ABS-CBN Corporation

Sgt. Esguerra Avenue, Quezon City, Philippines

27 April 2012

Philippine Stock Exchange, Inc. Attn: Ms. Janet A. Encarnacion Head, Disclosure Department 3rd Floor, Philippine Stock Exchange Plaza Ayala Triangle, Ayala Avenue, Makati City

Subject: Submmission of the Annual Report for the fiscal year ended December 31, 2011

Gentlemen / Ladies: We are submitting SEC 17-A (Annual Report) for the fiscal year ended December 31, 2011.

Very truly yours,

Paul Michael V. Villanueva Compliance Officer for Corporate Governance

COVER SHEET
1 8 0 3
SEC Registration Number

A B S - C B N - C B N D

C O R P O R A T I O N

f o r m e r

A B S A N

B R O A D C A S T I N G I D I A R I E S

C O R P O R A T

I O N )

S U B S

(Companys Full Name)

S G T . M O .

E S G U E R R A I G N A C I A C I T Y

A V E

C O R N E R

S T .

Q U E Z O N

(Business Address: No. Street City/Town/Province)

Rolando P. Valdueza
(Contact Person)

415-2272
(Company Telephone Number)

1 2
Month

3 1
Day

1 7 A
(Form Type)

0 6
Month

2 1
Day

(Fiscal Year)

(Annual Meeting)

(Secondary License Type, If Applicable)

Dept. Requiring this Doc.

Amended Articles Number/Section Total Amount of Borrowings

6,062
Total No. of Stockholders

P12.8 billion =
Domestic To be accomplished by SEC Personnel concerned

$1.0 million
Foreign

File Number

LCU

Document ID

Cashier

STAMPS Remarks: Please use BLACK ink for scanning purposes.

SECURITIES AND EXCHANGE COMMISSION SEC FORM 17-A ANNUAL REPORT PURSUANT TO SECTION 17 OF THE SECURITIES REGULATION CODE AND SECTION 141 OF THE CORPORATION CODE OF THE PHILIPPINES

1. For the fiscal year ended December 31, 2011 2. SEC Identification Number 1803 3. BIR Tax Identification No. 301-000-406-761V

4. Exact name of issuer as specified in its charter: ABS-CBN CORPORATION AND SUBSIDIARIES 5. Philippines Province, Country or other jurisdiction of incorporation or organization 6. (SEC Use Only) Industry Classification Code:

7. ABS-CBN Broadcasting Center, Sgt. Esguerra Ave cor Mo Ignacia St., Quezon City 1100 Address of principal office 8. (632) 924-41-01 to 22 / 415-2272 Issuer's telephone number, including area code 9. Not applicable Former name, former address, and former fiscal year, if changed since last report. 10. Securities registered pursuant to Sections 8 and 12 of the SRC, or Sec. 4 and 8 of the RSA Number of Shares of Common Stock Outstanding and Amount of Debt Outstanding 779,584,602 as at December 31, 2011 Php12.5 billion

Title of Each Class Common Stock, Php1.00 par value

Short-term & Long-term debt (current & non-current) 11. Are any or all of these securities listed on a Stock Exchange? Yes [] No [ ]

If yes, state the name of such stock exchange and the classes of securities listed therein: Philippine Stock Exchange Common Stock

12. Check whether the issuer: (a) has filed all reports required to be filed by Section 17 of the SRC and SRC Rule 17 thereunder or Section 11 of the RSA and RSA Rule 11(a)-1 thereunder, and Sections 26 and 141 of The

Corporation Code of the Philippines during the preceding twelve (12) months (or for such shorter period that the registrant was required to file such reports); Yes [] No [ ]

(b) has been subject to such filing requirements for the past ninety (90) days. Yes [] No [ ]

TABLE OF CONTENTS

PART I BUSINESS AND GENERAL INFORMATION Item 1. Business Item 2. Properties Item 3. Legal Proceedings Item 4. Submission of Matters to a Vote of Security Holders PART II -- OPERATIONAL AND FINANCIAL INFORMATION Item 5. Market for Issuers Common Equity and Related Stockholder Matters Item 6. Managements Discussion and Analysis or Plan of Operation Item 7. Financial Statements Item 8. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure PART III CONTROL AND COMPENSATION INFORMATION Item 9. Directors and Executive Officers of the Issuer Item 10. Executive Compensation Item 11. Security Ownership of Certain Beneficial Owners and Management Item 12. Certain Relationships and Related Transactions PART IV CORPORATE GOVERNANCE Item 13. Corporate Governance PART V EXHIBITS AND SCHEDULES Item 14. Exhibits and Reports on SEC Form 17-C SIGNATURES

PART I - BUSINESS AND GENERAL INFORMATION Item 1. Business Business Overview ABS-CBN Corporation (ABS-CBN or the Company) is the Philippines leading information and entertainment multimedia conglomerate. The Company is primarily involved in television and radio broadcasting, as well as in the production of television and radio programming for domestic and international audiences and other related businesses. The Company produces a wide variety of engaging, world-class entertainment programs in multiple genres and balanced, credible news programs that are aired on free-to-air television via its Very High Frequency (VHF) TV network, Channel 2, and its Ultra High Frequency (UHF) TV network, Studio 23, along with a vast regional network of TV stations nationwide. The Companys VHF television network, anchored by Channel 2, its flagship station in Mega Manila, and several owned and operated television stations and affiliated stations throughout the country, is the highest-rating and most expansive television network in the country. The Company also owns and operates Studio 23, the leading UHF channel, with a vast network of UHF stations nationwide. Studio 23 complements Channel 2s mass-based programming through its airing of popular foreign series and local sports programming. The Company is also one of the leading radio broadcasters, operating 18 AM and FM radio stations throughout the key cities of the Philippines. ABS-CBNs anchor radio stations in Manila, DZMM on the AM band and DWRR on the FM band, are among the most-listened to in Mega Manila. In addition, ABS-CBN, through its subsidiaries, Sarimanok News Network, Inc. and Creative Programs, Inc., also provides news and entertainment programming for 9 channels on cable TV ABS-CBN News Channel or ANC, Cinema One, Lifestyle Network, Myx, Balls, Velvet, Hero, and DZMM Teleradyo. The Company owns the leading film and music production and distribution outfits in the country, Star Cinema and Star Records, and also has business interests in content development and production, merchandising and licensing, cable and satellite television services, mobile and online multimedia services, glossy magazine publishing, video and audio post production, overseas telecommunication services, money remittance, cargo forwarding, property management and food and restaurant services, all of which complement and enhance the Companys strength in content production and distribution. ABS-CBN brings its content to worldwide audiences via cable, satellite, online and mobile, through its various international subsidiaries and affiliates, and its flagship channel, The Filipino Channel (TFC). TFC is available in most major territories with a significant Filipino populace such as the United States, the Middle East, Europe, Australia, Canada and Japan. With direct ties to more than 2 million viewers outside the Philippines, ABS-CBN Global also offers services vital to the overseas Filipino long-distance telecoms, money remittance and cargo forwarding. As of end-2011, ABS-CBN Global accounts for 17% of the Companys top line. ABS-CBN also holds an interest in the countrys largest cable TV network, SkyCable. Cornering over half of the total pay TV subscribers in the country, SkyCable represents a major content distribution platform for the Company. Aside from providing postpaid and prepaid cable TV services, SkyCable also offers SkyBroadband, the fastest residential broadband internet service in the country, and SkyVoice, the most affordable long-distance telecommunication package available. Throughout the years, the Company has evolved from a purely broadcasting business into a thriving multimedia content and distribution conglomerate that continues to be in the service of the Filipino. ABS-CBN has diversified its revenue sources; from relying mostly on airtime advertising revenue, the Company now sources about 40% of its sales direct from its consumers in the form of subscription and other services and goods. ABS-CBNs common shares and Philippine Depositary Receipts are traded in the Philippine Stock Exchange. Historical Background

ABS-CBN traces its roots from Bolinao Electronics Corporation (BEC), established in 1946 as an assembler of radio transmitting equipment. In 1952, BEC adopted the business name Alto Broadcasting Corporation (ABS) and began setting up the countrys first television broadcast by 1953. On September 24, 1956, Chronicle Broadcasting Network (CBN), owned by Don Eugenio Lopez Sr. of the Lopez family, was organized primarily for radio broadcasting. In 1957, Don Eugenio Lopez Sr. acquired ABS and on February 1, 1967, the operations of ABS and CBN were integrated and BEC changed its corporate name to ABS-CBN Broadcasting Corporation. ABS-CBN achieved many firsts since it started the television industry in the country in 1953. However, with the imposition of martial law in September 1972, ABS-CBN ceased operations as the government forcibly took control of the Company. ABS-CBN resumed commercial operations in 1986 after the People Power or EDSA revolution. Recovery after 14 years of absence was difficult as resources were scarce. Nevertheless, through relentless effort, ABS-CBN recaptured leadership in the Philippine television and radio industries by 1988. During the 1990s and the early part of the new millennium, the Company expanded and ventured into complementary businesses in cable TV, international distribution, mobile services, and magazine publishing among others. Business Strategy Transforming lives by changing the media landscape is both ABS-CBNs vision and passion. We are driven to pioneer and innovate because we know that we help more Filipinos discover themselves and connect to one another. We open pathways to opportunities and we bring people a step closer to their dreams. In ABS-CBN, we are firmly committed to pursuing excellence. The key elements to our business strategy are: Anytime, anywhere, in any device or medium. As our audience demand greater control over how and when they will consume our content, we will ensure our continued relevance by distributing our content in the widest array of platforms that technology will allow. Our audience will be able to reach us anytime at any place in any medium. Building on our core strength in content creation. While everything around us changes the technology, the production process, the medium used to access our content our core ability to create quality content that touches, inspires and empowers our viewers must remain constant. We will continue building on our core strength in content creation. Maintain a strong fiscal position and bring value to our stakeholders. We will derive the most synergies possible between our content and distribution businesses. We will consciously operate more efficiently and cost-effectively, as we deliver greater value to our customers, clients, partners, and shareholders.

Subsidiaries and Affiliates ABS-CBN Film Productions, Inc. ABS-CBN Film Productions, Inc. (AFPI) or more popularly known as Star Cinema, is the countrys leading film producer and distributor. AFPI, a 100%-owned subsidiary of ABS-CBN, produces films primarily for the domestic market and has already penetrated the international scene, having conducted several sold-out international screenings. Sixteen of AFPIs films comprise the list of the countrys top 20 highest local movie grosses of all time, including 9 of the top 10. It has been considered to be the catalyst for the re-emergence of the local cinema industry, which was once floundering due to the proliferation of piracy. In 2011, AFPI produced 16 film, 6 of which grossed upwards of Php100 million, the local film industrys unofficial benchmark for a blockbuster hit. ABS-CBN Global Ltd.

