged the Advertising Board's first Golden Pearl Best Station Award. "People appreciate our balanced news reporting and public affairs programs so that even if we are not rating as well as our closest competitor, we are getting the advertising support," says Jimenez.

"We have the more balanced programming -- news, current affairs, sports, entertainment, drama, some comedy," retorts Garcia, now ABS-CBN president and chief operating officer. "It shows in our higher ratings and bigger reach." He adds that about 85% of the network's programs are locally made, "the biggest ratio in the industry." That, Garcia explains, "gives us the edge in controlling costs." The station, for instance, has trimmed shooting time for a local drama episode to two days, from two and a half. "With foreign programs," Garcia notes, "you cannot negotiate the price down." Given a rival in Channel 7, "we're not complacent."

With Agila II, GMA hopes to bring its award-winning programming to a larger audience. The satellite is owned 51% by Philippine Long Distance Telephone and 20% by China's Everbright group under a consortium called Mabuhay Philippines Satellite. With it, Channel 7 can blanket the country with direct-to-home satellite broadcasts. "The technology is cheaper and more efficient than cable," says Jimenez. GMA can now also go into satellite news-gathering and implement its long-term plan for news bureaus throughout the country and in places abroad with sizable Filipino communities.

As someone who avowedly serves God through broadcasting, Jimenez displays missionary zeal when talking about reaching new viewers, especially in far-flung provinces. His aim: to raise GMA's coverage to 92% this year and "perhaps 100%" before 2000. Channel 7 has more stations (42 to ABS-CBN's 25) but "we have wider coverage," says Garcia: 97% of all households with TV sets. With our reach, Jimenez counters, "we will be uniting the country through programs rich in Philippine values and sentiments, and catalyzing growth through news, public service and information programs." And tapping rural buying power: "Half of the economy's growth will come from the countryside in the next century."

GMA is also moving into media-related ventures and forging strategic alliances. In the past two years, the company has added program distribution and syndication, and the production of stage props to its lines of business. Among seven new wholly owned units are a marketing and sales group and a movie studio. GMA has also invested in ventures, including Mabuhay Philippines Satellite.

The broadcaster is building a $46-million, 15-story headquarters building that will house seven studios and state-of-the-art equipment. Another $29 million will go into its radio division. "Radio is a very profitable business," notes Jimenez's son Butch, who oversees the radio expansion plans. "It will grow faster than TV." He recalls that a popular FM station was sold for $5 million last year, though its assets were no more than $250,000. The government restricts radio franchises to a limited band of frequencies, hence, radio stations are keenly sought after.

Are GMA's grandiose ambitions out of place in these penny-pinching times? Jimenez says his company has been trying to cut costs, putting off some imports, for instance. Rival Garcia predicts that with the economic slump, ad growth this year will be flat. But Jimenez remains confident. "While advertisers may prune their budgets, our strong position in the industry will carry us through," he says. "We also believe that some advertisers, instead of cutting back, will launch aggressive campaigns not only to protect their market but also to increase sales." On such hopes hang GMA's share offering and expansion plans.


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