Philippines in View · 2019. 10. 30. · ABS-CBN subsidiary SKYcable, which claims about 800,000...

An exclusive report for CASBAA Members

Philippines in ViewA CASBAA Market Research Report

Table of Contents

1 Executive Summary 41.1 Pay-TV Operators 41.2 Pay-TV Subscriber Industry Estimates 51.3 Pay-TV Average Revenue Per User (ARPU) 51.4 Media Ownership of FTAs 61.5 Innovations and New Developments 61.6 Advertising Spend 61.7 Current Regulations 6

2 Philippine TV Market Overview 82.1 TV Penetration 82.2 Key TV Industry Players 92.3 Internet TV and Mobile TV 11

3 Philippine Pay-TV Structure 123.1 Pay-TV Penetration Compared to Other Countries 123.2 Pay-TV Subscriber Industry Estimates 123.3 Pay-TV Subscribers in the Philippines 133.4 Pay-TV Subscribers by Platform 143.5 Pay-TV Operators’ Market Share and Subscriber Growth 143.6 Revenue of Major Pay-TV Operators 163.7 Pay-TV Average Revenue Per User (ARPU) 173.8 Pay-TV Postpaid and Prepaid Business Model 173.9 Pay-TV Distributors 173.10 Pay-TV Content and Programming 183.11 Piracy in The Philippine Pay-TV Market 20

4 Overview of Philippine Free-To-Air (FTA) Broadcasting 214.1 Main FTA Broadcasters 214.2 FTA Content and Programming 26

5 Future Developments in the Philippine TV Industry 275.1 FTA Migration to Digital 275.2 New Developments and Existing Players 285.3 Emerging Players and Services 29

6 Technology in the Philippine TV Industry 306.1 6.1 SKYCABLE 306.2 Cignal 306.3 G Sat 306.4 Dream 30

7 Advertising in the Philippine TV Industry 317.1 Consumer Affluence and Ability to Spend 317.2 General TV Viewing Behaviour 327.3 Pay-TV and FTA in Relation to Philippine Social Strata 337.4 Advertising Spend 347.5 Key Advertisers and Future Trends 35

8 Regulation of the Philippine TV Industry 378.1 Key Stakeholders in Philippine TV Regulation 378.2 Current Regulations 38

AppendicesAppendix 1: Number of Families by Number of TV Set Owned By Region in ‘000s (2010) 41Appendix 2: Flagship FTAs and Sister Channels 42Appendix 3: Smaller Broadcasters in the Philippines 43Appendix 4: Content Split for Flagship FTA Channels 44Appendix 5: Content Split for Sister FTA Channels 45Appendix 6: Top FTA Programmes 46Appendix 7: Programming Proposition of FTA Channels 47Appendix 8: Pricing Bundles and Channel List of Pay-TV Operators 48Appendix 9: CPI Content Operation and Distribution 56Appendix 10: NTC Organisational Structure 58Appendix 11: NTC Departmental Structure 59Appendix 12: MTRCB Organisational Structure 60Appendix 13: IPO Organisational Structure 60Appendix 14: OMB Organisational Structure 61Appendix 15: MTRCB Television Classification Ratings 61Appendix 16: Contact and Contacts’ Details 62Appendix 17: Abbreviations 68

Table of Contents

PhiliPPineS in view4

1 Executive Summary

The Philippine pay-TV industry has entered into

a period of development and diversification, as

companies explore new types of content offerings

particularly in the relatively affluent urban areas.

Internet (OTT) as well as mobile methods of delivering

content are in various stages of commercialization

and development, and digital service expansion

continues in order to provide bigger bouquets

including more sophisticated programming (e.g. HD

channels) to consumers.

The cable sector continues to be dominated by

ABS-CBN subsidiary SKYcable, which claims about

800,000 subscribers nationwide, or 45% of the overall

pay-TV market. Its major competitor is PLDT affiliate

Cignal DTH service, which in a few short years of

rapid growth has reached 600,000 subscribers, giving

it a roughly 25% market share. Growth of the market

and development of new content offerings is being

driven by the competition between these two major

media conglomerates (ABS-CBN and PLDT). The

remainder of the market is made up of 600 smaller

operators (including two smaller DTH platforms as

well as provincial cable operators.)

Reception of pay-TV signals nationwide is still

relatively low at about 19.7% of TV households; this

reflects the low spending power of many households

and the widespread availability (and popularity) of

free-to-air terrestrial channels. (With a population

of 96.7 million, the Philippines had 16.9 million TV

households by the end of 2012, representing a TV

household penetration rate of 79%.)

Attractiveness of the terrestrial offering will be

enhanced as rollout begins in 2014 of digital

terrestrial television (DTT). Policy on DTT has been

slow to develop in the Philippines, with a final

decision in favor of the Japanese ISDB-T standard

coming late in 2013. Implementing Rules and

Regulations for the digital rollout are expected soon;

a key question will be who – in addition to current

national broadcasters – will be licensed to broadcast

digital channels, and how many competitors there

will be.

1.1 Pay-TV OperatorsThe Philippine pay-TV market has been dominated by

SKYcable since its establishment 23 years ago. As a

company, SKYcable has focused on offering varied

and specialized content on pay television to enhance

the viewing experience of an increasingly discerning

Filipino audience. Currently, SKYcable offers over 200

channels.

Although SKYcable historically has led the pay-TV

sector of the TV industry, Cignal Digital TV, under the

MediaQuest Holdings of the Philippine Long Distance

Telephone Company (PLDT) Group, has changed the

competitive landscape since its launch in 2009. Cignal

is a subscription-based direct-to-home (DTH) satellite

TV provider. It offers around 90 channels at present.

Smaller DTH operators Dream and G-SAT offer

more limited content bouquets. There are also other

operators, such as Cablelink, which offer services

in limited areas in the country. Cablelink has a

PhiliPPineS in view 5

subscription-based cable antenna television system

operation in 16 cities in the Philippines and also

offers high-speed cable Internet service.

Because of the Philippine’s archipelagic geography,

there are many rural and small operators throughout

the country. Presently, there are around 800 licensed

pay-TV operators in the Philippines. However,

Philippine regulators indicate that there are only about

600 active pay-TV operations. A detailed description of

the pay-TV industry is set out in Section 3.

1.2 Pay-TV Subscriber Industry EstimatesConcrete and verifiable industry-wide data on pay-TV

subscription numbers are impossible to obtain; there

is no enforceable government reporting requirement

nor any authoritative source with access, in

particular, to provincial subscription numbers. Based

on discussions with key media industry stakeholders

in the Philippines, estimates of subscriber numbers

spanned from 1.5 million to 3.8 million for 2012, as

reflected in the following exhibits. Different Philippine

media groups concurred that the industry suffered

from prevalent underreporting and misrepresentation

of subscriber numbers from provincial operators, as

well as rampant illegal connections via signal theft,

making subscriber estimates notoriously shaky.

This inconsistency in subscriber number estimates is

reflected in the varying figures reported by different

interviewed industry players or groups, as seen below.

Research in the Philippines suggests that the

uncertainty in pay-TV subscriber estimates will remain

for some time. However, with increased digitization of

pay-TV networks, the uncertainty element is expected

to reduce somewhat over the next few years.

Factors that are driving pay-TV take-up include:

• Higher household incomes

• Lower cost of television sets

• Increased choice and cheaper subscription

packages, including prepaid options.

1.3 Pay-TV Average Revenue Per User (ARPU)At present, SKYcable has reported an ARPU of US$14

per month for pay-TV and US$25.5 per month for its

broadband service. Cignal has reported ARPU of

similar US$13.4 per month for its postpaid service

and US$5.8 for its prepaid service. However, MPA has

estimated a national pay-TV ARPU of US$11.1 in 2012.

Exhibit 1: Philippine Pay-TV Subscribers According to Different Industry Groups in ‘000s (2012)

A B C D E

Source: Venture Consulting discussions with media companies in the Philippines

Uncertainty Range of Reported Subscriber Numbers Base Number of Reported Subscribers

4,000

3,000

2,000

1,000

0

1,800 1,8002,700 3,000 2,850

1,700

3,500

800

2,600600

3,600


1.4 Media Ownership of FTAsPrivate media groups dominate the TV industry in

the Philippines, as major FTA channels and pay-TV

operators share similar parent companies. There are

six major FTA channels, which collectively account

for 92% of the national audience share in 2013. The

remaining share is split among several smaller private

or government-owned channels. Correspondingly, the

two major pay-TV operators jointly represent 70% of

subscriber share in 2012, with the remaining share

distributed among – 800 smaller operators.

Two private media/telecom groups, ABS-CBN

Corporation and PLDT, have interests in both FTA and

pay-TV businesses.

1.5 Innovation and New Developments• The current Internet TV offerings in the market

are ABS-CBN’s iWanTV! and Cignal’s TV-To-

Go. iWanTV! has been operational since 2008,

offering catch-up programming, VOD movies and

streaming of ABS-CBN’s terrestrial channels.

Cignal TV-To-Go is under beta testing and will

commercially launch in early 1Q 2014, with a focus

on live streaming of more than a dozen channels.

• Mobile TV, video viewed on mobile handsets, has

significant growth potential given the country’s

high mobile penetration rate, which was reported

to be 82% of the population in 2012. As a result,

major media groups in the Philippines are

interested in offering mobile TV propositions.