ABS-CBN pioneered international content distribution when it launched the countrys first international direct-to-home (DTH) and cable channel service through ABS-CBN Globals The Filipino Channel (TFC). Launched in 1994, TFC is targeted specifically at overseas Filipinos, both immigrants and temporary workers. TFC is available in various formats (DTH, cable, Internet Protocol TV [IPTV], mobile and online through TFCNow) in all territories where there is a significant market of overseas Filipinos such as the United States, the Middle East, Europe, Australia, Canada, and Japan, among others. In July 2005, ABS-CBN, through ABS-CBN Globals subsidiary, ASB-CBN International, signed an affiliation agreement with DirecTV, one of the leading DTH system providers in the United States. Under the deal, DirecTV has the exclusive right to distribute the TFC package on its DTH platform. In return, DirecTV will pay license fees to ABS-CBN and to ABS-CBN International. As of end-2011, ABS-CBN Global reaches over 2.4 million viewers in over 40 countries across 4 continents worldwide. ABS-CBN Interactive, Inc. Realizing the emergence of new media technologies, ABS-CBN incorporated ABS-CBN Interactive, Inc. (ABSi) in January 1999 to manage the Companys new media ventures and strategies. ABSi initially undertook the development of PinoyCentral, an online portal for Filipino web content. Riding the wave of increased mobile phone and short message service (SMS) usage in the Philippines, ABSi developed a slew of mobile products, leveraging on ABS-CBNs content properties. ABSis mobile value-added service (VAS) products broke new ground, cementing ABSis place among the top mobile content providers in the country. ABSi pioneered mobile and TV tie-ups in the Philippines, enabling the mobile phone user to send in their feedback on ABS-CBN programs, join promos, vote for their favorite reality show contestant, and keep in touch with their favorite celebrities, among others. ABSi also developed the Companys online video streaming service, TFCNow!, which garnered international recognition for its innovativeness, marking ABS-CBNs entry into the internet space as a distribution platform for its content. ABSi also went into the gaming business, from the development of mobile games tied up to ABS-CBN content to the licensing of popular international role-playing and casual games. As the Companys link to the online space, ABSi ensures that ABS-CBN remains relevant among the internet population through its primary websites, abs-cbn.com and abs-cbnnews.com, and through the various social networking communities, including Multiply, one of the worlds largest social networks, where ABSi is an exclusive marketing, technology and mobile partner. ABS-CBN Publishing, Inc. Established in 1992, ABS-CBN Publishing (API) completes the Companys tri-media coverage with 13 glossy magazine titles, anchored by one of the countrys leading fashion and lifestyle magazine, Metro. APIs glossy magazine titles serve niche upscale interests, ranging from fashion and lifestyle, celebrity, gossip and entertainment, to culinary arts, parenting and interior design. Each magazine title leverages on ABS-CBNs content and enhances the Companys other content and distribution properties. Creative Programs, Inc. Creative Programs, Inc. (CPI) manages and operates the Companys 7 cable channel offerings, each delivering superior cable programming anchored on various genres. While each cable channel addresses the information and entertainment needs of a specific niche target, CPIs cable channels collectively captures all the demographic markets vital to advertisers. Cinema One, the highest rating cable channel and the premier Filipino movie channel, brings high-quality Filipino movies to every household. Myx, the leading music channel, revolutionized music video consumption, inviting viewers to sing along as the lyrics are shown on screen. Hero, the number one anim channel, delivers excitement to the youth as they go through their journey for self expansion and awareness. Upscale females find the Lifestyle Network and Velvet as indispensable companions for empowerment in their busy and demanding environment, while Balls promises fun and thrill to active upscale males with its sports and irreverent content.

CPI successfully delivered an enriched cable viewing experience with new features, segments and milestone live events in 2010. Balls! broadcasted the 2010 FIFA World Cup including the exciting and finals match between Spain and the Netherlands, which drew a record number of viewers. It also held the biggest UFC event featuring George St. Pierre, one of the top names in the league. It launched Sharon at Home in the Lifestyle Network, which featured another facet of the local superstar Sharon Cuneta. Velvet revamped the lineup to be more youth oriented as it aired,top-rated US series like 90210, Americas Next Top Model and Keeping Up with the Kardashians. It expanded Cinema Ones offering with Asian films dubbed in Filipino, strengthening its hold as the countrys number 1 cable channel. Hero, meanwhile, revitalized its mix with new and more popular titles. Lastly, through tent pole events like MYXMo!, MYX SlamJam and the MYX Music Awards, it further reinforced MYXs hold on the young males and standing as the most-watched music channel

Sarimanok News Network, Inc. / ABS-CBN News Channel ABS-CBN News Channel, or more popularly known as ANC, is the only 24/7 Filipino cable news channel in the country. Launched in 1996, ANC brings the news that matter most to Filipinos around the world. Besides daily newscasts, ANC also produces a variety of lifestyle, business, travel and sports programming. ANC is also available worldwide via the TFC package of ABS-CBN Global. Sky Cable Corporation Founded in 1990, Sky Cable Corporation (Sky Cable) is the countrys largest cable TV service provider, cornering over half of the total pay TV market. Sky Cables recent move to digitize its cable services opened new opportunities for programming and pricing flexibility, and at the same time, minimized the adverse impact of cable TV pilferage. Now offering both postpaid and prepaid packages, as well as a la carte programming on top of its three cable TV packages, Sky Cable ensures that every familys entertainment needs will be met. The many combinations of Sky product innovations and pricing schemes being offered to subscribers gave them freedom to choose the package that best suited them. It introduced the first and only real triple-play service in the market in Metro Manila with Sky Bundle Plan 1099. The bundle included cable TV, broadband, and Internet phone, which gave the Filipino home the best combination of entertainment, information and communication technologies. The continued move towards digitization and towards an enhanced viewing experience for its customers resulted in the increased rollout of Digiboxes in Metro Manila to 75% of Sky Cable pay-TV subscribers from 52% in 2009. In Cebu, 23% of existing subscribers acquired their Digiboxes, which resulted in an improvement of 5% in monthly revenues. In Davao, on the other hand, 71% of our total number of subscribers went digital, a result of low-priced products we introduced to improve penetration rates. In 2010, Sky Cable also launched the Sky Broadband Ultra High Speed, an Internet connection subscription that offers speeds of up to 112 mbps. Further, beginning 2010, Sky broadband subscribers had the fortune to catch up on missed episodes of their favorite ABS-CBN shows via iWantv in the convenience of their desktops or laptops. iWantv, a revolutionary online access to entertainment, featured TV on Demand, Movies on Demand, and Live TV, with ABS-CBN shows, programs, and teleseryes, available anywhere, anytime. Foreign shows and movies were also made available on video-on-demand format. Star Recording, Inc. (Star Records) / Star Songs, Inc. Star Recording Inc. was established in 1995 to address the Companys growing need for a recording outfit for its multi-talented artists. Star Songs, which handles the Companys music publishing and composing requirements, was incorporated the following year.

Studio 23, Inc. With pay TV in its infancy in the country during the mid-1990s, Studio 23 was launched to serve the upscale market, a market clamoring for foreign content, a market that ABS-CBN needed to serve. In 1996, Studio 23 began its first broadcast in Mega Manila.

Studio 23 easily became known as the countrys free cable channel. Studio 23 brought to the Philippines many global programming hits such as Dawsons Creek, Smallville, Buffy, Survivor, CSI, the Amazing Race, Alias, Desperate Housewives, Lost, and Greys Anatomy, among others. Over the years, Studio 23 has gradually re-focused its programming to capture the elusive urban youth market with programs such as the UAAP and NCAA games and popular US shows, gimmicks such as the revolutionary FUSEd (or Fresh US Episodes, which delivered the latest seasons and episodes of the most popular US series as they are aired in the US) and events that brought large gatherings and impressive participation figures. ABS-CBN Foundation, Inc. ABS-CBNs enviable position of being in media opens up opportunities to render public service. The driving philosophy underpinning the Companys business is to be of service to the Filipino people. Given the sociopolitical context of the Philippines, ABS-CBNs audience and stakeholders expect and rightly deserve nothing less. ABS-CBN Foundation Inc. (AFI), a non-stock, non-profit organization, was incorporated in 1989 to address the plight of the disadvantaged and to ensure that solicited help are properly allotted and utilized. AFI has 5 flagship programs: o E-Media. A pioneer in educational television, E-Media produces and distributes programming geared toward helping the countrys public schools improve their quality of education. o Bantay Bata (Child Watch). A national child-caring program that offers a 24/7 hotline, home visits, legal/medical/educational assistance, and supplemental feeding. It is aimed to rescue children from abusive environments and promote the welfare and rights of children. Rescued children are assured of proper nurturing and care through AFIs Childrens Village, established in one of the suburbs of Metro Manila. o Bayan Microfinance. AFI saw the need to provide livelihood assistance and opportunities to poor but enterprising countrymen. Bayan Microfinance was established as a program to provide financial assistance to promising micro-enterprises. It was eventually spun-off as a separate nonstock, non-profit entity, ABS-CBN Bayan Foundation, Inc. in 2000. o Bantay Kalikasan (Nature Watch). Launched in 1998, Bantay Kalikasan promotes the cause of the environment through proper disposal of industrial products such as batteries and the reestablishment of nature havens across the country, most notable of which is the reforestation and protection of the La Mesa Watershed, the only remaining patch of forest in the Metro Manila area and a major source of potable water. o Sagip Kapamilya. Since its inception, AFI has been in the forefront of disaster response. With the Philippines prone to natural calamities such as earthquakes, typhoons and volcanic eruptions, AFI recognized the need for a holistic approach in providing disaster relief and rehabilitation to victims. Bayanijuan was launched in 2008, coinciding with ABS-CBNs 55th year in television, to synergize and fully utilize the different programs of AFI in rebuilding each Filipino community one at a time. The following table lists down the Companys active subsidiaries and affiliates (as of December 31, 2011): COMPANY DATE OF INCORPORATION PRINCIPAL ACTIVITIES OWNERSHIP INTEREST

Philippine Subsidiaries and Affiliates (Direct Wholly-Owned and Majority Owned)

ABS-CBN Publishing, Inc. Star Recording, Inc. (Star Records) 03 September 1992 02 February 1995 Print publishing Audio and video production and distribution Services - post production Music publishing 100.0 100.0

Roadrunner Network, Inc. Star Songs, Inc.

23 November 1995 07 August 1996

100.0 100.0

Sarimanok News Network, Inc.

23 June 1998

Content development programming services

and

100.0

ABS-CBN Interactive, Inc. The Big Dipper Digital Content & Design, Inc.

