After the shutdown of ABS, GMA7 became the dominant television broadcaster and the primary source of free-to-air broadcasting within the country.
The absence of a significant competitor allowed GMA7 to rack up revenue. The substantial revenue improvement led to a strong cash flow from operations.
The substantial improvement in cash flows from operations allowed GMA7 to hike dividends from 0.30 in 2020 to 1.35 in 2021. The significant hike in dividends made GMA7 shares soar to the moon. Year-to-date GMA7 is up 182.63%.
The strong results absent a significant competitor inspired GMA7 to go empire building. GMA7 ambitioned to transform itself as one of the country’s next big conglomerates.
GMA7’s empire-building ambition would only mean that GMA7 will have to appropriate retained earnings to fund its empire-building. Expect dividend distribution to shareholders to go down significantly as GMA7 will have to use its profits to support empire-building.
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