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 practices of GMA7. The key to a free-tv broadcasting success is the quality of the content. And a critical factor to a quality content is the employment of best human capital. From the actors, to the cameramen, directors and to the graphic editors you must have the most talented personnel there is to produce a content at par with the best in the world. And the best of these personnel are attracted to the best compensation and benefits there is. The huge unfunded pension and unpaid employee benefits may have something to say so in how GMA7 attracts and retains these people.
On February 25, 2020 CNN Philippines reported that the Court of Appeals has ordered GMA Network to reinstate 51 “talents” who were dismissed for joining a protest rally years ago, declaring them as regular workers of the station. The petitioners filed a case against the network in 2014, saying some of them were terminated because they took part in a protest picket against “unfair labor practices” of GMA.
Recently, on July 17, 2020 Rappler.com reported that GMA workers demand testing after employee gets COVID-19. The report said, “To ask workers to report for work without assuring their health and well-being not only endangers everyone in the newsroom, but will also risk affecting the continued operations of one of the few remaining sources of critical information amid this pandemic,’ says the Talents Association of GMA. GMA Network says it has observed all necessary health protocols.”
Disclaimer: This is an independent analysis with the objective of informing readers about company fundamentals. Accuretti Systems Inc. does not own any shares of GMA7.