29 January 1999 30 June 2000

Services - interactive media Digital film archiving and central library of content licensing and transmission Content development programming services Content development programming services and

100.0 100.0

Creative Programs, Inc.

24 October 2000

100.0

Studio 23, Inc.

24 October 2000

and

100.0

TV Food Chefs, Inc. ABS-CBN Film Productions, Inc. ABS-CBN Integrated and Strategic Property Holdings, Inc. ABS-CBN Global Cargo Corporation

23 January 2001 25 March 2003 09 October 2003

Services -restaurant and food Movie production Real estate

100.0 100.0 100.0

04 November 2009

Non-vessel common carrier operations Holding company

100.0

Sapientis Holdings Corporation

29 June 2009

100.0

Philippine Subsidiaries and Affiliates (Indirect Wholly-Owned and Majority Owned)

Sky Cable Corporation 06 June 1990 Cable television services 56.7 thru Sky Vision Corporation 100.0 thru ABS-CBN Publishing, Inc. 100.0 thru ABS-CBN Global Ltd. 100.0 thru ABS-CBN Interactive, Inc. 70.0 thru Sapientis 66.5 thru Sapientis, subsidiary of CTI

Culinary Publications, Inc.

17 May 1996

Print publishing

E-Money Plus, Inc.

07 August 2000

Services money remittance

ABS-CBN Multimedia, Inc.

25 August 2004

Digital electronic distribution Holding company Telecommunication

content

Columbus Technologies (CTI) Multi-Media Telephony, Inc.

29 December 2011 29 December 2011

International Subsidiaries
ABS-CBN International 22 March 1979 California, USA ABS-CBN Telecom North America, Inc. ABS-CBN Global Ltd. with Branch Offices at the following countries: 1. 2. Philippines Taiwan 19 April 1995 California, USA 03 January 2002 Cayman Islands Holding company Cable and satellite programming services Telecommunications 100.0 thru ABS-CBN Global Hungary Kft 100.0 thru ABS-CBN International 100.0

ABS-CBN Middle East FZ-LLC

29 April 2002 Dubai, UAE

Cable and satellite programming services Trading

100.0 thru ABS-CBN Global, Ltd. 100.0 thru ABS-CBN Middle East FZ-LLC 100.0 thru ABS-CBN Global, Ltd.

ABS-CBN Middle East LLC

29 April 2002 Dubai, UAE

ABS-CBN Europe Ltd. with Branch Offices at the following countries: 1. 2. Italy Spain

08 May 2003 United Kingdom

Cable and satellite programming services

ABS-CBN Australia Pty. Ltd

18 May 2004 Victoria, Australia 22 March 2006 Japan 08 March 2007 Canada 03 July 2008 Singapore

Cable and satellite programming services Cable and satellite programming services Cable and satellite programming services Corporate support and administrative services for various international ABS-CBN subsidiaries and affiliates Holding company

100.0 thru ABS-CBN International 100.0 thru ABS-CBN Europe Ltd. 100.0 thru ABS-CBN International 100.0

ABS-CBN Japan, Inc.

ABS-CBN Canada ULC (formerly The Filipino Channel Canada ULC) ABS-CBN Shared Service Center PTE. Ltd. (with Regional Operating Headquarters in the Philippines)

ABS-CBN Global Hungary Kft. (with Branch Office in Luxembourg) ABS-CBN Global Netherlands B.V.

09 February 2009 Hungary 19 May 2009 Netherlands 18 November 2009 California, USA 2010 , Kingdom United

100.0

Holding company

100.0 thru ABS-CBN Global Hungary Kft 100.0 thru ABS-CBN International 100.0 , subsidiary of ABS-CBN Europe 100.0, thru ABS-CBN Hungary

ABS-CBN Global Remittance, Inc.

Services money remittance

ABS-CBN Europe Remittance Inc. ABS-CBN Canada Remittance Inc.

Services-money remittance Services-money remittance

2011, Canada

COMPANY Philippine Affiliates

Lopez, Inc. First Philippine Corporation Sky Vision Corporation Holdings

DATE OF INCORPORATION

PRINCIPAL ACTIVITIES

OWNERSHIP INTEREST

Holding company 30 June 1961 Holding company

Parent of ABS-CBN 43.0 owned by Lopez, Inc. 18.8 owned by ABS-CBN; 70.0 owned by Lopez,

18 April 1991

Investing in ventures related to cable television, cable communications, cable

systems, television media and shopping networks, and film distribution Lopez Holdings Corporation (formerly Benpres Holdings Corporation) Bayan Telecommunications Holdings Corporation AMCARA Broadcasting Network, Inc. 08 June 1993 Holding company

Inc.

56.2 owned by Lopez, Inc.

15 October 1993

Holding company

88.3 owned by Lopez, Inc. radio 49.0

12 April 1994

Television and broadcasting Holding company

Beyond Cable Holdings, Inc.

07 December2001

7.0

Non-Stock Corporations
ABS-CBN Foundation, Inc. ABS-CBN Bayan Foundation, Inc. 71 Dreams Foundation, Inc. 05 July 1989 18 January 2000 24 March 2006 Charitable institution Charitable institution Charitable institution

Competition Free-to-Air Television There are currently 11 commercial television stations those which derive the majority of their revenues from the sale of advertising and airtime in Mega Manila (which includes Metro Manila and parts of the nearby provinces of Rizal, Laguna, Cavite and Bulacan), with 7 on VHF and 4 on UHF. The Company's television broadcasting networks compete for advertising revenues, the acquisition of popular programming and for the services of recognized talent and qualified personnel. The Company's television stations also compete with other advertising media, such as radio, newspapers, outdoor advertising and cable television channels, as well as with home video exhibition, the Internet and home computer usage. The major free-to-air broadcasting networks in the country, their corresponding Mega Manila channels, and their respective performance in National Urban Philippines household ratings and audience share for 2011, are as follows:
National Urban Philippines (2011) RTG% ABS-CBN Corporation National Broadcasting Network Associated Broadcasting Company GMA Network Inc. ABS-CBN 2 NBN 4 ABC 5 / TV5 GMA 7 10.5% 0.1% 3.9% 10.1% SHR% 35% * 13% 34%

NETWORK

CALLSIGN / FREQUENCY

GMA NewsTV Intercontinental Broadcasting Corporation IBC 13

0.6% 0.2%

2% 1%

Southern Broadcasting Network ABS-CBN Broadcasting Corporation Eagle Broadcasting Corporation RJ Broadcasting Corporation
*Less than 0.05%

SBN 21 / ETC Studio 23 NET 25 RJTV 29 / 2nd Avenue

0.1% 1.2% 0.0% 0.0%

* 4% 0% 0%

The Company principally competes with 9 commercial free-to-air television stations in Mega Manila, including the channels of its major competitor, GMA Network, Inc. (GMA 7 or GMA Network) which owns and operates GMA 7. NBN 4, RPN 9 and IBC 13 are owned and operated by the Philippine government, although there have been plans to privatize RPN 9 and IBC 13. Beginning 2008, Solar Entertainment Corporation, a Filipino company primarily in the business of cable programming, entered into blocktime agreements with RPN 9, SBN 21 and RJTV 29. The three channels are currently airing Solar-produced and acquired programs and use the respective callsigns: Solar TV, ETC and 2nd Avenue. In August 2008, ABC 5 was re-launched as TV5 after it entered into a blocktime agreement with Media Prima Berhad (MPB), a Malaysian company, where MPB will manage and operate the channels entertainment programming. In October 2009, Mediaquest Holdings Inc., a unit of the Beneficial Trust Fund of the Philippine Long Distance Telephone Company (PLDT), acquired a 75% stake in ABC Development Corporation, operator of TV5, and had a separate agreement to acquire MPB Primedia, MPBs Philippine unit. Radio The Companys flagship radio stations, DZMM on the AM band and 101.9 in the FM band, competes with over 2 dozen radio stations in each band in Mega Manila. The Companys other regional/provincial radio stations (2 in the AM band and 14 in the FM band) also compete with the regional radio stations of major radio broadcasting companies, such as Manila Broadcasting Company, Bombo Radyo, and Radio Mindanao Network. The Companys radio network competes with other radio broadcasting entities for advertising revenues and for the services of recognized talent and qualified personnel. The Company's radio stations also compete with other advertising media and other forms of entertainment, including music products such as CDs, cassette tapes and digital music players. Programming ABS-CBN is a growing supplier of Filipino content for television and cable channels both in the Philippines and, increasingly, throughout the world. In-house produced content have been and are still currently aired in numerous countries around the world, particularly in Southeast Asia, China, Africa, and Eastern Europe. The Company faces competition for distribution of its programming from other producers of Filipino programming. ABS-CBN also competes with other programming providers for channel space and compensation for carriage from cable television operators and other multi-channel distributors. For such program services, distributors select programming based on various considerations, including the prices charged for the programming and the quality, quantity and variety of programming. ABS-CBNs content library of in-house produced drama series, movies, reality shows, variety shows, documentaries, and the like, runs in the hundreds of thousands of hours combined. Moreover, the Company also has exclusive broadcast licenses for numerous popular foreign-acquired programs and movies. Competition in acquiring foreign-produced programming and films has also been greater than in the previous years. The Company competes with other Philippine broadcast entities and pan-regional cable programming producers in acquiring broadcast rights to popular foreign TV shows and films.

International Cable and Satellite Services The Company's DTH satellite subscription service in the United States presently competes with other satellite television and cable systems, national broadcast networks, and regional and local broadcast stations. Likewise, the Companys other TFC products in other territories, such as in the Middle East, Europe, Australia, Canada and Japan, compete with other similar service providers and other entertainment means of the Filipino communities in these areas. The Company also faces direct competition in terms of Filipino programming. In 2005, GMA Network launched its own Filipino cable channel in the United States, GMA Pinoy TV. GMA Network has already launched a second international cable channel, GMA Life TV. Magazine Publishing Each of the Company's glossy magazine publications, published by its subsidiary API, competes for readership and advertising revenues with other magazines of similar format and with other forms of print and non-print media. Competition for advertising is based on circulation levels, reader demographics and advertising rates. Philippine-based publishers, such as Summit Media and Mega Magazine and Publications, churn out more than 50 glossy magazine titles combined each month. Film Production and Distribution The production and distribution of feature films is a highly competitive business in the Philippines. AFPI, or more commonly known as Star Cinema, competes for the services of recognized creative talents, both artists and production staff, and for film rights and scripts, which are essential to the success of a feature film. The Company likewise competes with other feature film producers, including other Filipino studios, smaller independent producers and major foreign studios such as Warner Brothers, Disney, Dreamworks, and Warner Brothers. Success in the Philippine movie business depends on the quality of the film, its distribution and marketing, and the publics response to the movie. The number of films released by the Company's competitors in any given period may create an oversupply of product in the market, which may reduce the Company's share of gross box office admissions. Star Cinema also competes with other forms of entertainment and leisure time activities such as DVDs, video cassettes and computer games. Piracy also takes a considerable chunk of the Companys earnings potential. Music Production and Distribution The Company competes in the production and distribution of songs, jingles, musical scores and other musicrelated content with other local and foreign music publishers and independent composers and lyricists, as well as other forms of entertainment. The Company also competes in the acquisition of the services of artists and other talents. Piracy and illegal downloads of the Companys music content properties also adversely impact the Companys music production and distribution business. Internet and Interactive Services With regard to the mobile VAS products, digital advertising solutions, and online games that the Company provides through ABSi, the Company faces competition from Internet service providers, mobile content providers, telecommunications companies, online game distributors, and other internet and mobile related content and service providers.