On this front, ABS-CBN intends to launch a

mobile service, using Globe Telecom’s network,

to provide voice, SMS and data services. The

new service will also provide TV programming

via smartphones and tablets; it is likely to be

launched in the first half of 2014.

• In terms of online digital propositions, Omni

Digital Media Ventures, a subsidiary of Solar

Entertainment, launched Blink in October 2013.

Blink is an online platform catering to young,

upwardly mobile 21-to-35 year olds. The content

available on Blink is comprised of 193 movie titles

and 23 television titles from Paramount, The Walt

Disney Company, CBS Studios, Sony Pictures,

Warner Brothers, and 20th Century Fox.

• Broadband penetration remains low. As a result,

Apple TV, Google TV, Netflix, Hulu, Amazon, and

other legitimate international over-the-top (OTT)

services are not expected to be launched in the

Philippines anytime soon. However, downloads of

content from illegal pirate OTT sites are common.

1.6 Advertising SpendAdvertising spend in the Philippines in theory

amounted to US$4 billion in the first half of 2013

based on rate card revenue. This amount is

comprised of digital, as well as the tri-media of

television, radio, and print. However, according to

Mindshare, the estimated spend in 2013 is expected

to be – US$3 billion for the full year.

Among all media, TV has the highest share of rate-

card revenue, with US$3 billion, followed by radio

with US$706 million. Print has a small share of

US$136 million, while digital, despite its infancy, has

a respectable share of US$130 million. Within the TV

industry, the three major FTA channels cover almost

87% of the total ad spend by FTA channels in 2012.

1.7 Current RegulationsThe regulatory environment in the Philippines is

largely permissive and facilitative.

The Philippines maintains a generally liberal

regulatory environment for businesses, and this

carries over into its approach to the pay-TV industry.

There are no wholesale or retail rate regulations,

no “landing rights” licensing requirement for

channels, no imposition of exorbitant licensing fees

on wholesale or retail providers, no restrictions on

advertising revenue, and no government rules for

tiered or bundled services offerings.

However, regulatory agencies are relatively weak

– they have been unable to quell some of the

malpractices that distort the industry – particularly

with respect to intellectual property rights.


Moreover, the country’s slow-moving national judicial

and legislative systems prevent industry players and

regulators from improving the legal environment

for pay TV. The Philippines’ legislature has been

slow to ratify key bills and legislative amendments,

including the harmonization of legal frameworks

for convergent operators and improvement of IP

laws. The regulatory system has not kept pace with

the rapid developments in the industry. Regulators’

main focus for now is implementation of the digital

terrestrial transition – and this is understandable as

the bulk of the population continues to rely on FTA TV

for their TV content.

But the more advanced “new media” industry

sub-segments have already advanced well beyond

the regulatory framework. There are, for example,

currently no regulations governing provision of TV

over the Internet. A much-discussed Convergence

Bill may or may not change this, as the NTC does not

strictly regulate content and only has some specific

guidelines as to what cannot be shown or broadcast.

It is notable that industry players are not waiting for

a regulatory framework for new media offerings to

develop; they are designing and rolling out services

(described in the main report) even while the

regulatory vacuum persists.

Exhibit 2: Philippine Pay-TV Subscribers Growth in ‘000s (2008-2013)

2008 2009 2010 2011 2012 2013

Source: MPAData includes paying subscribers only

Pay-TV Subscribers CAGR

2,500

2,000

1,500

1,000

500

0

1,415 1,5091,596 1,761

2,000 2,214

9%


Households Without TV

Households With TV (FTA only and Pay TV)

21%

79%

This section sets out an overview of the Philippine TV

industry. It includes discussion of the country’s TV

penetration, key TV industry players, media ownership

structure, and recent developments in Internet TV and

mobile TV.

2.1 TV Penetration With a population of 96.7 million, the Philippines

had 16.9 million TV households by the end of 2012,

representing a TV household penetration rate of

79%. However, there was significant disparity in the

distribution of TV households in the country, as it is

estimated that the Luzon and Mega Manila regions,

with around 60% of the population, accounted

for more than 75% of the TV households in the

Philippines.

While there is still room for TV penetration growth in

the Philippines when compared to other Southeast

Asian countries, the urban-rural split already shows

relatively high penetration for the rural regions,

despite the country’s geographical challenge of

having numerous divided islands.

2 Philippine TV Market Overview

Source: Company Reports, Venture Consulting Analysis

Exhibit 4: Philippine TV Penetration Versus Other SEA Countries (2012)

Sources: Company Reports, Venture Consulting Analysis

TV Penetration

98%

Malaysia

98%

Thailand

79%

Philippines

61%

Indonesia

Exhibit 3: Overview of TV Market in the Philippines (2012)


Among households with television, almost 90% were

reported as late as 2010 to have just one TV set; only

around 10% owned multiple televisions, from two

sets onwards (Appendix 1). TV household penetration

is expected to increase in the next few years, as the

prices of television sets are becoming more affordable,

especially with the influx of cheaply made appliances.

2,600

NCR

CAR R I R I

IR I

IIR I

VAR I

VB R V R VI

R VII

R VIII R I

X R X R XI

R XII

R XIII

ARMM

2,400

2,200

2,000

1,800

1,600

1,400

1,200

1,000

800

600

400

200

0

Rural with TV

Total UrbanUrban with TV

Total Rural

2,380 2

,498

126

212

600

288

712

727

806 61

382

0

314

315

418

213

247

117

107

1,205

1,506

1,639

1,050

1,267

228

411

740

663

273

352 345

432 5

9671

3 401

712

141

153 28

7 286

183

86 53 65

215

206

515

352

12824

8

304

545

34936

1

272 32

655

0

500

198

485

189

172

337

690

447

114 159

Exhibit 5: Philippine TV Penetration by Household Urban-Rural Split in ‘000s (2010)

Number of Families (in 000s)*R = Region

Note: For definition of the region labels, see Appendix 1Source: National Statistics Office, 2010 Annual Poverty Indicators Survey

2.2 Key TV Industry Players

2.2.1 FREE-TO-AIR (FTA) BROADCASTERS

Private media groups dominate the TV industry in

the Philippines, as major FTA channels and pay-TV

operators share similar parent companies. There are

six major FTA channels, which collectively accounted

for 91% of the national audience share in 2012. The

remaining share is split among several smaller private

or government-owned channels. Correspondingly, the

two major pay-TV operators jointly represent 70% of

subscriber share in 2012, with the remaining share

distributed among – 800 smaller operators.


The three FTA heavyweights (ABS-CBN, GMA, and

TV5) continued to dominate the national audience

share through 2013. A sample audience share from

mid-year is depicted below. The three main players

each carry a flagship FTA channel, as well as a sister

FTA channel (Appendix 2).

Among the smaller broadcasters, the strongest player

is Solar Entertainment Corporation, which also offers

content on pay-TV platforms.

2.2.2 PAY-TV OPERATORS

The Philippine pay-TV market has been dominated

by SKYcable since its establishment 23 years ago.

Its commercial launch happened in January 1992,

two years after its founding. As a company, SKYcable

intended to offer varied and specialised content on

pay television to enhance the viewing experience

of an increasingly discerning Filipino audience.

Currently, SKYcable offers over 200 channels.

Exhibit 6: Media Ownership of FTA Channels in the Philippines

Source: ABS-CBN, GMA, PLDT, TV-5, Venture Consulting Analysis

Media Group ABS-CBN Corporation GMA PLDT

Free-To-Air Channels

ABS-CBN Channel 2 TV-5GMA Network

Star Cinema and TVCity Network Marketing &

Productions

Studio 23 Aksyon TVGMA News TV

Creative Programme Inc. GMA Network Films

Pay-TV Operators SKY cable Cignal

Content Producers

100% 100%100%

100% 100%

100%

100%

55%

100% 100%

100% 100%Pay-TV Operator

FTA Channels

TV Content Producer

Exhibit 7: National Audience Share of Philippine FTAs (May 26 – June 1 2013)

Source: Company Reports, Nielsen, Venture Consulting Analysis

Audience Share

40%

50%

30%

20%

10%

0%

30.8%

ABS-CBN

36.0%

GMA

15.6%

TV5

4.8%

GMANews

3.4%

Studio 23

9.4%

Other FTAs

Two private media groups, ABS-CBN Corporation and PLDT, have interests in both FTA and pay-TV businesses.


Although SKYcable has historically led the pay-TV

sector of the TV industry, Cignal Digital TV, under the

MediaQuest Holdings of the Philippine Long Distance

Telephone Company (PLDT) Group, has changed the

competitive landscape since its launch in 2009. Cignal

is a subscription-based direct-to-home (DTH) satellite

TV provider. It offers around 90 channels at present.

There are other operators, such as Cablelink, which

offer services in limited areas in the country. Cablelink

has a subscription-based cable antenna television

system operation in 16 cities in the Philippines and

also offers high-speed cable Internet service.

Because of the Philippines’ archipelagic geography,

there are many rural and small operators throughout

the country. Presently, there are around 800 licensed

pay-TV operators in the Philippines. However,

Philippine regulators indicate that there are only about

600 active pay-TV operators. A detailed description of

the pay-TV industry is set out in Section 4.

