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Lopezes Fail to Turn Around ABS-CBN’s Fortunes as Weak First Quarter Wipes Out Equity

 

ABS-CBN Corp.’s long-running turnaround effort suffered another blow in the first quarter of 2026, as weaker advertising, a shrinking cable business, and compressed gross margins pushed the former broadcasting giant into negative equity.

The Lopez-led media company reported a ₱813 million net loss for the three months ended March 31, 2026, wider than the ₱500 million loss a year earlier, as consolidated revenue fell 21% to ₱3.33 billion. Gross profit dropped to ₱527 million from ₱1.02 billion, driving the gross profit ratio down to about 15.8% from roughly 24.0% in Q1 2025.

The weak quarter erased what remained of ABS-CBN’s equity cushion. Total equity swung to a ₱66 million deficit from ₱747 million positive equity at end-2025, while the company’s accumulated deficit widened to ₱6.65 billion from ₱5.97 billion.

The results underscore how difficult it has been for the Lopezes to rebuild ABS-CBN’s earnings base after the loss of its broadcast franchise. Management has shifted the company toward content production, licensing, digital distribution, live events, partnerships and international platforms, but Q1 showed that the replacement model remains volatile and less profitable than the old free-to-air advertising engine.

Advertising revenue in the content production and distribution segment fell 31% to ₱1.23 billion, partly because Q1 2025 benefited from election-related advertising and major entertainment drivers. The company also lacked comparable blockbuster events and film releases in Q1 2026.

The cable and broadband business continued to deteriorate. Revenue in the segment plunged 46% to ₱571 million, mainly due to a continued decline in subscribers, while its net loss widened to ₱301 million from ₱171 million a year earlier.

Cost-cutting was not enough to offset the revenue decline. Consolidated expenses fell 12%, but operating loss still widened to ₱726 million from ₱397 million. EBITDA swung to a ₱127 million loss from a ₱391 million gain, with EBITDA margin falling to negative 3% from positive 9%.

The balance sheet also weakened. Current liabilities exceeded current assets by ₱13.5 billion, worse than the ₱12.4 billion working-capital deficit at end-2025. Contract liabilities rose sharply, while allowance for expected credit losses increased to ₱2.66 billion, signaling continued pressure on collections.

Debt remains the central overhang. ABS-CBN’s interest-bearing loans were broadly stable at about ₱11.8 billion, but parent-company loans remain classified as current amid franchise-related covenant issues and ongoing refinancing talks. The filing warned that these conditions create material uncertainty that may cast significant doubt on the group’s ability to continue as a going concern.

There were some offsets: cash increased to ₱1.29 billion, and operating cash flow remained positive. But those positives were overshadowed by the collapse in core profitability and the move into negative equity.

The takeaway: ABS-CBN is not yet showing a durable turnaround. The company still has valuable brands, content assets, music talent, live-event potential, and distribution partnerships, but Q1 2026 showed that its post-franchise business model remains fragile. The Lopezes’ challenge is no longer just restoring growth — it is repairing a balance sheet that has lost its equity buffer.

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Disclaimer: This is for informational purposes and is not investment advice. Figures are taken from company disclosures and exchange data; valuation ratios include the author’s calculations based on cited inputs.

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