Cable Programming and Television Operations Sky Cable, through its Sky Cable network, directly competes for viewer attention and subscriptions with other providers of entertainment, news and information, including other cable television systems, broadcast television stations and DTH satellite companies.

Cable television systems also face strong competition from all media for advertising revenues. Important competitive factors include fees charged for basic and premium services, the quantity, quality and variety of the programming offered, signal reception, customer service, and the effectiveness of marketing efforts. ABS-CBN, through its subsidiaries SNN and CPI, also provides programming for 9 cable channels. These cable channels compete for viewership with other local cable programmers and pan-regional cable channels. Production and acquisition for cable programs, as well as the selling of airtime for advertising, are highly competitive. The Company also faces competition with other cable channels in terms of cable carriage among the numerous pay TV providers in the country.

Patents, trademarks, licenses, franchises, concessions, royalty Republic Act No. 7966, approved on March 30, 1995, granted the Company the franchise to operate TV and radio broadcasting stations in the Philippines through microwave, satellite or whatever means including the use of new technologies in television and radio systems. The franchise is for a term of 25 years. ABS-CBN is required to secure from the National Telecommunications Commission (NTC) appropriate permits and licenses for its stations and any frequency in the TV or radio spectrum. Third Party-Owned foreign and local film and programs aired through the networks ABS-CBN and its subsidiaries have licenses from foreign and local program and feature film owners to distribute the same through its networks. The licenses to distribute the foreign programs and foreign and local feature films grant ABS-CBN and its subsidiaries the right to distribute said programs and films on free TV, cable, and satellite in the Philippines and in territories wherein The Filipino Channel is distributed. These licenses for TV rights have an average term of 2 to 3 years. Such programs comprise approximately 15% of the programming of ABS-CBN 2, approximately 65% of the content of Studio 23, and close to 90% for all CPI cable channels collectively. ABS-CBN and its wholly-owned subsidiary, Sky Films, Inc. (which was merged into ABS-CBN Film Productions Inc. in November 2007), also have the license to distribute local and foreign feature films in the Philippines for theatrical, TV, and video distribution, with limited ancillary rights. The licenses for foreign films have an average term of 10 to 15 years. Aside from licenses, programs or events produced by third parties are aired through the networks of ABS-CBN and its subsidiaries under blocktime agreements or coverage and broadcast agreements entered into with such third party-producers. Music Licenses ABS-CBN and its subsidiaries enter into agreements for the synchronization and use of music in its films and programs with the composers, publishers and recording companies. ABS-CBN also has agreements with the Filipino Society of Composers, Authors and Publishers, Inc. (FILSCAP) and the Music and Video Performance, Inc. (MVP), the collecting societies in the Philippines, for the public performance rights of music contained in such films or programs produced by ABS-CBN. The existing agreements with FILSCAP and MVP include the subsidiaries of ABS-CBN. Fees for public performance rights of the music in films and programs outside the Philippines are paid to the relevant collecting societies in the territories where the films and programs are exhibited. Star Records has various licensing, mechanical and distribution rights agreements with composers, publishers and recording companies, as the case may be, for the songs and albums it produces, manufactures, distributes or sells in the local market. ABSi also has such similar agreements for its musical products, such as ring-tones, digital music, that are downloaded on mobile and online applications. Need for any governmental approval of principal products or services

The principal law governing the broadcasting industry is the 1936 Commonwealth Act. No. 146, as amended, otherwise known as the Public Service Act. This Act seeks to protect the public against unreasonable charges and inefficient service by public utilities, including companies engaged in television and radio broadcasting as well as to prevent excessive competition. The 1987 Philippine Constitution provides that ownership and management of mass media shall be limited to citizens of the Philippines, or to corporations, cooperatives or associations wholly-owned and managed by such citizens (Section 11, Article XVI). As a result, the Company is highly regulated by the Philippine Government. The Companys Congressional Franchise, renewed in 1995 for a term of 25 years, allows the Company to engage in the television and radio broadcasting business. The government departments and agencies that administer the laws governing the broadcasting industry and content are the National Telecommunications Commission (NTC), the Department of Transportation and Communication (DOTC), the Movie and Television Review and Classification Board (MTRCB), the Optical Media Board (OMB), and the Department of Labor and Employment. The NTC is the government agency which regulates the broadcasting industry. Among its specific functions is the granting of provisional authorities and certificates of public conveniences to own and operate a broadcasting station within the Philippines. The NTC also regulates the bandwidth allocation used by the different broadcasting companies through the grant of temporary permits and licenses to operate television and radio stations. The DOTC formulates general and specific policies on the broadcasting industry. Although the DOTC exercises supervision and control over the NTC, it does not have the power to review the acts and resolutions of the NTC. The MTRCB classifies television programs based on their content, including the showing of indecent and excessively violent scenes on television. The OMB issues permits to television stations or networks engaged in the exhibition and distribution of programs in video format. In addition to the restrictions imposed by the government agencies, a broadcaster must also follow rules and industry standards promulgated by the Kapisanan ng mga Brodkaster sa Pilipinas (KBP), of which the Company is a member. The KBP is a self-regulating trade organization consisting of television and radio operators. It formulates policies and guidelines for the operations of its members and enforces programming and advertising rules. Costs and effect of compliance with environmental laws Whenever required, the Company applies for and secures proper permits, clearances or exemptions from the Department of Environment and Natural Resources, Department of Health, Air Transportation Office, and other regulatory agencies, for the installation and operation of proposed broadcast stations nationwide. For the past 3 years, there were no costs related to the effect of compliance with environmental laws. Employees and agreements of labor contracts, including duration The number of employees and talents of ABS-CBN was 3,904 as of December 31, 2011. ABS-CBN management recognizes two labor unions, one for the supervisory employees and another for the rank and file employees. The Supervisory Union represents approximately 6% of the total regular employees of ABS-CBN, while 24% of belong to the Rank & File Union. The collective bargaining agreement (CBA) for the supervisory union was renewed last August 13, 2010, covering the period from August 1, 2010 until July 31, 2013, while the CBA for the rank and file employees, covering the period December 11, 2011 to December 10, 2014.

Risks Relating to the Company

The Companys results of operations may be negatively affected by adverse economic conditions in the Philippines and abroad since its operations depend on its ability to sell airtime for advertising, to sell various goods and services, and to collect subscription fees from its subscribers. Historically, the advertising industry, relative to other industries, has been particularly sensitive to the general condition of the economy. Also, the ability of consumers to pay for the Companys services or goods depends on their disposable income at any given time. Consequently, the Companys business may be affected by the economic condition of the country and of the territories where it conducts its business. ABS-CBNs Board of Directors and management are mindful of the potential impact of various risks to the Companys ability to operate a viable business. Strategy formulation and decision-making always take into account these potential risks and the Company ensures that it takes all the steps necessary to minimize, if not eliminate, such risks. ABS-CBN ensures that it has the proper control systems in place, and to the extent possible, adopted global best practices, to identify and assess, analyze and mitigate market, operating, financial, regulatory, community, reputational, and other risks. The Risk Management Committee formed in March 2010 assumes the responsibility of oversight for Enterprise Risk Management, taking over from the Audit Committee. Also in March 2010, the Board of Directors of the Company approved the appointment of Mr. Johnny C. Sy as Chief Risk Management Officer, reporting directly to the Board of Directors, concurrent with his responsibilities as Head, Digital Consumer Devices. As Chief Risk Management Officer, he will provide the overall leadership, vision and direction for enterprise risk management by establishing and implementing an integrated risk management framework to cover all aspects of risks across the Companys organization, and improve the Companys risk management readiness. Item 2. Properties The properties of the Company consist of production, broadcasting, transmission and office facilities, majority of which are owned by the Company. Broadcast operations are principally conducted in the 44,000 square meter ABS-CBN Broadcasting Center located at Sgt. Esguerra Avenue in Quezon City. The broadcast center also houses the Companys 650-foot transmitter tower and other broadcast facilities and equipment. The broadcast center is comprised of several buildings, the newest of which is a modern 15-story building known as the Eugenio Lopez Jr. Communications Center (ELJCC). The ELJCC houses the corporate offices of the Company and its subsidiaries engaged in related businesses. Aside from the corporate offices, the building also has 3 television soundstages, 3 sound recording studios and other television production facilities. The building has a gross floor area of approximately 100,000 square meters and total office space of approximately 58,000 square meters. The ground floor is leased to various businesses including banks, retail stores, coffee shops and restaurants. The broadcast center also houses the Companys other buildings and properties: o The main building, which currently houses the Companys TV Production, News and Current Affairs, Regional Network, and Manila Radio groups. The Companys Technical Operations Center and several studios and soundstages are also located in the main building, which was completed in 1968. The Design and Talent Center, which houses several studios and the Companys talent management group, Star Magic.