2.3 Internet TV and Mobile TVBoth the Internet TV and mobile TV markets in the

Philippines are nascent. They are limited by the lack

of Internet connectivity in the less urban areas in the

Philippines, with Internet and broadband population

penetration at around 35% and 1.3%, respectively.

The current Internet TV offerings in the market are

ABS-CBN’s iWanTV! and Cignal’s TV-To-Go. iWanTV!

has been operational since 2008, while Cignal TV-To-

Go is under beta testing and will only commercially

launch in early 1Q 2014. The potential of Internet

TV seems to lie with the growing trend of catch-up

viewing, as evidenced by the success of iWanTV’s

highest rated shows, which are usually the on-

demand viewing of daytime and primetime soaps.

2.3.1 IWANTV!

iWanTV! offers live streaming and on-demand videos

over the Internet via the iWanTV! portal. It is a service

started in 2010 and co-owned by ABS-CBN and

SKYcable. It started as an exclusive service to Sky

BroadBand and Bayan DSL subscribers with just

ABS-CBN content but eventually opened to the public

in 2011.

Currently, the platform freely offers the three latest

episodes of each show on ABS-CBN. The daily

broadcast of ABS-CBN Channel can be viewed via

live streaming. Premium content, through foreign

and local movies, is also available to SKYcable and

SKYbroadband subscribers. Local movies shown are

those produced by ABS-CBN through its content

production arm, while foreign movies on iWanTV! are

acquired movies shown on ABS-CBN Channel, as

well as Kix Thrill.

2.3.2 TV-TO-GO

Cignal’s TV-To-Go currently provides live streaming of

14 channels, including TV-5. The service is available

only on Android smart phones and tablets, but the

company plans to eventually expand the service to

other operating systems. TV-To-Go aims to achieve 1

million subscribers by 2014.

There is limited visibility on the actual take-up of

these services.

Mobile TV, video viewed on mobile handsets, has

significant growth potential given the country’s high

mobile penetration rate, which was reported to be

82% of the population in 2012. As a result, major

media groups in the Philippines are interested in

offering mobile TV propositions. On this front, ABS-

CBN intends to launch a mobile service, using

Globe Telecom’s network, to provide voice, SMS and

data services. The new service will also provide TV

programming via smartphones and tablets; it is likely

to be launched in the first half of 2014.

Unlike existing TV services, mobile TV offers viewers

the convenience of itinerant watching and may

therefore gain in popularity, especially with the

increasing growth of smartphone penetration in the

Philippines.


This section takes a deeper look into the pay-

TV market, setting out subscriber numbers and

subscriber projected growth, as well as market

splits, usage description, and coverage area. It also

covers pay-TV content programming, pricing strategy,

business models, and it sets out the effects of piracy

on the industry.

3.1 Pay-TV Penetration Compared to Other CountriesAs shown below, Philippine pay-TV penetration is

lower thanother Southeast Asian countries and we

believe it has significant potential for growth.

3.2 Pay-TV Subscriber Industry EstimatesBased on discussions with key media industry

stakeholders in the Philippines, estimates of

subscriber numbers spanned from 1.5 million to 3.8

million for 2012, as reflected in the following exhibits.

Concrete and verifiable subscriber numbers are

notoriously difficult to obtain; different Philippine

media groups revealed that the industry suffered from

prevalent underreporting and misrepresentation of

subscriber numbers from provincial operators, as well

as the rampancy of illegal connections via signal theft.

This inconsistency in subscriber number estimates is

reflected in the varying figures reported by different

interviewed industry groups, as seen below.

3 Philippine Pay-TV Structure

Exhibit 8: Philippine Pay-TV Penetration Compared to Other SEA Countries (2013)

Source: Company Reports, BroadbandandTVnews.com, Venture Consulting Analysis*Includes paid and unpaid connections

Pay – TV Penetration

80%

100%

60%

40%

20%

0%

56%

Malaysia

65%

Thailand

19%

Philippines

10.5%

Indonesia

Exhibit 9: Philippine Pay-TV Subscribers According to Different Industry Groups in ‘000s (2012)

Source: Venture Consulting discussions with media companies in the Philippines

Base Number of Reported Subscribers

Uncertainty Range of Reported Subscriber Numbers

3,000

4,000

2,000

1,000

0A B C D E

1,700

1,800

800

1,800

3,500

2,600

2,700

3,600

3,000

600

2,850


By comparison, we have set out estimates for pay-TV

subscribers from CASBAA and MPA, as seen below.

Our discussions in the Philippines suggest that the

uncertainty in pay-TV subscriber estimates will remain

for some time. However, with increased digitization of

pay-TV networks, the uncertainty element is expected

to reduce somewhat over the next few years.

Factors that are driving pay-TV take-up include:

• Higher household incomes

• Lower cost of television sets

• Increased choice and cheaper subscription

packages, including prepaid options.

However, there is consumer resistance. Industry

observers report that in many cases where

households were asked to pay for cable services (e.g.

when analogue service was withdrawn), they chose

to disconnect. Further, in provinces, some people

worried about the power consumption and heating

effect of the set-top box (STB) and therefore opted

out of the paid service. Consumer resistance for all

these reasons will tend to dampen growth in legal

subscribers at least in the immediate term.

3.3 Pay-TV Subscribers in the Philippines The chart below sets out the recent growth trend

in pay-TV subscribers in the Philippines, based on

consistent data from one expert source.

Exhibit 10: Philippine Pay-TV Connection Estimates by CASBAA and MPA in ‘000s

(2012)

Note: CASBAA’s figures are based on evaluation of several surveys by media research companies and reflect both paid and unpaid connectionsSource: CASBAA, MPA

Connections

3,000

2,000

1,000

0MPACASBAA

2,900

2,000

Exhibit 11: Philippine Pay-TV Subscriber Growth in ‘000s (2008-2013)

Source: MPA

Pay-TV Subscribers

2,000

2,500

1,500

1,000

500

0

1,415

2008

1,509

2009

1,596

2010

1,761

2011

2,000

2012

2,214

2013

CAGR

9%


This data series shows that pay-TV penetration of TV

households has increased steadily and is currently at

12%, as set out below.

3.4 Pay-TV Subscribers by PlatformIn 2013, the highest number of subscribers was

still on analogue cable. However, subscribers on

other platforms, especially DTH, have increased

significantly, as shown in the exhibit below.

3.5 Pay-TV Operators’ Market Share and Subscriber GrowthCurrently, the country’s pay-TV market is dominated

by SKYcable and Cignal. As seen in the chart below,

SKYcable holds the largest market share, though

Cignal has been enjoying strong growth.

3.5.1 SKYCABLE

SKYcable offers pay-TV service, as well as Internet

and VoIP services. In terms of ownership, ABS-CBN

Corporation owns 55% of SKYcable, while STT Group

Singapore owns 40% economic rights via Philippines

Depository Receipts, with no voting rights nor Board

Member representations. Lopez Holdings Corporation

holds 5%.

The company in its present form was established in

2008, when PLDT’s economic stake in Home Cable

and Benpres’ shares in SKYcable were consolidated

into SKYcable Corporation.

SKYcable’s shift from analog to digital enabled it

to offer High Definition (HD) channels, as well as

the ‘select’ service, which allows customers to add

channels to existing subscription plans. Moreover, the

100%

2008 2009 2010 2011 2012 2013

90%

80%

70%

60%

50%

40%

30%

20%

10%

0%

Pay-TV Penetration / TVHH

FTA-Only Penetration / TVHH

Exhibit 12: Growth of Philippine Pay-TV and FTA Penetration of TV Households (2008-2013)

Source: MPA

9% 9% 10% 10% 11% 12%

91% 91% 90% 90% 89% 88%

1,400

1,200

1,000

800

600

400

200

0

Analogue Cable Digital Cable DTH

Exhibit 13: Philippine Pay-TV Penetration by Platform in ‘000s (2008 -2013)

Source: MPA

1,278 1,291 1,216

1,082 1,099 1,115

80 112205

385424 464

57 106175

294

477

635

2008 2009 2010 2011 2012 2013

Exhibit 14: Pay-TV Operators’ Market Share Based on Subscriber Numbers (Dec 2012)

SKYcable Cignal

Others (~800 smaller operators)

45%

30%

25%

Source: Company Reports, PLDT, Venture Consulting Analysis


Cignal

shift lessened signal theft and eased the expansion

to Internet broadband and Voice-Over-Broadband

service. Currently, there are 147 SD channels and 40

HD channels available to SKYcable subscribers.

In 2012, SKYcable’s subscription numbers were

boosted by 200,000 subscribers through the

acquisition of Destiny Cable, Philippine’s 3rd largest

cable operator, UniCable, the biggest provincial

operator in Cebu, and Solid Broadband Corp. This

purchase had a consolidated value of US $81.2

million. Most of SKYcable’s subscribers are located

within Metro Manila. However, the company does not

make available a specific regional breakdown.

3.5.2 CIGNAL

Cignal, which was launched in 2009, is the leading

DTH satellite provider in the Philippines. Cignal is a

service under MediaScape Inc., which is a subsidiary

of MediaQuest Holdings, the media partner of the

PLDT Group of Companies.

In the past two years, Cignal has been aggressive in

growing its subscriber base. Its target is to reach 2

million by end of 2018, from 600,000 currently.

