GMA7 now the leading broadcaster keeps falling back to earth, now at 5.02 but looks like it is still falling, why?
With ABS-CBN off-the air, GMA7 is now the undisputed leader in broadcasting in the Philippines. GMA7 has moments of surged in the wake of the killing of the franchise of ABS-CBN. It went as high as 8.50 but then after it began to descend back to earth. We tried to look its financials to look for clues on why GMA7 is not flying right now. It strikes us that GMA7 has a huge unfunded pension to its employees. As of the end of Q1 2020 it has a total of 3.1 Billion Pesos of pension liability and unpaid other long-term employee benefits. That is 47% or almost half of the total liabilities of GMA7 which stood at 6.6 Billion Pesos. While GMA7 is debt free, funding its pension liability could take significant resources out of the shareholders. Dividend distribution might be lowered down in the future as the demand to fund the huge pension liability and employee benefits increases. Beyond the resources required, the huge unfunded pension gives us a preview on the Human Capital management p...