ABS-CBN also owns several properties within close proximity to the broadcast center, most notably the Pinoy Big Brother house, the Pinoy Dream Academy dormitory, the Pinoy Dream Academy performance area, and the JUSMAG compound, currently used by some of the Companys divisions. With the Company having made substantial investments in upgrading its production, broadcasting and transmission equipment in recent years, the Company does not anticipate any major increase in capital expenditures for the acquisition or the development of any property in the near future. Local and Regional Properties

ABS-CBN also owns real estate properties in various parts of the country. Originating stations have the capacity to produce and broadcast their own programs and to air advertising locally. Relay stations can only re-transmit broadcasts from originating stations. Affiliate stations are not owned by the Company. Rather, they are typically independently owned by local Filipino business people and are contracted to re-broadcast the Companys originating signals during specified time blocks for negotiated fixed fees. The following table sets forth the location and use of ABS-CBNs television and radio stations as of December 31, 2011:

VHF TV STATIONS STATION 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 Manila Cebu Bacolod Mt. Kitanglad, Bukidnon Davao General Santos Zamboanga Naga Tacloban Dumaguete Isabela Tuguegarao Cotabato Baguio Iligan Butuan Ilocos Norte Legaspi Olongapo Iloilo* Batangas Bohol Mt. Province Zambales Albay Sorsogon Aklan Ilocos Sur Cagayan de Oro Occidental Mindoro Catanduanes Masbate Comm. Bctg. Co.** MIT-RTVN** CH 2 3 4 2 4 3 3 11 2 12 2 3 5 3 4 11 7 4 12 10 10 9 11 13 10 7 9 11 4 11 7 10 7 LOCATION (Transmitter Site) Mo. Ignacia St., Diliman, QC Mt. Busay, Cebu City Mt. Kanlandog, Murcia, Negros Occ. Mt. Kitanglad, Bukidnon Shrine Hills, Matina, Davao City Brgy. Lagao, Gen. Santos City Zamboanga City Naga City Mt. Naga-naga, Tacloban City Valencia, Negros Or. Santiago City, Isabela Tuguegarao, Cagayan Cotabato City Mt. Sto. Tomas, Benguet Iligan City Butuan City San Nicolas, Ilocos Norte Mt. Bariw, Legaspi Upper Mabayuan, Olongapo City Jordan, Guimaras Mt. Banoy, Batangas Jagna, Bohol Mt. Amuyao, Mt. Province Botolan, Zambales Tabaco, Albay Sorsogon, Sorsogon Kalibo, Aklan Bantay, Ilocos Sur Bulua, Cagayan de Oro San Jose, Occidental Mindoro Virac, Catanduanes Masbate, Masbate Ozamis City

VHF TV STATIONS STATION 34 MIT-RTVN** 35 St. Jude Thaddeus Inst. of Tech** 36 Sulu Tawi-Tawi Broadcasting Corporation** 37 Calbayog Comm. Bctg. Corp. 38 Palawan Bctg. Corp. *owned by Amcara; ** Affiliate UHF TV STATIONS STATION CH LOCATION (Transmitter Site) CH 9 12 10 10 7 LOCATION (Transmitter Site) Mt. Palpalan, Pagadian City Surigao City Jolo, Sulu Calbayog City, Western Samar Puerto Princesa, Palawan

1 Manila** 23 Metro Manila 2 Cebu**** 23 Mt. Busay, Cebu City* 3 Davao**** 21 Matina Hills, Davao City* 4 Dagupan**** 30 Sto. Tomas, Benguet* 5 Naga**** 24 Naga City* 6 Batangas**** 36 Mt. Banoy, Batangas* 7 Baguio** 32 Mt. Sto. Tomas (Baguio)* 8 Laoag**** 23 San Nicolas, Laoag* 9 Bacolod**** 22 Bacolod City* 10 Iloilo** 38 La Paz, Iloilo City* 11 Zamboanga**** 23 Zamboanga City* 12 Gen. Santos**** 36 General Santos City* 13 Tacloban*** 24 Mt. Naga-Naga, Tacloban 14 Cagayan De Oro**** 23 Cagayan de Oro City* 15 Dumaguete**** 24 Mt. Palimpinon, Valencia, Negros Oriental* 16 Botolan**** 23 Botolan, Zambales* 17 Isabela **** 23 Santiago City* 18 Bohol*** 40 Jagna, Bohol 19 Marbel, Koronadal**** 24 Marbel, S. Cotabato 20 Rizal*** 40 Jala-Jala, Rizal 21 Legaspi*** 23 Legaspi City 22 Olongapo**** 24 Olongapo City* 23 Iligan **** 26 Iligan City* 24 Butuan*** 22 Butuan City 25 Cotabato*** 23 N. Cotabato 26 Pagadian*** 24 Pagadian City 27 Palawan**** 23 P. Princesa, Palawan 28 Surigao*** 23 Surigao City 29 Roxas City**** 21 Roxas City 30 Baler**** 22 Baler, Aurora 31 Camarines Norte**** 23 Daet, Camarines Norte 32 Kalibo**** 23 Aklan 33 Dipolog**** 42 Dipolog City 34 Lucena City**** 24 Lucena City, Quezon 35 Lipa City **** 38 Lipa City, Batangas 36 Tarlac** 34 Tarlac City 37 San Miguel** 34 San Miguel, Bulacan 38 San Fernando, Pampanga** 46 San Fernando, Pampanga 39 San Pablo** 46 San Pablo, Laguna 40 Cabanatuan** 30 Cabanatuan, Nueva Ecija 41 Ilocos Sur** 34 Bantay, Ilocos Sur * co-located with VHF TV Stations ; **owned by ABS-CBN;*** with pending application with the NTC,****owned by Amcara

FM RADIO STATIONS STATION 1 2 3 4 5 6 7 8 9 10 11 12 13 14 Manila Cebu Bacolod Davao Baguio Legaspi Naga Laoag Dagupan Iloilo Tacloban Cagayan De Oro Cotabato Gen. Santos FREQ (MHz) 101.9 97.1 101.5 101.1 103.1 93.9 93.5 95.5 94.3 91.1 94.3 91.9 95.1 92.7 CALL SIGN DWRR DYLS DYOO DXRR DZRR DWRD DWAC DWEL DWEC DYMC DYTC DXEC DXPS DXBC LOCATION Lopez Center, Antipolo City Mt. Busay, Cebu City Mt. Kanlandog, Murcia, Negros Occ. Shrine Hill, Matina, Davao City Mt. Sto. Tomas, Benguet Mt. Bariw, Legaspi Naga City San Nicolas, Ilocos Norte Dagupan City Iloilo City Tacloban City Bulua, Cagayan de Oro City Cotabato City Lagao, Gen. Santos City

15 16

Zamboanga Palawan

98.7 99.9

DXFH DYCU

Zamboanga City Puerto Princesa

AM RADIO STATIONS STATION 1 2 3 4 Manila Cebu Davao Palawan FREQ (MHz) 630 1512 1296 765 CALL SIGN DZMM DYAB DXAB DYAP LOCATION Obando, Bulacan Pardo, Cebu City Matina, Davao City Puerto Princesa

Item 3. Legal Proceedings For the past 5 years, the Company is not a party in any legal proceedings which involves a claim for damages in an amount, exclusive of interest and cost, exceeding 10% of the current assets of the Company. While not deemed material legal proceedings based on the amount of the claims involved, the following legal proceedings involving the Company were the subject of news reports, and therefore generated public interest but Management is nevertheless of the opinion that should there be any adverse judgment based on these claims, this will not materially affect the Companys financial position and results of operations: ABS-CBN Broadcasting Corporation vs. AGB Nielsen Media Research (Philippines), Inc. The Company has a pending case against AGB Nielsen for injunction and breach of contract in connection with the alleged infiltration of panel homes in various areas in the country. The case was docketed as Q-07-61665 and was raffled before the Regional Trial Court of Quezon City, Branch 80. The trial court dismissed the complaint. The Company appealed from the dismissal of the complaint by filing a petition for certiorari with the Court of Appeals and the petition is pending. GMA Network, Inc. vs. ABS-CBN Broadcasting Corporation, et al" The Company also has a pending civil case for libel against it filed by GMA Network, Inc. in connection with the same events covered by the case against AGB Nielsen. The case was filed in 03 January 2008 and docketed as Q-08-61735, is pending before the Regional Trial Court of Quezon City, Branch 76. GMA's total claim against the Company is Fifteen Million Pesos (P15,000,000.00). GMA has completed presentation of its evidence and the admission of its documentary evidence is pending resolution with the trial court.

People of the Phils., vs. Santos-Concio, et al. This case, docketed as Criminal Case No. 138027, before the Regional Trial Court of Pasig, Branch 261, arose from the incident that transpired during the anniversary celebration of Wowowee, where a stampede resulted in the deaths of 71 people and multiple injuries to about 200 others. Complaints for reckless imprudence resulting in multiple homicide and multiple physical injuries were filed against certain officers of the Company including its President and Chief Operating Officer, Ms. Ma. Rosario Santos-Concio and then Managing Director for TV Production, Ms. Ma. Socorro V. Vidanes. The Court has dismissed the complaint as against accused Ms. Santos-Concio and Ms. Vidanes, but the case remains pending as regards certain other officers of the Company. The Court also ordered the Department of Justice to complete the preliminary investigation on the possible liability of local government officials of the City of Pasig and the police and suspended the proceedings pending the completion of the investigation.

Due to the failure to promptly conduct the preliminary investigation, the accused filed the Omnibus Motion for the dismissal of case for violation of their right to speedy disposition of cases and to quash the Information because the facts charged do not constitute an offense. Unknown to the accused, the Department of Justice has since conducted a preliminary investigation against the local government officials of the City of Pasig and dismissed the charges against them. The Court denied the motion to dismiss and quash Information and ordered the arraignment of the remaining accused. However, the accused filed a Motion for Reconsideration of the denial of the motions to dismiss and quash Information and Reinvestigation on the ground that they were not given a chance to participate in the preliminary investigation against the local government officials of the City of Pasig. The Motion for Reconsideration was denied. The accused were arraigned on 29 June 2011. They refused to enter any plea and the Court entered a plea of not guilty for them. The accused also filed a Motion to Inhibit the presiding judge and Motion for Partial Reconsideration regarding the denial of the Motion for Reinvestigation. The Accused filed a petition for certiorari with the Court of Appeals to appeal the denial of the Motions to Dismiss and Quash Information. The petition is entitled Almaden, et al., vs. Suarez, et al.,, docketed as CA-GR Sp. No. 120337. The petition remains pending. In the meantime, the mediation conference was conducted and a settlement was reached with twelve (12) private complainants. The mediation conference has been terminated and pre-trial is set on 9 May 2012.

Wilfredo Revillame vs. ABS-CBN Broadcasting Corporation This is a civil action for rescission of contract and damages filed by Wilfredo Revillame against the Company in connection with the former's talent contract with the Company. The Company filed a counterclaim for breach of contract, injunction, and damages. The case was docketed as Civil Case No. Q-10-67770 and original raffled to Regional Trial Court, Branch 84. Upon the inhibition of the presiding judge of Branch 84, the case was re-raffled to and is now pending with Branch 217. Revillame's total claim against the Company is Eleven Million Five Hundred Thousand Pesos (P11,500,000.00). Revillame filed a Motion to Dismiss on the ground that the Company is guilty of forum-shopping. The motion is still pending. ABS-CBN Corporation vs. Wilfredo Revillame aka Willie Revillame, Wilproductions, Inc., ABC Development Corporation and Ray Espinosa in his capacity as President of ABC This is a complaint for copyright infringement filed by the Company against Revillame, Wilproductions, ABC Development Corporation and Ray Espinosa, for the production and airing of Willing Willie, in violation of the Companys copyright over the show Wowowee, which it created, produced and broadcast. The case was docketed as Civil Case No. 10-1155 and is pending with the Regional Trial Court, Makati, Branch 66. The Company is asking for One Hundred Two Million Four Hundred Thousand Pesos (P102,400,000.00) as actual and compensatory damages and other consequential damages. When the Court denied defendants Motion to Defer Proceedings, they filed a petition for Certiorari before the Court of Appeals, entitled ABC Development Corporation and Ray Espinosa vs. Villarosa and ABS-CBN Corporation, docketed as CA-GR Sp. No. 117063. The Court of Appeals granted the petition, and dismissed the suit copyright infringement case on the ground of forum-shopping. The Company has filed a Motion for Reconsideration which remains pending.