3.5.3 CABLELINK

Cablelink is a smaller pay-TV operator with

subscription-based cable antenna television system

operations in southern cities of Metro Manila. It is

owned by Cable Link and Holdings Corporation.

Formerly known as Conception Pay-TV Network, it

started its cable television (CATV) operation in 1995.

In 2004, Cablelink launched its broadband Internet

service known as i-Blaze Cable Internet.

3.5.4 DREAM SATELLITE TV (DREAM)

Dream was the first all-digital DTH television

broadcasting service via satellite in the Philippines. In

April 1997, Dream was incorporated as the Philippine

Multi-Media System, Inc. (PMSI). In 1998, PMSI was

granted a 25-year franchise term for television and

radio broadcasting in the Philippines. On April 22,

2001, the commercial launch of Dream Broadcasting

System, the first DTH system in the Philippines, took

place.

Dream broadcasts from the Dream Broadcast Center

located at the Clark Special Economic Zone in

Pampanga. Currently, Dream offers a bouquet of 38

TV channels and 10 radio channels, and has around

100,000 subscribers.

Exhibit 15: Subscriber Growth of SKYcable in ‘000s (2012 – 2013)

Note: Subscriber numbers include the 200,000 subscribers acquired from Destiny CableSource: SKYcable

100

200

300

400

500

600

700

800

900

1,000

020132012

720800

60 80

Cable Broadband

Exhibit 16: Cignal’s Subscriber Target in ‘000s (2013 and 2018)

Source: Cignal

Cable Subscribers (Postpaid and Prepaid)

500

1,000

1,500

2,000

2,500

020182013

600

2,000


3.5.5 GLOBAL SATELLITE (G SAT)

G Sat is another DTH satellite pay-TV television

service in the Philippines. G Sat is owned by Global

Broadcasting and Multimedia Inc. (GBMI) and First

United Broadcasting Corporation, registered in

the Philippines with the Securities and Exchange

Commission (SEC).

The group that owns G Sat is also engaged in satellite

wireless transmission, WIMAX transmission, landline

transmission, satellite internet data transmission,

terrestrial television operation, broadband

data service, content aggregation, production

and distribution, consolidation of telecom and

broadcasting management. At present, G Sat offers

69 television channels (including 12 in HD) and 7

radio channels; it has around 40,000 subscribers.

3.6 Revenue of Major Pay-TV OperatorsBased on publicly available data, pay-TV revenue is

expected to reach US$600 million by 2018, as shown

in the graph below.

Exhibit 17: Philippine Pay-TV Revenue Forecast in US$mn (2012 – 2018)

Source: Company Reports, BroadbandandTVnews.com, Venture Consulting Analysis

Revenue

200

400

600

800

020182012

280

600

CAGR

14%

The following chart shows that this revenue is mainly

from subscriptions.

SKYcable’s revenue for the last few years is shown in

the graph below. Its 13% CAGR is comparable to the

14% CAGR of the overall market revenue.

By comparison, Cignal’s gross revenue in 2012 was

US$53.4 million.

Subscriptions Advertising

22%

78%

Source: Company Reports, Venture Consulting Analysis

Exhibit 18: Philippine Pay-TV Revenue Split in US$mn (2012)

Total: US$ 280mn

Exhibit 19: SKYcable’s Revenue in US$mn (2010 – 2012)

Source: Company Reports, ABS-CBN, Venture Consulting Analysis

Revenue

20

40

60

100

80

120

02010 2011 2012

7886

100

CAGR

13%


Advertising

3.7 Pay-TV Average Revenue Per User (ARPU)At present, SKYcable has reported an ARPU of US$14

per month for pay-TV and US$25.5 per month for its

broadband service. Cignal has reported ARPU of

similar US$13.4 per month for its postpaid service

and US$5.8 for its prepaid service. However, MPA

has estimated a national pay-TV ARPU of US$11.1 in

2012, as seen in the exhibit below.

Overall ARPU of the pay-TV market is expected to

grow at a 14% CAGR over the next five years.

3.8 Pay-TV Postpaid and Prepaid Business Model

3.8.1 CIGNAL

Cignal uses both prepaid and postpaid models. Of its

gross revenue of US$53.4 million in 2012, 55% came

from its postpaid service and 45% from its prepaid

service. Cignal’s aim is to encourage its subscribers

to migrate from prepaid to postpaid services.

A list of Cignal’s offered prepaid tariffs is in

Appendix 8.

3.9 Pay-TV DistributorsKey pay-TV distributors are Content Programs Inc.

(CPI), Accion, and Cableboss.

3.9.1 CABLE BOX OFFICE SHOWS (CABLEBOSS)

Cableboss is the largest program distributor, which

has been in operation for 20 years. It is split into

Cableboss and OMNI, with the latter handling the

distribution of Fox, Setanta, and Jinx, among others.

Overall, it has around 500 operator affiliates.

Cableboss is the only distributor with a dedicated unit

for fingerprinting to combat signal theft. Cableboss

has no overlap with Accion, as they hold different

program distributions.

3.9.2 ACCION

Accion is a program distributor, which offers pay-TV

and Internet services. It has been in operation since

1993 and its market is mainly provincial, with around

380 operator affiliates in the country.

While having Internet services, Accion’s main

segment of business is still cable TV distribution. It

is in operation in key cities, particularly Olangapo,

Zambales, Lucena, Quezon, and Batangas. Accion

has started to go digital in 2013, with Zambales being

the first to digitise.

Accion goes around the provinces per quarter to

liaise, as well as to conduct regular conventions for

smaller operators.

3.9.3 CONTENT PROGRAMS INC. (CPI)

The ABS-CBN group’s pay-TV operation content

production is handled by CPI, a subsidiary, which

operates, distributes, and handles the ad sales of

seven channels, as well as its pay-per-view (PPV)

services. The details of the content and distribution of

CPI can be found in Appendix 9.

Exhibit 20: Philippine Pay-TV Monthly ARPU in US$ (2008 – 2013)

Source: MPA

ARPU (US$)

2.0

4.0

6.0

10.0

8.0

14.0

12.0

02008 2009 2010 2011 2012 2013

10.8 10.8 10.8 10.9 11.1 11.3

CAGR

1%


3.10 Pay-TV Content and ProgrammingThe top rated programmes are in entertainment and

have generally been children’s shows and movies.

The most popular kids programmes are those that are

international, while the top rated movies are those

that are local. The lack of competition from local kids

programming may be one reason why international

content achieves high ratings.

Exhibit 21: Ratings of Top Philippine Cable TV Channels

Cinema One

Cartoon Network

Pinoy Box Office

Disney Star Movies HBO Nickelodeon Disney Junior

Basketball TV

Source: Kantar Media

Movies (Entertainment)

Content Provider:

Content Provider:

Drama (Entertainment)

Kids

Sports

Local Content Provider International Content Provider

100

75

50

25

0

91.1

69.361.9

55.8

47.643.8

18.7 18.5 16.1

Ratings of Top Cable TV Channels From Jan to Mar 2013 (in ‘000s)

ABS-CBN Turner VIVA Disney FOXTime

WarnerViacom Disney Solar

Top Kids’ Programme on Cable TV

Jan-Mar 2013

S/N Programme Channel Rating (‘000)

1 The Pink Panther Show Cartoon Network 169.6

2 Dragon Riders of Berk Cartoon Network 168.8

3 Pokemon: Black and White Cartoon Network 126.6

4 Paddle Pop Kombatei Cartoon Network 126.2

5 Power Rangers Samurai Cartoon Network 119.5

6 The Power Puff Girls Cartoon Network 109.1

7 Oggy and the Cockroaches Cartoon Network 103.9

8 Ninjago Masters of Spinjitzu Cartoon Network 103.5

9 Mr Beat – The Animated Series Cartoon Network 103.1

10 Paddle Pop Elemagika Cartoon Network 102.7

11 Tom and Jerry Show Cartoon Network 101.1

12 Fish N Chips Cartoon Network 100.7

13 Courage The Cowardly Dog Cartoon Network 99.8

14 The Tom and Jerry Show Cartoon Network 95.6

15 Dragons Riders of Berk Cartoon Network 95.4

Top Movies on Cable TV

Jan-Mar 2013

S/N Programme Channel Rating (‘000)

1 Home Sic Home Cinema One 315.2

2 Ala Eh... Con Bisoy Hale-Hale Cinema One 299.7

3 Supahpapalicious Cinema One 279.1

4 Pera O Bayong (Not Da TV) Cinema One 278.2

5 Otso-otso Pamela-mela Wan Cinema One 272.7

6 Home Along Da Riles Cinema One 268.7

7 Ang Pulubi At Ang Prinsesa Cinema One 267.2

8 Marami Ka Pang Kakaining Bigas Pinoy Box Office 262.8

9 Guwapings: The First Adventure Cinema One 258.3

10 Enteng Ng Ina Mo Cinema One 253.8

11 Dobol Trobol Lets Get Redi 2 Rambol! Cinema One 252.0

12 Costales Cinema One 245.8

13Enteng Kabisote 4: Okay Ka Fairy Ko... The Beginning of the Legend

Cinema One 245.7

14 Born To Love You Cinema One 245.3

15 Mr Darling Domestic (Greyt Eskeyp) Cinema One 241.5

Exhibit 22: Top Pay-TV Programmes

Note: *The top rated foreign movie, Kung Fu Hustle (on Star Movies), garnered rating of 222k. In comparison, the 15th placed local movie garnered rating of 241.5kSource: Kantar Media (by Average Ratings)


Exhibit 23: Genres Offered by Major Pay-TV Operators

SKYcable Cignal

Movies Movies

Sports / Men Sports

Kids Kids

Learning Educational / Documentary

Music Music

General Entertainment General Entertainment

News News / Information

Lifestyle / Women Lifestyle

Religious Religious

Embassy Channel Foreign Channels

Chinese Channel

Source: SKYcable, Cignal

HD channels are offered by both operators. Genres

with HD counterpart are usually movies, sports,

kids, and general entertainment. Both operators

rebroadcast FTA channels.

