Downsizing Workforce Inevitable as PH TV Surfs the Digital Wave

DOUBLE-EDGED DIGITIZATION. Most TV networks in the Philippines are forced to downsize their workforce and spend more to stay afloat in today's digital wave

Image courtesy of www.rappler.com

Source: www.rappler.com

The major telcos are not the only ones affected by the digital transition. Television broadcasting is also making the move to digital.

TV executives are redefining their business models as they navigate the television industry's shift to a multimedia sphere.

Local broadcast giants, such as GMA Network, Incorporated and ABS-CBN Corporation, have seen their traditional supremacy in delivering news and entertainment shift in today’s multi-platform and multimedia space.

As most of their viewers now consume news through Twitter, Facebook and other social media channels, TV networks are forced to embrace the Internet while still maintaining accuracy and trustworthiness.

“It’s not the future. Digitalization is today. Physical capital barriers have crumbled as ‘open content’ on the Web undermines the traditional scheme of delivering news,” ABS-CBN chief digital officer Donald Lim said on the sidelines of the Philippine Marketing Association event in June.

The changing landscape for the Philippine television industry has pushed networks to streamline their workforce and retain employees who understand the threats and opportunities that the digital world presents to their business.

ABS-CBN’s Lim confirmed that his company is doing a manpower reduction program this year, although he did not say how many the network is targeting to lay off. Sources inside ABS-CBN tell Rappler these moves began with SSP or Special Separation Program in 2014.

An unverified news report in May, however, quoted ABS-CBN chief finance officer Rolando Valdueza saying “less than 200 employees nationwide will be affected during the ongoing digitalization of the company.”

He also said in the news report by Manila Standard Today that the aim of the manpower reduction was not to reduce costs, but rather “to get people as we prepare for the shift into digital services.”

ABS-CBN has around 8,500 employees, including those of units ABS-CBN Global and Sky Cable Incorporated.

Its rival GMA Network in April laid off around 100 reporters, video cameramen, and drivers in its regional offices in Cagayan de Oro, Bacolod, and two other cities. The network cited declining revenues, redundancy in workforce and additional capital for digital shift as reasons for the retrenchment.

The network’s job cuts will likely continue in its main office in Quezon City, with president and CEO Felipe Gozon saying: “We’re done with regional offices, but here in the main office, we still have to know by how many [are we going to layoff]; we’re constantly reviewing.”

Downsizing inevitable

“Downsizing workforce is inevitable. It is part of digital age. It’s a reality, all of us will have to plan for. We need to lay off. That is part of the business. We are experiencing it now,” ABS-CBN’s Lim said.

“If you look at it now, you’re not earning as much as you did 10 years ago. That’s given. So it’s a race toward how do you adapt. In the end it’s business," Lim added.

"Regardless of public service, everything else, it’s still a business. You can only give so much. You can only protect the country so much but in the end you have to earn. You have to have that balance,” Lim explained.

However, for CNN Philippines, its president Benjamin Ramos said in a phone interview: “We have no plans of reducing manpower. For us, we started off small, around 600 employees. Other networks are cutting off staff because they started big and now they need to reduce. For us, we do not have to. In fact, we need more staff.”

Rappler tried to call and text TV5 officials but they could not be reached since May.

ANALOG SHUTDOWN. All local networks will need to shut off their analog TV by 2019, NTC says.

Image courtesy of www.rappler.com

Additional capital

Not only that. Television in the Philippines is on the verge of a major change, as the country aims to completely replace the current analog cable networks with a digital system by 2019.

Local broadcast networks have earmarked significant amounts in their budgets to finance the digital shift.

This was after the National Telecommunications Commission (NTC) in December 2014 finally cleared the way for the country’s shift to Digital Terrestrial Television Broadcast (DTTB) system. This means all local networks will need to shut off their analog TV systems and shift to DTTB.

“The migration plan, or when to shut off analog TV, will be by phases and NCR (National Capital Region) will be the first one. The shift will start by 2019," NTC Commissioner Gamaliel Cordoba said.

"No analog TV operation shall be allowed after the analog shut-off, which will be set by the agency," Cordoba added.

ABS-CBN, GMA, and TV5 has allotted more than P500 million to build the infrastructure needed to roll out DTTB.

TV5 President and CEO Emmanuel Lorenzana told reporters in September 2014 that his network is investing "anywhere from P500 million ($11.21 million) to P700 million ($15.69 million) across 3 to 4 years for digital TV; the amount will be used to build our infrastructure and transmission." Lorenzana added that the company will complete the upgrades "earlier than 2020."

ABS-CBN’s Cerrado meanwhile said his company "already spent around P2 billion ($44.84 million) for infrastructure and it’s already built."

For GMA, Gozon said his network allotted "about P2 billion ($44.84 million) to P3 billion ($89.68 million) for infrastructure alone," including transmission and equipment to ready for the digital migration.

"Thanks to a thorough review of our business needs vis-à-vis our capabilities, and the industry situation as a whole, all transmitter and other upgrades that were already in the pipeline were still being implemented despite our belt-tightening," Gozon said.

For CNN Philippines, Ramos said his company is targeting to start to migrate to digital TV within the year, but he did not disclose how much it is allocating for the shift.

Redefine business model

"As early as today, telcos and networks are experiencing pressure on both revenues and margins from numerous sources, including increased competition, new engagement models, and new regulations that are forcing them to adapt to the changing landscape and be more competitive," Alberto said.

According to IDC's Alberto, operators have measures they can implement to help themselves survive and thrive in the coming years.

They can "redefine their business model; invest in data compression technology for better management of growing data volumes; and make the most of the service levels on their networks," Alberto said.

Alberto added that if they do not act now, business will continue as usual, but operators will face drops in margins and end-consumers will experience a continued decline in network service quality.

The outcome, the IDC country head said: a "sort of digital dead end."