ABS-CBN Corporation vs. Willie Revillame, Atty. Romeo Monfort, Reynaldo Fong and other John and/or Jane Does,

This is a suit for use of a falsified document in a judicial proceeding and falsification of AIPC Bond No. G (16)-09314/NSMKT2 which Revillame submitted in the trial court. This case was filed with the Office of the City Prosecutor of Quezon City and was docketed as XV-03-INV-11I-07-532 The suit was dismissed. The Company has appealed the dismissal of the suit with the Department of Justice. Item 4. Submission of Matters to a Vote of Security Holders There were no matters submitted to a vote of security holders during the fourth quarter of the fiscal year covered by this report. PART II - OPERATIONAL AND FINANCIAL INFORMATION Item 5. Market for Issuers Common Equity and Related Stockholder Matters The Companys common shares have been listed on the Philippine Stock Exchange (PSE) since 1992. Its Philippine Depositary Receipts (PDRs) were listed in 1999. Common shares may be exchanged for PDRs and vice versa. The common shares (PSE: ABS) closed at Php37.75 while the PDRs (PSE: ABSP) closed at Php38.30 on March 30, 2012. Dividends The declaration and payment of dividends are subject to certain conditions under the Companys existing long term loan agreements with various banks and other lenders (see Note 19 of the accompanying notes to the Companys audited consolidated financial statements). Under said loan agreements, the Company may declare and pay dividends provided: (a) all payments (including pre-payments) due on said loan and premiums on insurance of assets are current and updated; (b) all financial covenants set forth therein are satisfied; (c) certain financial ratios are met and such payment will not result in the violation of the required financial ratios under the loan agreements; (d) no event of default as provided in the loan agreements shall exist or occur as a result of such payment; and (e) the total amount of the cash dividends does not exceed 50% of the Companys net income after taxes for the fiscal year preceding the declaration.
Stock Dividend (Per Share) No stock dividend since 1996 Cash Dividend (Per Share) Amount (in Pesos) Php0.60 Php0.64 Php0.45 Php0.825 Php0.90 Php1.11 Php2.10 Php0.80 Declaration Date March 28, 2001 July 21, 2004 March 28, 2007 March 26, 2008 March 25, 2009 March 11, 2010 March 4, 2011 March 30, 2012 Record Date April 25, 2001 July 24, 2004 April 20, 2007 April 30, 2008 May 5, 2009 March 31, 2010 March 25, 2011 April 25, 2012 Payment Date May 25, 2001 August 10, 2004 May 15, 2007 May 27, 2008 May 29, 2009 April 29, 2010 April 19, 2011 May 22, 2012

High and Low Share Prices ABS High 2012 First Quarter 2011 First Quarter Second Quarter Third Quarter Fourth Quarter 2010 First Quarter Second Quarter Third Quarter Fourth Quarter ABSP High

Low

Low

37.75 47.50 42.50 40.50 High 30.00 38.50 56.00 56.00

30.00 40.50 38.90 28.60 Low 25.50 29.00 36.50 43.50

38.30 47.90 44.00 44.00 High 31.00 40.50 56.00 56.00

29.90 44.00 41.50 34.50 Low 26.00 28.50 40.50 45.00

The number of shareholders of record as of December 31, 2011 was 6,062. Common shares outstanding as of December 31, 2011 were 779,584,602. Top 20 Stockholders as of March 31, 2012 As of March 31, 2012, the Top 20 stockholders of ABS-CBN own an aggregate of 764,614,417 or 98.08% of outstanding common shares.
Rank 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Lopez, Inc. PCD Nominee Corporation (Filipino) Ching Tiong Keng Abs-Cbn Foundation, Inc. Eugenio Lopez III Creme Investment Corporation Fg Holdings Charlotte C. Cheng Cynthia D. Ching Phil. Communication Satellite Corporation Tiong Keng Ching ACRIS Corporation Federico M. Garcia La Suerte Cigar & Cigarette Factory Alberto G. Mendoza &/Or Jeanie Mendoza Mimi Chua Manuel M. Lopez Majograjo Dev. Corporation Antonino T. Aquino &/Or Evelina S. Aquino Leoncio N. Chungunco Jr. Sub-total Top 20 Stockholders Others Total Stockholders Name Citizenship Filipino Filipino Filipino Filipino Filipino Filipino Filipino Filipino Filipino Filipino Filipino Filipino Filipino Filipino Filipino Filipino Filipino Filipino Filipino Filipino Record / Beneficial Record Record Record Record Record Record Record Record Record Record Record Record Record Record Record Record Record Record Record Record No. of Shares 446,231,607 312,480,820 859,500 780,995 651,190 417,486 386,270 340,000 337,500 325,500 252,000 247,346 226,207 205,000 168,250 162,390 146,186 140,700 129,470 126,000 764,614,417 14,970,185 779,584,602 Percentage 57.24% 40.08% 0.11% 0.10% 0.08% 0.05% 0.05% 0.04% 0.04% 0.04% 0.03% 0.03% 0.03% 0.03% 0.02% 0.02% 0.02% 0.02% 0.02% 0.02% 98.08% 1.92% 100.00%

Employee Stock Option Plan The Company had an employee stock option plan (ESOP) which covered 1,403,500 shares at 95% of offer price during the initial public offering. Collections were made in 48 semi-monthly installments without interest through payroll deductions. Shares offered under the Plan have been fully paid and issued since 1995. On March 29, 2000, the Board of Directors approved another ESOP covering 6,080,306 shares. In 2002, all the shares acquired by the Company covering this ESOP, were exercised by the employees. As of December 31, 2011, there are no more outstanding ESOP.

Item 6. Managements Discussion and Analysis or Plan of Operation The Management Discussion and Analysis of Financial Condition and the Results of Operation for the past three fiscal years are attached hereto as Annex A. Information on Independent Accountant and other Related Matters The principal accountants and external auditors of the Company is the accounting firm of SyCip, Gorres, Velayo & Company (SGV & Co.). The accounting firm of SGV & Co. has been the Companys Independent Public Accountants for the last 5 years. There was no event in the past 5 years where SGV & Co. and the Company had any disagreement with regard to any matter relating to accounting principles or practices, financial statement disclosure or auditing scope or procedure. The Company has engaged SGV & Co., with Mr. Aldrin M. Cerrado as the engagement partner, for the audit of the Companys books in 2010. SGV & Co. is being recommended for re-election at the scheduled Annual Stockholders Meeting on June 21, 2012. Representatives of SGV & Co. for the current year and for the most recently completed fiscal year are expected to be present at the Annual Stockholders Meeting. They will have the opportunity to make a statement if they desire to do so and are expected to be available to respond to appropriate questions. The aggregate fees billed to ABS-CBN and its subsidiaries for each of the last 2 fiscal years for professional services rendered by the external auditor are as follows: 2011 Audit Fees Non-Audit Fees 23,647,605 12,255,862 2010 21,877,605 4,891,764

The audit committees approval policies and procedures for the above services from SGV & Co., the external auditors are discussed in Section 7 of the Companys Manual of Corporate Governance filed with the Commission on September 2, 2002. The audit committee pre-approves all audit and non-audit services as these are proposed or endorsed before these services are performed by our independent auditor.

Item 7. Financial Statements The Statement of Managements Responsibility for Financial Statements prepared in accordance with SRC Rule 68 as amended, is attached hereto as Annex B. Also in Annex B are the Companys Audited Financial Statements as of December 31, 2011 prepared in accordance with SRC Rule 68, as amended and Rule 68.1. The Schedule for Determination of Retained Earnings available for Dividend Declaration prepared in accordance SEC Memorandum Circular No. 11 is also included in Annex B. Item 8. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure There are no changes in and disagreements with accountants on accounting and financial disclosure during the two most recent fiscal years or subsequent interim period. PART III - CONTROL AND COMPENSATION INFORMATION Item 9. Directors and Executive Officers of the Issuer Board of Directors The following are expected to be nominated as members of the Board of Directors for the ensuing year during the Companys Annual Stockholders Meeting on June 21, 2012: Eugenio L. Lopez III Augusto Almeda-Lopez Ma. Rosario Santos-Concio Oscar M. Lopez Presentacion L. Psinakis Federico R. Lopez Manuel M. Lopez Salvador G. Tirona Federico M. Garcia Justice Vicente V. Mendoza (Independent Director) Javier J. Calero (Independent Director) All of the above nominees are incumbent directors. They were formally nominated by a shareholder of the Company, Lopez Inc., through its Chairman, Mr. Oscar M. Lopez. The nominees will serve as directors of the Company for one year from date of election. The Company has adopted the SRC Rule 38 (Requirements on Nomination and Election of Independent Directors) and compliance therewith has been made. The following directors have held their current positions in their respective companies for more than 5 years unless otherwise indicated. Below is a summary of the nominees qualifications: Eugenio L. Lopez III, Filipino, age 60 Chairman of the Board of Directors and Chief Executive Officer Mr. Lopez III was elected Chairman of the Companys Board of Directors in 1997 when his father, the late Eugenio Geny Lopez, Jr., turned over the reins of the company to the younger Mr. Lopez, who had been President since 1993 and Director since 1986. He joined the Company in 1986 as Finance Director before he became General Manager in 1988. Mr. Lopez III also serves as Vice Chairman of Bayan Telecommunications, Director of Sky Vision Corporation, and Director/Treasurer of Lopez Holdings Corporation. He was recently elected as a Director of First Gen Corporation. He is also the Chairman and CEO of the Lopez Communications Group (CommGroup), the management committee that Mr. Lopez III formed in 1997 to oversee the development and implementation of convergence projects for ABS-CBN, together with BayanTel and SkyCable. Mr. Lopez III graduated with a Bachelor of Arts degree in Political Science from Bowdoin College. He has a