Details such as channel lists and pricing bundles of

the two major pay-TV operators are in Appendix 8.

3.10.1 SKYCABLE CHANNELS

The majority, 70%, of SKYcable’s channels are

international channels. 95% of these are acquired

directly from content providers with minimum

guarantee and revenue share agreements in place.

SKYcable then negotiates for advertising space on

the channels, specifically as much as a few minutes

per hour. Alternatively, it may have revenue share

agreements for advertisements that they sell for the

content provider. Parent ABS-CBN owns most local

channels broadcast on SKYcable’s network.

Among all SKYcable channels, 52% are entertainment

based, 25% are news and documentary, 9% are kids,

6% are sports, and the remaining 8% are the a mix of

the other categories.

Forty of SKYcable’s channels are broadcast in HD.

Currently, video-on-demand (VOD) services are

only available through iWanTV’s online on-demand

streaming for FTA programming, as well as the FOX

Premium Play VOD service for SKYcable subscribers

who have FOX Movies Premium HD.

3.10.2 CIGNAL CHANNELS

Much like its rival, 70% of Cignal’s channels are

international and most of the channels are devoted

to entertainment programming. The breakdown

is 64% entertainment, 10% kids, 16% news and

documentary, and 10% sports.

Cignal was the first to get into HD, with 19 channels

currently on high definition, and currently offers

access to online video-on-demand service through

FOX Movies Premium Play for subscribers who

purchase the FOX Movies Premium HD channel.

Exhibit 24: SKYcable Channel Split (2013)

Source: SKYcable, Philippine Daily Inquirer, LinkedIn, GMA News, BusinessWeek, Venture Consulting Analysis

EntertainmentKidsSports

News/ InformationOthers

20%

40%

60%

80%

100%

0%International ChannelsLocal Channels

53% 52%

9%5%

21%27%

15%5%

3%11%


Exhibit 25: Cignal Channel Split (2013)

Source: Company Reports, ABS-CBN, Venture Consulting Analysis

20%

40%

60%

80%

100%

0%International ChannelsLocal Channels

79%

58%

16%

7%

5%21%

14%

EntertainmentKidsSports

News/ InformationOthers

3.11 Piracy in the Philippine Pay-TV MarketPiracy has been a longstanding problem for the

Philippine media industry. In the pay-TV sector, the

two main forms of piracy have historically been

unauthorized distribution/underreporting and

individual signal theft. Signal theft on an individual

basis is gradually being reduced (as progressive

digitization of networks makes individual theft more

difficult, and as a new law against signal theft was

enacted in 2013), but unauthorized distribution and

underreporting by cable operators remain substantial

problems.

An additional emerging concern to the pay-TV

industry is Internet-based piracy, specifically as a

result of the arrival in the market of Android-based

“black boxes,” many of which tap Internet program

streams originating in China. These boxes carry

feeds of at least 500 channels and can easily be

bought online or in electronics shops for as little as

US $200 to US $400 for a year or two of usage, with

subsequent years’ access charged at a much lower

maintenance fee. Although some of the sellers have

been reported to content providers and even to the

regulator, NTC, these unlicensed and unregistered

boxes continued to be available in the Philippines.


This section sets out the FTA players’ backgrounds,

as well as their content, programming offerings, and

channel production.

4.1 Main FTA Broadcasters

4.1.1 ABS-CBN CORPORATION

ABS-CBN Corporation is the leading multimedia

conglomerate in the Philippines, with operations

in FTA broadcasting and pay-TV services. ABS-

CBN, which started airing TV programmes in

1953, controls two FTA channels, specifically

ABS-CBN Channel 2 and Studio 23. ABS-CBN

targets Filipino households and focuses mostly on

local entertainment, particularly drama and news

programming. ABS-CBN’s pay-TV operation is run

by SKYcable, the largest pay-TV operator in the

Philippines. Currently, SKYcable is seeking to add to

its cable operations, and is vying for a DTH operation

license with a pending application with the National

Telecommunications Commission (NTC).

ABS-CBN engages in content production through

two wholly-owned subsidiaries, Star Cinema and

Creative Programs Inc (CPI). Star Cinema produces

FTA TV programming, such as local dramas, while

CPI provides content for SKYcable and other affiliate

cable operators around the country.

4 Overview of Philippine Free-To-Air (FTA) Broadcasting

Exhibit 26: ABS-CBN Corporation’s Key Business Interests and Assets

Source: ABS-CBN, Reuters, Venture Consulting Analysis

ABS-CBN International

ABS-CBN Convergence

FTA Operations Pay-TV OperationsContent

ProductionRadio

OperationsPublishing Business

Content Syndication Telephony

ABS-CBN Channel 2

(FTA Network)

100%

100% 100% 100%

55%

100%

100%

100%

100%

100%

100%

(FTA Network)

(Pay-TV Platform)

(Cable Channels Owner and Content

Producer)

(Content Producer)

(Record Labels)

(Radio Network)

(Radio Network) (Intl. Sales)

(Publishing House)

SKYcable Star Cinema and TV DZMMABS-CBN Publishing

Studio 23 Creative Programme Inc. Star Recording DWRR


ABS-CBN has significant broadcasting capabilities

and content production resources. It owns 22 studios,

15 of which are in Metro Manila, while six are in other

areas in the Philippines and one in San Francisco,

USA. It also owns 32 editing and production suites

and multiple offsite production vans.

As a major FTA network, ABS-CBN derives most

of its revenue from advertising. ABS-CBN’s

subscription revenues are primarily derived from

cable TV subscription to SKYcable packages, as well

as subscriptions to ABS-CBN channels in overseas

markets. The split is shown in the following exhibit.

In terms of television ad spend market share, ABS-

CBN commands the largest portion at 45% in the first

half of 2012.

ABS-CBN has performed relatively well over the past

few years, with a growth of ~8% p.a. The reported

revenue decline in 2011 was largely due to a fall in

advertising revenue, attributed by management to the

bearish economy.

4.1.2 GMA NETWORK

GMA Network is a private multimedia conglomerate

that is known for its FTA channels in the Philippines.

It controls two FTA channels, GMA Network and GMA

News TV, and started airing in 1961. Like its closest

rival, ABS-CBN, GMA focuses on local entertainment

and news programming targeted at Filipino

households.

In addition to FTA broadcasting, GMA also

produces its own content under two wholly-owned

subsidiaries, specifically Citynet Network Marketing

and Productions, as well as GMA Network Films.

Citynet Network Marketing and Productions provides

programming for its TV channels, while GMA Network

Films produces movies for distribution.

Exhibit 27: ABS-CBN’s Gross Revenue Split in US$mn (2012)

Advertising Revenue Subscription Revenue

Source: ABS-CBN, Venture Consulting Analysis

40%

60%

USD – $718mn

Exhibit 28: ABS-CBN’s Net Revenue in US$mn (2007 – 2012)

Source: Osiris, MPA

Revenue

200

400

600

800

02007 2008 2009 2010 2011 2012

398446 441

555501

558

CAGR

8%


GMA derives the majority of its revenue from

“advertising related to television broadcasting” and

acknowledges that it needs to “diversify its revenue

base beyond advertising”. Expectedly, GMA has

significant broadcasting capabilities with – 38% of its

Property, Plant and Equipment Assets, which was at –

US$65 million in 2011, coming from broadcasting and

related equipment.

GMA’s involvement in the pay-TV sector is confined to

distribution of a small bouquet of channels led by its

flagship “Pinoy Channel” in overseas markets.

GMA’s revenue growth of – 5% p.a. was less than

that of its major competitors. Further, GMA has an

ad spend market share of 34% in the first half 2012,

behind ABS-CBN.

Exhibit 29: GMA Network’s Key Business Interests and Assets

Source: GMA, Venture Consulting Analysis

GMA Worldwide

FTA OperationsContent

ProductionRadio

OperationsContent

Syndication

GMA Network

(FTA Network)

100%

100%

100%

100%

100%

100%

100%

(FTA news channel

of GMA Network)

(Content Producer; television)

(Content Producer)

(Record Labels)

(Radio Network)

(Radio Network)

(Intl. Sales)

Citynet Network Marketing and

Productions

GMA Network Films

DZBB Super Radyo

GMA News TV GMA Records Barangay LS

Exhibit 30: GMA’s Gross Revenue Split in US$mn (2012)

Advertising Revenue Production Revenue and Others

Source: GMA, Venture Consulting Analysis

8%

92%

USD – $315mn

Exhibit 31: GMA’s Net Revenue in US$mn (2007 – 2012)

Source: GMA, Osiris, Media Partners Asia (MPA)

Revenue

100

200

300

400

02007 2008 2009 2010 2011 2012

204 211232 243 223

254

CAGR

4%


4.1.3 TV-5

Founded in 1960 and formerly known as ABC 5,

TV-5 was relaunched in 2008. Together with its sister

channel, Aksyon TV, TV-5 is controlled by Mediaquest,

which is affiliated with PLDT. Similar to its larger

rivals in FTA broadcasting, TV-5’s FTA channels focus

on local entertainment and news programming. They

also produce some of their content in-house.