Masters degree in Business Administration from Harvard Business School. Mr. Lopez III is a recipient of various Philippine broadcasting industry awards. Augusto Almeda-Lopez, Filipino, age 84 Vice-Chairman Mr. Almeda-Lopez joined ABS-CBN in 1962. He has served as Vice Chairman of the Company since 1989. Mr. Almeda-Lopez is also the Vice-Chairman of First Philippine Holdings Corporation. He also serves as the Chairman of ACRIS Corporation and ADTEL, Inc. while he serves as a Director of various companies in the telecommunications, manufacturing, and service industries, namely First Philippine Industrial Corporation, First Gen Renewables Inc., First Electro Dynamics Corporation, Philippine Electric Corporation, Bayan Telecommunications Inc., and Sky Vision Corporation. He is an alumnus of De La Salle College and Ateneo de Manila, is a graduate of the University of the Philippines College of Law class 1952 and he finished an Advanced Management Program course at Harvard University in 1969. Ma. Rosario Santos-Concio, Filipino, age 57 Board Member, President and Chief Operating Officer Ms. Santos-Concio was Head of Channel 2 Mega Manila Management prior to her appointment as President and Chief Operating Officer where she brought greater synergy between Marketing, Sales, and Production. She was also in charge of achieving profit margins, nationwide ratings, annual programming strategy and customer development targets of the Company. She is also known as an award-winning actress and an accomplished film and TV producer. Onscreen, Ms. Santos-Concio hosts ABS-CBN Channel 2s longest-running drama anthology Maalaala Mo Kaya. As President and COO, she leads the Executive Committee and all subsidiary and division heads report to her. Ms. Santos-Concio began her career in the Company as a Television Production Consultant in 1987 after working as a line producer for BanCom, Audiovision, Vanguard Films, Regal Films and Vision Exponents. She also worked as a Film Production Manager for the Experimental Cinema of the Philippines. Ms. Santos-Concio was hailed as Best Actress in the 1978 Asian Film Festival in Sydney, Australia for her work in the film, Itim, and is the recipient of many cinema and broadcast industry-related awards over the years. Ms. Santos-Concio graduated cum laude from St. Pauls College in Manila with a Communications Arts degree. Ms. Santos-Concio also completed the Advanced Management Program at Harvard Business School in 2007. Oscar M. Lopez, Filipino, age 82 Board Member Mr. Oscar M. Lopez has served as Director of ABS-CBN since 1966. He also serves as Chairman Emeritus and Chief Strategic Officer of the First Philippine Holdings Corporation (FPHC), and Chairman Emeritus of Lopez Holdings Corporation , First Gen and Energy Development Corporation. He is Chairman of First Philippine Industrial Park and First Sumiden Circuits, Inc. He is also Vice Chairman of Rockwell Land. Mr. Lopez has led FPHCs efforts in other businesses aside from energy and power, including toll road construction, industrial park and real estate development, and electronics manufacturing. Mr. Lopez has a Masters degree in Public Administration from the Littauer School of Public Administration in Harvard University (1955), the institution where he also earned his Bachelor of Arts degree, cum laude in 1951. Presentacion L. Psinakis, Filipino, age 77 Board Member Ms. Psinakis has served as a Director of the Company since 1988. Ms. Psinakis is the founder and President of Griffin Sierra Travel, Inc. She is a member of the Board of Trustees of the Eugenio Lopez Foundation, Inc. and also serves as director of the following companies: Lopez Inc., Benpres Insurance Agency, ADTEL Inc., and Philippine Commercial Capital Inc. She took a Bachelor of Arts course in St. Scholastica's College. Federico R. Lopez, Filipino, age 51 Board Member Mr. Lopez is a Director of the Company since 1999. He is Chairman and Chief Executive Officer of First Philippine Holdings Corporation. He is also the Chairman and Chief Executive Officer of First Gen and Energy Development Corporation. Mr. Lopez is the Chairman of First Philec, First Balflour, First Philippine Solar Corporation, and First Philippine Industrial Corporation. He is a member of the boards of First Philippine Holdings Corporation, Energy Development Corporation, First Private Power Corporation, and Bauang Private Power Corporation. He also serves as director, President and Chief Executive Officer of FG Luzon, FG Bukidnon Power Corporation, First Gen Hydro Power Corporation, First Gen Geothermal Power Corporation, First Gen

Visayas Hydro Power Corporation, First Gen Mindanao Hydro Power Corporation, First Gen Energy Solutions Inc., First Gen Northern Energy Corporation, First Gen Premiere Energy Corporation, Red Vulcan, Prime Terracota, First Gen Visayas Energy Inc., First Gen Prime Energy Corporation, FGHC, FGPC, FGP, AlliedGen, Unified Holdings Corporation, FNPC, FGLand, and FGPipeline. He is also President of First Philippine Conservation Inc. Mr. Lopez graduated from the University of Pennsylvania with a Bachelor of Arts degree in Economics and International Relations, cum laude in 1983. Manuel M. Lopez, age 69 Board Member Mr. Lopez is the Chairman and Chief Executive Officer of Lopez Holdings Corporation. He is a holder of a Bachelor of Science degree in Business Administration and attended the Program for Management Development at the Harvard Business School. He is the chairman of Meralco , Rockwell Land, Bayan Telecommunications , SkyCable and INDRA Philippines. He is the Vice Chairman of FPHC and is a director of among others, of Lopez, Inc. He was Chief Executive Officer of Meralco from July 2001 to June 2010. Mr. Lopez is the Philippine Ambassador to Japan. He attended the two-day Briefing on Corporate Good Governance Risk Management of the Knowledge Institute of SGV & Co. Mr. Manuel M. Lopez, replaced Mr. Manuel L. Lopez, Jr. effective effective July 28, 2010. Salvador G. Tirona, age 57 Board Member Mr. Tirona is the President and Chief Operating Officer of Lopez Holdings Corporation. He initially joined as the companys Chief Finance Officer (CFO) in September 2005 and held this position until his appointment in his current position in 2010. He was formerly a director and the CFO of Bayan. In 2003, he played a critical and strategic role as CFO of Maynilad Water Services, Inc., particularly in implementing its rehabilitation plan. He holds a Bachelor degree in Economics from the University of Ateneo de Manila and a Master of Business Administration from the same university. He attended the five-day Professional Directors' Program of the Institute of Corporate Directors. Mr. Tirona replaced Mr. Angel Ong effective July 28, 2010. Federico M. Garcia, Filipino, age 67 Board Member Mr. Garcia was President of ABS-CBN from 1998 to 2003. Prior to his appointment as President, Mr. Garcia was Executive Vice President and General Manager of ABS-CBN. He also worked as a TV Sales Executive with ABSCBN in 1966 until Martial Law. Before rejoining the Company in 1987, he was Executive Vice President of GMA Network, managing its marketing and programming activities. He attended the College of Business Administration at the University of the Philippines. Mr. Garcia is a recipient of various Philippine broadcasting industry awards. Justice Vicente V. Mendoza, Filipino, age 79 Independent Director Justice Mendoza was an Associate Justice of the Supreme Court from 1994 to 2002. He was also an Associate Justice of the Court of Appeals from 1980 to 1993 and its Presiding Justice in 1994. He was an Assistant Solicitor General from 1973 to 1980. He also taught political review and gave bar review classes at the University of the Philippines College of Law from 1978 to 1993. He graduated from the U.P.College of Law in 1957 and was admitted to the Philippine Bar in 1958. He was conferred an LL. M. degree by Yale Law School in 1971 and was a visiting scholar at the Harvard Law School in the fall term in 1976. He has authored several law books and has written several articles published in law journals. Javier J. Calero, Filipino, age 75 Independent Director Mr. Calero is the Chairman of the Full Circle , a public relations company. He has been with the said company since June 2004. He has also been senior adviser for the International Foundation for Elections Systems since 1999. He was chairman of Zenith Optemedia , a member of the Publicis Group of Companies from November 2003 to 2005. He was connected with J. Walter Thompson Company from 1958 to 2000 and became its Chairman and Chief Executive Officer in 1992. He is a fellow of the Australian Institute of Company Directors and the Institute of Corporate Directors. He is currently a director of Philam Asset Management, Inc. He obtained his Bachelor of Science degree in Commerce from De La Salle College in 1960. He attended the

Harvard Business School Advance Management Program and is a candidate for a Masters of Business Economics Degree from the Center of Research and Communications. Independent Directors of the Board The Companys Independent Directors, Justice Vicente V. Mendoza and Mr. Javier J. Calero have at least one (1) share of the stock of the Company in their respective names, are college graduates and possess integrity, probity and assiduousness. They are persons who, apart from their fees as directors of the Company, are independent of management and free from any business or other relationship which could, or could reasonably be perceived to, materially interfere with their exercise of independent judgment in carrying out their responsibilities as directors of the Company. Specifically, Justice Mendoza and Mr. Calero: (i) are not directors or officers or substantial stockholders of the Company or its related companies or any of its substantial shareholders (other than as independent directors of any of the foregoing); (ii) are not relatives of any director, officer or substantial shareholder of the Company, or any of its related companies or any of its substantial shareholders; (iii) are not acting as nominees or representatives of a substantial shareholder of the Company, or any of its related companies or any of its substantial shareholders; (iv) have not been employed in any executive capacity by the Company, or any of its related companies or by any of its substantial shareholders within the last two (2) years; (v) are not retained as professional advisers by the Company, any of its related companies or any of its substantial shareholders within the last two (2) years, either personally or through their firms; (vi) have not engaged and do not engage in any transaction with the Company or with any of its related companies or with any of its substantial shareholders, whether by themselves or with other persons or through a firm of which they are partners or companies of which they are directors or substantial shareholders, other than transactions which are conducted at arms length and are immaterial; and (vii) do not own more than two percent of the shares of the Company and/or its related companies or any of its substantial shareholders. Justice Mendoza, and Mr. Calero do not possess any of the disqualifications enumerated under Section II (5) of the Code of Corporate Governance and Section II (D) of SEC Memorandum Circular No. 16, Series of 2002. Executive / Corporate Officers Rolando P. Valdueza, Filipino, age 52 Chief Finance Officer Mr. Valdueza was appointed Chief Finance Officer in 2008. Prior to his appointment as CFO, he was Head of the Regional Network Group (RNG) of ABS-CBN since 2001. As Head of RNG, he made a mark by establishing focus on ratings and revenues. He also institutionalized specific strategies to further strengthen local programming and ABS-CBN affinity with the local communities and improved operating efficiencies. Before joining the Company in 1988 as Budget Officer, he was an auditor with SGV & Co. and was Finance Manager at the National Marine Corporation. He also served as Sky Cable Regional Director for Visayas and Mindanao and later became Managing Director of Pilipino Cable Corporation. Mr. Valdueza took up BS Accounting at University of the East and graduated magna cum laude in 1981. Ma. Socorro V. Vidanes, Filipino, age 50 Head, Channel 2 Mega Manila Management Prior to her appointment as Head of Channel 2 Mega Manila in 2009, Ms. Vidanes held the position of Managing Director for ABS-CBN TV Production from 2001 to 2008. She was responsible for the conceptualization, production and management of all TV Entertainment programs on ABS-CBN Channel 2. She has been with ABS-CBN since 1986, starting as an Associate Producer and has since then been involved in the production of all types of programs talk shows, variety, reality, game, comedy and drama. Ms. Vidanes obtained her degree of Bachelor of Arts in Communication Arts from the Ateneo de Manila University. Florida C. Tan, Filipino, age 52 Managing Director, ABS-CBN TV Entertainment Production Ms. Tan was appointed Managing Director of ABS-CBN TV Entertainment Production in 2009. She is responsible for the operations of all business units under TV Entertainment Production. Prior to her appointment, Ms. Tan was Head of TV Entertainment Production Development and Control of ABS-CBN. Ms. Tan is a respected television veteran, with over 25 years of television production experience. She began her career as a