PLDT is the incumbent telecom operator in the

Philippines and operates mainly in the mobile

and fixed communications businesses. PLDT

has substantial interests in the media sector via

MediaQuest Holdings, a media conglomerate that is

wholly-owned by PLDT’s retirement and trust fund.

Apart from operating two FTA channels, Mediaquest

also owns cable pay-TV operator, Cignal.

Exhibit 32: PLDT’s Key Business Interests and Assets

Note (1) Digtel owns Sun Cellular, a mobile operator in the Philippines: (2) While PLDT has no major content production subsidiary, TV 5 produces some of their own programmingSource: PLDT

Cignal

Telecoms FTA Company

PLDT Company

Pay-TV Operations

100% 100%; via ABC Holdings 100%; via ABC Holdings

100%; via ABC Holdings

(FTA Network)

(FTA Network)

(Pay-TV Platform)

TV5

Aksyon TV

Exhibit 33: PLDT’s Gross Revenue Split in US$mn (2012)

Source: PLDT, Venture Consulting Analysis

Wireless Fixed Lines

Business Process Outsourcing

5%

60%

35%Total: US$3912 mn

PLDT derives most of its revenue from its mobile

business. Its revenue profile reflects the importance

of mobile to PLDT. Revenues from PLDT’s interest

in media, such as TV-5 and Cignal Digital TV, are not

consolidated into PLDT’s group revenue because they

are deemed to be subsidiaries of PLDT’s retirement

fund.

TV 5 earned net revenues of US$98 million and Cignal

earned revenues of – US$ 30 million in 2012.

PLDT Smart Digital1

(Fixed Telecoms) (Mobile Telecoms) (Fixed and Mobile Telecoms)


Source: PLDT, Venture Consulting Analysis

Fixed Lines

PLDT’s TV-5 has quickly gained traction to become

a serious player in the media industry. In line with

increase in net revenue, TV-5’s share of advertising

revenue among FTA broadcasters rose from 3% in

2010 to 7% in 2011, and to 11% in 2012, with a net

revenue CAGR of 215% since launch in 2009.

4.1.4 SOLAR ENTERTAINMENT CORPORATION

Solar Entertainment Corporation is a private media

group providing TV broadcasting and content

production services, which started operations in 2001.

As an operator that offers content to both FTA and

pay-TV platforms, Solar’s focus is to be the leading

content provider in the industry, while also being

involved in TV broadcasting, film distribution, and pay-

TV distribution.

In film distribution, Solar is the local affiliate of

United International Pictures. As for pay-TV, Solar

distributes eight cable channels of its own, and also

acts as the channel distributor and advertising sales

representative in the Philippines for Diva Universal,

Universal Channel, and Syfy.

The general content focus of the company is centred

on sports and entertainment. However, more recently,

Solar has begun incorporating news as one of its main

content offerings. Solar News is currently the only

provider of English language news on Philippine FTA.

Solar Entertainment had revenues of – US$50 million

in 2012.

Exhibit 34: TV-5 Net Revenue in US$mn (2009 – 2012)

Source: Osiris, MPA

Revenue

100

50

0

98.3

2012

41.3

2011

18.2

2010

3.0

2009

CAGR

219%

Exhibit 35: Solar Entertainment Corporation’s Key Business Interests and Assets

Note: (1) RJTV is a small free-to-air television and radio network operator (2) BEAM is a small free-to-air television operator based in Manila (3) Operates 8 channels but with limited viewership – Basketball TV (local and international sports), Blink Cinema (international movies), Jack TV (entertainment), Shop TV; HSN (home shopping), Solar All Access (pay-per-view international sports), Solar Sports (local and international sports), NBA Premium TV (international sports), The Game Channel (entertainment)Source: Reuters, Venture Consulting Analysis

FTA OperationsPay-TV

Operations

Solar Entertainment

Content Production

100%35%Buys block time on RJTV1

Buys block time on BEAM2

100%

(Cable Channels3 owner)

Solar Entertainment

Solar Entertainment

(Content Producer)

100%

(FTA Network)(FTA Network)

(FTA Network)

(FTA Network)

ETCJack City

Solar News

2nd Avenue


4.2 FTA Content and ProgrammingContent among flagship FTA channels is focused

mainly on local programming, particularly local

entertainment and local news. International

content on these channels is mainly comprised of

entertainment and kids programs.

The sister FTA channels show local content only,

predominantly local news, with the exception of

Studio 23, which has a more entertainment-based

line-up and includes some international content.

A similar content split for each flagship and sister

FTA channels could be seen in Appendix 4 and

Appendix 5.

100%

ABS-CBN Ch 2

Studio 23

TV-5

Askyon TV

GMA News TV

GMA Network

90%80%70%60%50%40%30%20%10%0%

Exhibit 36: Content Split of Flagship FTA Channels

Source: Venture Consulting Analysis

54%

31%

28%

39%

19%

52%

25%

8%

27%

61%

72%

12%

4%

9%

1%

1%

6%

28%

26%

8%

16%

7%

13%

18%

20%

3%

11%

1%

Intl. Entertainment Intl. News/Info Intl. Kids Intl. Sports

Local SportsLocal KidsLocal News/InfoLocal Entertainment

It is quite evident that local entertainment

programming has widespread appeal in the

Philippines, as this category has dominated the list of

most popular FTA programmes, with ABS-CBN being

the top provider of these shows.

A list of top FTA programs, as well as a table of

the programming propositions of the different

FTA channels could be seen in Appendix 6 and

Appendix 7.


This section discusses future developments in the

industry, including FTA migration from analogue

to digital and its subsequent effect on pay TV, new

developments expected from the existing players in

the industry and a review of some emerging players.

5.1 FTA Migration to DigitalOn 6 November 2013, the government announced

that it had selected the Japanese Integrated Services

Digital Broadcast- Terrestrial (ISDB-T) as the national

TV standard for digital terrestrial TV (DTT).

It stated that one of the deciding factors for choosing

the Japanese standard over the European DVB standard

was the emergency alert system built into ISDB-T for

mobile phones and television, as well as expected

lower costs for set-top boxes compatible with existing

television sets.

5 Future Developments in the Philippine TV Industry

All major stakeholders are awaiting the rules and

regulations for DTT implementation, which will be

released in a few months.

According to current plans, households in the

Philippines are expected to complete the migration

from analogue to digital by 2018, provided switch-on

occurs by mid-2014. Given the delays experienced in

the past, it seems likely that this deadline will slip.

While there have not been any DTT licenses formally

awarded as yet, it is understood that all current FTA

broadcasters are expected to receive a DTT license,

provided that they meet the investment requirements.

In addition, new entities may be licensed to provide

DTT services. Currently, NTC reports around ten

service provider applications have been filed. An

indicative timeline is set in the following exhibit.

Exhibit 37: Indicative Timeline of Analogue to Digital Switchover

ActivitiesPre-Implementation Implementation

2010 2011 2012 2013 2014 2015 2016 2017 2018

1.Preparatory work and consultation with stakeholders

2.Establishment of the National DTTB Committee and Migration Plan

3.Approval of Migration Plan, Policy Issuances and Transmission Standards

4.Approval o fImplementing Rules and Regulations

5. Piloting / Trial Phase

6. Digital TV Switch-on

7. Broadcaster Roll-out

8. Simulcast Period

9. Analog Switch-off Period

Source: ITU, Interim NRT’s DTT Migration Plan and Proposed Milestones

MilestonesProcess


5.2 New Developments of Existing Players

5.2.1 ABS-CBN AND SKYCABLE

ABS-CBN wants to diversify its revenue sources and

reduce its reliance on FTA advertising revenues.

Recently, through ABS-CBN Convergence Inc., it

has partnered with Globe, a major mobile network

operator in the Philippines, in a convergence initiative

of network sharing. The partnership enables ABS-

CBN to deliver ABS-CBN content and offer traditional

telecoms services on mobile devices. Globe will

provide capacity and coverage for this service on a

nationwide basis.

Apart from TV content broadcast on the mobile

platform, ABS-CBN also intends to develop digital

content that is uniquely for mobile platforms,

reflecting their insights on Filipinos’ content

consumption on mobile. Subsequently, they intend to

explore user-generated content.

SKYcable plans to continue to expand its digital cable

network nationally, as well as its broadband Internet

network. Presently, SKYcable has migrated 99% of

SKYcable’s Metro Manila subscribers to digital set-

top boxes, while the figure is at 60% for SKYcable

provincial subscribers. These percentages do not

include the newly acquired Destiny subscribers, as

digital service to Metro Manila Destiny subscribers

has only been offered in 2Q 2013.

5.2.2 CIGNAL, TV-5 AND PLDT

As stated earlier, Cignal is trialling its TV-To-Go

service, and it is expected to launch commercially in

1Q 2014.

This is an IPTV-based pay-TV service, deployed over

PLDT’s fixed telecoms infrastructure. When bundled

with broadband and voice services, PLDT can offer

subscribers a “triple play” of services over a single

connection to the home.

PLDT plans to create better synergies between its

mobile, Internet, and media businesses, possibly

setting up an integrated advertising strategy that

would maximise all three. It has been reported

that PLDT’s media blueprint is to own, produce,

and provide content across multiple platforms,

substantially broadening its role from basic telecom

services.

Currently, PLDT is building on current investments

of Mediaquest. It plans to further invest in TV-5, as

it budgeted ~US$120 million in 2013 to improve

program line-up and expand nationwide coverage.

5.2.3 GMA

GMA intends to continuously improve its TV

broadcast proposition with the launch of DTT

channels. Currently, GMA is focusing on the

expansion of its broadcast network outside of Mega

Manila and Luzon, while strengthening digital

propositions, such as its online portals, PEP.ph and

Spin.com. It may enter pay-TV in the future; however,

it has not disclosed specific plans.

5.2.4 SOLAR ENTERTAINMENT

Solar Entertainment intends to launch DTT channels,

likely to continue Solar’s focus on entertainment,

sports, and news.

Meanwhile, Solar has created an online digital

proposition; Omni Digital Media Ventures, a

subsidiary of Solar Entertainment, has launched Blink

in October 2013. Blink is an online platform catering

to young, upwardly mobile 21 to 35 year olds. The

content initially available on Blink was comprised

of 193 movie titles and 23 television titles from

Paramount, The Walt Disney Company, CBS Studios,

Sony Pictures, Warner Brothers, and 20th Century

Fox. Blink offers PPV movies at US$4 per title with 48

hours to watch, as well as a monthly subscription at a

US$10 fee for television series.

Blink plans to increase content up to 800 hours of

TV shows a month and 200 movie titles, including

sports and regional content such as Korean dramas.


It is also projecting to expand into Malaysia and

Indonesia in 2014 through joint ventures with Solar

Entertainment although no partnerships have been

announced yet.

5.2.5 VIACOM INTERNATIONAL MEDIA

NETWORKS ASIA (VIMN) CONTENT

LOCALIZATION

VIMN has announced it will partner with Viva

Communications Inc. in the local production, on-

ground events, marketing, and advertising sales of

MTV Philippines, which will be rebranded as MTV

Pinoy by January 2014.

MTV Pinoy is the only VIMN channel that has been

localised collaboratively with a Philippine partner.

VIMN’s partnership with Viva started when Viva

was appointed as VIMN’s provincial distributor for

Comedy Central Asia.

VIMN is interested in accelerating localisation of its

content for the Philippines. While it has announced

collaboration with only Viva as of the present, it is also

open to working with other appropriate partners as

well.

5.3 Emerging Players and ServicesApple TV, Google TV, Netflix, Hulu, Amazon, and

other international over-the-top (OTT) players are

not expected to be launched in the Philippines in

the near future. OTT development will be hampered

by broadband infrastructure constraints, as well as

concerns about piracy.

However, telecom companies have recognized that

media is key, with smartphone activities playing

an increasingly significant role. This is especially

because of the Filipinos’ affinity for social networking,

as well as the country having strong growth potential

for smartphones and tablets.

Mobile network operators, such as Globe, may play a

big role in the next few years, as they invest in higher

speed (3G/4G) networks and seek other revenue

sources. Currently, Globe is distributing mobile

content through a partnership with ABS-CBN.


This section covers the conditional access systems

(CAS) used by the pay-TV operators, as well as the

corresponding satellite details used by DTH providers.

6.1 SKYcableSKYcable implements Digital Video Broadcasting-

Cable (DVB-C), a digital television signal transmission

standard, through SKYcable Digital. Adoption of

digital video broadcasting was an effort to curb cable

piracy and illegitimate connections.

It also results in an improved viewing experience

for subscribers, providing sharper picture quality,

customizable viewing preferences, and relevant

programming information through a real-time

onscreen program guide and in-house mail function.

Skycable currently supports two different types of

digital boxes, using Irdeto or Verimatrix conditional

access technology. A PVR service is offered, and the

company markets its PVR service under the brand

iRecord.

6.2 CignalCignal Digital TV adopts the Digital Video

Broadcasting-Satellite Second Generation (DVB-S2),

a digital television broadcast standard succeeding

the DVB-S system.

With an increased available bitrate over similar

satellite transponder bandwidth, DVB-S2 provides

better performance than earlier digital television

broadcast standards, particularly a 30% performance

gain over DVB-S. It allows Cignal to accommodate

both SD and HD TV broadcasts, including all

interactive services available on their satellite TV

service. With the supplement of video compression

improvements, an MPEG – 4 AVC high definition

television (HDTV) service can be transported using

the similar bandwidth for DVB-S on MPEG-2 standard

definition television (SDTV). For its encryption system,

Cignal uses Cisco VideoGuard in order to safeguard

its content from signal piracy.

Cignal is broadcast from the SES-7 satellite; users

require a 60cm dish. For its prepaid subscribers,

Cignal uses the prepaid loading platform of its sister

company SMART Communications.

6.3 G SatG Sat channels’ content is received from program

providers, compressed and broadcasted via SES

New Skies NSS 11 using the DVB-S Standard. Users

require 60 cm satellite dishes.

G Sat uses a CAS, with Conax technology, to secure

its content from signal piracy.

6.4 DreamDream’s content is currently broadcast through

Koreasat 5 (Mugunghwa 5) in DVB-S and NTSC color

format. Users require 55cm satellite dishes. Dream

uses the IRD and the Nagravision 3 Encryption

System.

6 Technology in the Philippine Pay-TV Industry


7.1 Consumer Affluence and Ability to SpendIn 2013, there were about 20 million homes in

the Philippines, comprised of an average four to

five members, with 70% having children in their

respective homes. Urban citizens have an average

household income of PHP24,000 or USD$560

per month, while rural counterparts earn around

PHP15,000 or USD$350 monthly. Only two out of

ten Filipinos claim to have savings, as their overall

monthly household expenses reach PHP13,500

to PHP15,500 or USD$315 to USD$360, with food

expenses having the biggest share in the split at

PHP6,500 to PHP7,500 or USD$150 to USD$180 per

month. As expected, urbanites spend more than

their rural counterparts. However, when taken as a

proportion of income, Filipinos in urban areas actually

spend less than the rural dwellers who spend more

than 92% of their monthly income. Despite living in

the provinces, rural Filipinos spend almost the same

amount on food, with less than PHP1,000 or USD$23

difference with their urban counterparts’ monthly

food expenditure.

Filipinos have been found to spend on milk products,

snacks, laundry products, food seasonings, coffee,

canned goods, noodles, and hair care products. For

both urban and rural Filipinos, the overall top must-

have product category is milk products, with each

urban and rural home spending PHP1,400 or USD$33

and PHP900 or USD$21 respectively per quarter on

said category. Other popular categories are baby care

and alcoholic beverages, which rank considerably

high in the ‘spend per buyer’ figures.

7 Advertising in the Philippine TV Industry

Exhibit 38: Average Monthly Expenses & Savings of Urban & Rural Filipino Households

in US$

Source: Kantar Media, TNS Philippines, and Kantar World Panel Information

Average Monthly Balance After Expenses

100

200

300

400

500

600

0RuralUrban

200

360

560

35

315

350

Average Monthly Overall Expense


Exhibit 39: Top Purchased Product Categories for Urban and Rural Filipinos

Category

Ranking

Urban Rural

1 Milk Products Milk Products

2 Snacks Snacks

3 Laundry Products Laundry Products

4 Food Seasonings Food Seasonings

5 Coffee Coffee

6 Canned Goods Canned Goods

7 Noodles Noodles

8 Hair Care Products Hair Care Products

9 Household Care

Products

Cooking Oil

10 Frozen Foods Soft Drinks

Source: Kantar Media, TNS Philippines, and Kantar World Panel Information

Overall, Filipinos, especially those in rural areas,

are still attached to sachet marketing, which is a

practice that promotes selling products in smaller

and more affordable sizes. This condones frequent

trips to purchase goods at lesser but more affordable

volumes per trip. This Filipino mindset has allowed

consumers to canvas and try different products and

brands available to them and has given marketers

an avenue to test the loyalty of their consumers.

Top categories for small but frequent purchases

are snacks or biscuits at 26 to 31 trips, sauces and

seasonings at 22 to 28 trips, and coffee at 20 trips per

quarter.

General sales for household electronics and

appliance staples reflect a growing disposable

income for Filipino households. Computer sales have

seen robust double-digit growth in 2012, while mobile

handset sales have made the Philippines a high

regional growth market for smartphones. TV sales

have also grown, especially with increasing demand

for flat-panel TV sets.

Credit card penetration and vehicle ownership also

reflect the level of the country’s consumer affluence.

Credit card penetration is relatively low at 3%, which

is approximately 3 to 4 million. In 2012, 80% of

transactions in the country were conducted in cash,

as around 82% of Filipinos still do not have accounts

with financial institutions.

7.2 General TV Viewing BehaviourFilipinos have strong affinity towards television

entertainment. Most people watch the television

during weekdays for an average of five hours, in

which time they can be reached by one of the over

8,500 advertisements aired daily on 136 television

channels. An estimated 40% of Filipinos watch TV

during primetime.

The demographics that strongly influence home

television viewing are housewives, and to some

extent, kids and teens. Housewives from rural areas

generally watch an hour less than urban housewives,

while rural kids and teens watch 45 minutes less than

their urban counterparts, according to reports by

Kantar.

In terms of viewing pattern, rural housewives tend

to watch between 6:30 to 8:00 PM, which is the

Exhibit 40: Sales of Filipino Household Electronics and Appliance in US$mn

(2012 – 2013)

Source: Business Monitor Data

2012

200400600800

1,0001,2001,4001,6001,8002,0002,2002,4002,6002,800

0Computer Sales TV Sales Handset Phone Sales

2,2001,900

901

2,4002,000

964

CAGR2013

9%

7%

5%


primetime period. They generally watch significantly

less television during the daytime, as well as after

primetime. On the other hand, urban housewives’

television viewing steadily climbs from 5:30 AM to

around 9:30 AM and goes on a steep ascent after

11:00 AM. Rural and urban kids have similar viewing

patterns in the morning, which lasts until 8:30 AM.

However, the rural children watch less TV at noon and

in the afternoon. They eventually pick up and surpass

the urban children viewing between 5:30 PM and 8:30

PM, much like the rural housewives.

It is evident that television viewing is heavily

influenced by the ‘shape’ of the day. Generally,

weekday and weekend programming are significantly

similar for rural and urban Philippines, with two

evident peaks, particularly the noontime and

primetime periods. Rural households generally view

less TV than urban ones during the daytime and

late at night, with their highest ratings at primetime.

Urban counterparts peak later on both weekdays

and weekends, as they tend to retire later than rural

viewers. The overall average viewing time is five hours.

These trends have strong marketing and media

implications, as TV ads aired at the same time

nationwide are received by two different kinds of

viewers, with varying receptivity. As viewing peaks

and drops change, ad placement strategies must also

shift accordingly. Filipino consumers and viewers in

Manila or urban Philippines should not be seen as

representative of the overall Filipino consumer and

viewer.

Despite the increasing popularity of smartphones,

tablets, and other portable media devices, the

Philippine market still prefers the TV platform to

access news and entertainment.

7.3 Pay-TV and FTA in Relation to Philippine Social StrataGiven Philippine socio-economic environment, it is no

surprise to find more affluent pay-TV subscribers as

compared to FTA. The differences captured in weekly

reach profile should influence advertisers’ decisions

on TV ad spend.

Exhibit 41: Pay-TV and FTA Weekly Reach Profile by Social Class (2013)

Social Class A - Upper Class - executives, presidents, CEOs (>Php 100,000 / month) Social Class B - Upper Middle Class - professionals (Php 50,000-100,000 / month) Social Class C - Middle Class - white-collar jobs (Php 15,000-50,000 / month) Social Class D - Lower Middle Class - blue-collar/clerical jobs (Php,8,000-15,000 / month) Social Class E - Lower Class - living below the poverty line (


The overall monthly reach for both pay-TV and FTA

were relatively stable during 2008-2012 period.

However, time series analysis between 2009 and 2012

shows that monthly reach of more affluent audiences

has grown on both pay-TV and FTA. This might signal

affluent audiences’ increasing affinity to all TV.

7.4 Advertising SpendPhilippines recorded actual media growth of 14% in 2012.

Media growth is projected to slow down in near term.

Advertising spend in the Philippines amounted

to US$4 billion in the first half of 2013 based on

rate card revenue as shown below. This amount

is comprised of digital, as well as the trimedia of

television, radio, and print.*

Among all media, TV has the highest share, with US$3

billion, followed by radio with US$706 million. Print has

a small share of US$136 million, while digital, despite

its infancy, has a respectable share of US$130 million.

Exhibit 42: Philippines TV Audience Monthly Reach, All People (2009-2012)

Source: Kantar Media People Meter*

Pay-TV

2009

In Millions

2010 2011 201205

15

10

20

25

30

35

40

45

50

8 910 10

35.4937.74 38.19 37.84

FTA

Exhibit 43: Philippines TV Audience Monthly Reach, Affluent Audience (2009-2012)

Source: Kantar Media People Meter** All Kantar Media People Meter data is based on survey panel of 2,609 homes and is considered representative of 75M individuals in the Philippines

2009

In Millions

2010 2011 20120

2

4

6

8

2.46 2.703.19 3.37

5.88 6.116.80

7.37

Pay-TV FTA

Exhibit 44: Media Growth in the Philippines (2012-2014F)

Source: Mindshare

5%

10%

15%

20%

0%2012 2013F 2014F

14.0%

8.1%

12.4%

Exhibit 45: Advertising Expenditure in the Philippines by Media in US$bn

(1st Half of 2013)

Note: *Costs are based on published rate cards For TV and radio, OBBs, CBBs, and freeforms are excludedSource: Kantar Media

Cost of Advertising Expenditure

3,500

4,000

4,500

2,500

3,000

500

1,000

1,500

2,000

0Total TV Radio Print Digital

4,014

3,042

706

136 130


However, according to Mindshare, the actual spend in

2013 is expected to be – US$3 billion for the full year.

Within the TV industry, the three major FTA channels

cover almost 87% of the total ad spend by FTA

channels in 2012.

ABS-CBN GMA TV5 ETC (RPN) IBC RJTV GNTV STUDIO 23 SOLAR NBN

50%

40%

30%

20%

10%

0%

Exhibit 46: Share of Ad Spend by FTA Channels

Cumulatively sum up to 12.5%

Source: Kantar Media; Media Partners Asia; MegaTam, Company Reports, Venture Consulting Analysis

43.0%

33.5%

10.9%

5.1%2.2% 1.8% 1.7% 1.0% 0.4% 0.2%

7.5 Key Advertisers and Future TrendsIn the Philippines, key advertised categories on TV

tend to be fast moving consumer goods (FMCG),

which is led by hair care products, as well as

detergents and laundry aids. At 9.09% share, hair

care, with the highest advertising share on Philippine

TV, amounts to US$2.8 million.

Hair S

hamp

oo

Deter

gents

&

Laun

dry A

ids

Milk

Powd

er

Tooth

paste

, Mou

thwas

h,

and T

oothb

rush

Gove

rnme

nt Ag

encie

s &

Publi

c Utili

ties

Hair C

ondit

ioner

Wirel

ess T

eleph

ony

Misc

ellan

eous

Food

Prod

ucts

Facia

l Care

Enter

tainm

ent

Exhibit 47: Advertising Share of Top Advertised Categories on Philippine TV (1st Half of 2013)


9.09%8.52%

5.43%

4.35% 4.25%3.60%

3.24% 3.15% 2.89% 2.82%

% Share of Top Advertised Categories on TV


Correspondingly, as for top advertisers, companies

that sell consumer goods take the biggest share on

Philippine TV followed by processed food and fastfood

companies. This is determined through monitoring an

average of 250,000 commercials shown per month.

In brands, Colgate toothpaste leads the ranking,

followed by Palmolive shampoo with conditioner.

This corresponds to the findings that place FMCG

goods as the top products with highest advertising

share on TV.

Unile

ver

Philip

pines

, Inc.

Proc

ter &

Gamb

le

Philip

pines

, Inc. Ne

stle

Philip

pines

, Inc.

Colga

te-Pa

lmoli

ve

Philip

pines

, Inc. Un

ited

Labo

ratori

es, In

c.

Mond

e Niss

in

Corp

oratio

n

Mead

John

son

Philip

pines

, Inc.

Unile

ver R

FM Ic

e

Crea

m, In

c.

Unive

rsal R

obina

Corp

oratio

n

Jollib

ee Fo

ods

Corp

oratio

n

Exhibit 48: Advertising Share of Top Advertisers on Philippine TV (1st Half of 2013)

Note:*Costs are based on published rate cards For TV and radio, OBBs, CBBs, and freeforms are excludedSource: Kantar Media

16.04%

11.77%

7.56%6.20%

3.44%

1.76% 1.73% 1.51% 1.19% 1.14 %

Others

Food Processing and F&B

Consumer Goods

Colga

te

Tooth

paste

Palm

olive

Sham

poo

With

Cond

itione

r

Surf

Deter

gent

Powd

er

Crea

msilk

Hair

Cond

itione

rs

Selec

ta Ice

Crea

m

Ariel

Dete

rgen

t

Powd

er

Suns

ilk H

air

Sham

poo

Nesc

afe C

offee

Palm

olive

Hair

Sham

poo

Bree

ze Po

wder

Deter

gents

Exhibit 49: Advertising Share of Top Brands Advertised on Philippine TV (1st Half of 2013)


1.94%1.80%

1.70%1.57% 1.53% 1.47% 1.41% 1.36%

1.24% 1.22 %

OthersHair CareDetergent and Laundry Aids


Others

This section describes the regulations concerning the

TV industry and the key stakeholders.

8.1 Key Stakeholders in Philippine TV RegulationKey stakeholders are Media Regulatory Bodies and

Self-Regulatory Bodies, and they are described in

turn.

8.1.1 MEDIA REGULATORY BODIES

Roles and responsibilities of the Media Regulatory

Bodies are set out below.

8 Regulation of the Philippine TV Industry

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