Production Assistant in 1982 for IBC Channel 13. Since then, she has handled various television production functions associate producer, writer, floor director, executive producer, director, production chief for Channel 13, GMA 7 and SBN 21. She joined ABS-CBN in 1993 as an executive producer. Ms. Tan graduated cum laude with a degree in Broadcast Communications from the University of the Philippines in Diliman where she also taught TV Production and Writing from 1984 to 1988. Jose Agustin C. Benitez, Jr., Filipino, age 53 Head, Channel 2 Sales Mr. Benitez joined the Company in 2006 as the Companys Head of Channel 2 Sales. He is tasked with establishing strategic long-term partnerships with agencies and advertiser clients by helping them build their businesses and, at the same time, bring in revenues to the Company. He provides sales solutions to clients from a broad range of traditional and non-traditional media products. He was formerly Sales Head of ABC Channel 5 and of GMA Channel 7, and was instrumental in developing the Sales Units of both companies. He was one of the first Sales Heads who was able to use his media/advertising background to successfully blend science with the selling skills of both teams. Before becoming involved in Broadcast Sales, Mr. Benitez was formerly Media Director and Vice President of Ace Saatchi and Saatchi, where he provided leadership to a media department that handled diverse clients such as San Miguel Corporation, Procter & Gamble Distributing Philippines Inc., Nestle Philippines Inc., Johnson & Johnson Philippines Inc., and Jollibee Foods Corporation. Here he won for the agency the first-ever Agency of Record (AOR) assignment of P&G. He was also formerly President and CEO of Zenith Optimedia, Nestles independent media agency, and President and CEO of Optimum Media, where he was mainly responsible for winning the Smart AOR business. This Smart win triggered a streak of 14 consecutive new business wins, helping the agency become a formidable force in the industry in a span of 3 months. Raul Pedro G. Bulaong, Filipino, age 47 Managing Director, Technical Production Operations Mr. Bulaong heads the Technical Operations Division of ABS-CBN. His responsibility covers production, postproduction, animation, distribution, Analog and Digital Transmission, and Media Asset Management. Before joining ABS-CBN, he was part of the team that managed RoadRunner Network, a post-production facility for TV Commercials and Films. Mr. Bulaong graduated from the University of the Philippines with a Bachelor's Degree in Mass Communication majoring in Broadcasting. He is a Famas Hall of Fame Awardee for winning 5 technical awards for Film Visual Effects. Peter A. Musngi, Filipino, age 59 Managing Director, Manila Radio and Sports The official voice-over announcer of ABS-CBN, Mr. Musngi started his media career as a staff announcer for DZYK-FM. He worked as a disc jockey in various radio stations for more than 15 years. He became station manager of DZMM and DWRR from 1988 to 1994; assistant vice president for Manila Radio from 1994 to 1997; vice president at SkyCable from 1997 to 1998; and assistant vice president for ABS-CBN Sports from 1998 to 2002. He was became Head of Manila Radio and Sports division in 2002. He also became Managing Director of ABS-CBN News Channel from 2004 to 2005. For almost 2 decades, he has been a commercial voice-over announcer, audiovisual presentation narrator and movie trailer announcer and hosted the multi-awarded entrepreneurial programs Radyo Negosyo on DZMM-AM radio and Kumikitang Kabuhayan on ABS-CBN Channel 2. Mr. Musngi graduated with a Business Administration degree from University of the East. He passed the CPA board exams in 1973. He finished his MBA at the Ateneo de Manila University. Louis Benedict O. Bennett, Filipino, age 46 Head, Regional Network Group Mr. Bennett was appointed Head of the Regional Network Group (RNG) in 2009. Under his leadership, the Luzon and Visayas Clusters transformed into profitable business units of the division and ratings in these areas continue to dominate the competition. During his successful tenure in RNG Radio, Mr. Bennett realized breakthroughs in ratings wherein most of our AM and FM stations became No. 1 or No. 2. Mario Carlo P. Nepomuceno, Filipino, age 53 Chief Human Resources and Organizational Development and Learning Officer Mr. Nepomucenos career spans close to 30 years in the field of human resources and organizational development with stints in brand management and sales. Mr. Nepomuceno has worked in a broad range of

industries with both local and global organizations, either as a consultant or employee. He has had exposure to the banking, fast moving consumer goods, transportation, data, telecoms, cable, and BPO industries, among others. Outside the private sector, he has serviced clients in the government and non-government sectors as well. Mr. Nepomuceno is a graduate of the Ateneo de Manila University with a bachelors degree in Psychology. Vivian Y. Tin, Filipino, age 50 Chief Research and Business Analysis Officer Ms. Tin heads the Research & Business Analysis Division of ABS-CBN. Her division provides consumer and market insights and information to support strategic and tactical business decisions for ABS-CBN and all its subsidiaries. Corporate Planning and Investor Relations are also part of Vivians responsibilities. Ms. Tin has had extensive experience in market research, particularly in media measurement and customized research. She began her career at Trends-MBL, where she rose to become Associate Research Director in 1992. After her stint in Trends-MBL, she moved on to ACNielsen Philippines where she became Director of Customized Research that handled top local and multinational companies in home care, personal care, pharmaceutical, food, dining and financial services. Prior to joining ABS-CBN, Ms. Tin was formerly Executive Director of Nielsen Media Research, the media research division of ACNielsen Philippines. She was a director of AdBoard in 2005 and 2006 and was the President of the Marketing & Opinion Research Society of the Philippines (MORES) in 2004 and 2005. She graduated magna cum laude with a Bachelor of Arts degree in Political Science and had her graduate studies on Applied Statistics, both at the University of the Philippines. Ms. Tin also completed the Advanced Management Program at Harvard Business School in 2010 Atty. Maximilian T. Uy, Filipino, age 48 Chief Legal Counsel Atty. Uy earned his Bachelor of Laws degree from the University of the Philippines, after having graduated from the College of Business Administration from the same university. He practiced law after passing the 1990 Bar Exams and eventually specialized in litigation and intellectual property law. He joined ABS-CBN in February 2000 and has held his present position since July 2006. Ramon R. Osorio, Filipino, age 59 Head, Corporate Communications Mr. Osorio is an active advertising and PR practitioner, advocacy stalwart, marketing communications educator and journalist. He has worked with J. Walter Thompson, Ace Saatchi, DYR Alcantara and Campaigns, Inc. Prior to joining ABS-CBN, he has spent 18 years in Campaigns Advocacy & PR, Inc. (CAPRI), the social marketing and below-the-line arm of Campaigns and Grey, as its President. Mr. Osorio chaired the communication arts department of the University of Santo Tomas for 17 years and was the 2002 Agora Awardee for Outstanding Achievement in Marketing Education and The Outstanding Tomasian Alumni (TOTAL) Awardee for media. Mr. Osorio writes a weekly column in The Philippine Star, entitled Commonness, which tackles and analyzes current events that impact on the Philippine business and life. In the 2002 and 2005 Catholic Mass Media Awards, Commonness won as Best Business column. Mr. Osorio got his academic grounding at the University of Santo Tomas and the MBA program of the Ateneo de Manila Graduate School of Business. He likewise observed and trained at Johns Hopkins University in Maryland; Center for Advertising Services in New York City; Academy for Educational Development (AED), George Washington University, APCO and Porter Novelli, all in Washington DC. He was the president of the International Association of Business Communicators (IABC), Philippine Chapter in 2003 and 2004, and is currently the IABC Regional Director for Asia-Pacific. Robert G. Labayen, Filipino, age 51 Head, Creative Communication Management Mr. Labayen spent 22 years in advertising prior to joining ABS-CBN in 2004. He started as a copywriter and rose to the rank of Managing Partner and Executive Creative Director. He also served the advertising industry as President of the Creative Guild of the Philippines. He has always wanted to use his talents to champion the Filipino spirit that's why he joined ABS-CBN in 2004. Today, his Division articulates the ABS-CBN vision of service to the Filipino through their work in promoting our company image and our entertainment, news, sports and advocacy programs. Leonardo P. Katigbak, Filipino, age 48 Head, Special Projects and Licensing

Former Studio 23 Managing Director, Mr. Katigbak was appointed Head of ABS-CBN's Special Projects and Licensing in 2008. He is tasked to oversee proper management implementation of assigned key projects and corporate strategies that have direct impact in advancing the company's total business imperatives. In addition to this, he will also have oversight on the Licensing Division. Mr. Katigbak has been with the company since 1987, starting out as writer, editor, director and producer before moving to the corporate side of the business in 1992. He began the ABS-CBN Archives and concurrently worked in ABS-CBN Acquisitions prior to his assignment in Studio 23 as Head of Programming and Acquisitions. Luis Paolo M. Pineda, Filipino, age 40 Head, Business Development Mr. Pineda was appointed Head of Business Development in 2009. He joined ABS-CBN Interactive in 2000 as Business Development Manager for www.pinoycentral.com where he was able to establish strong partnerships and identified potential joint ventures with companies in the same industry. His work eventually included coordination with all ABS-CBN media platforms, conceptualization, execution, and evaluation of mobile applications. He was promoted to Director in 2002 and Assistant Vice President in 2004 as he began to provide strategic direction for his business unit. In 2005, he took on the role of overall head for the companys mobile and online business while practically co-managing its video-streaming operations. His appointment to oversee the gaming business followed in August of 2005 and in December 2005, he was officially designated as Managing Director for ABS-CBN Interactive. Mr. Pineda has significantly contributed to the growth and success of the business unit, driving the group to reach its targets without fail year-on-year. Mr. Pineda is an alumnus of the Ateneo de Manila University and completed an executive management course in Kellogg University.

Antonio S. Ventosa, Filipino, age 50 Managing Director, Cable Channels and Print Media Group and Concurrent Officer-in-Charge, Studio 23 Mr. Ventosa joined the Company in 2006 as Head of Corporate Marketing. He was appointed in 2009 as Managing Director of ABS-CBNs Cable Channels and Print Media Group. He brings with him several years of experience in marketing, having spent more than 2 decades honing his skills in understanding and driving strategic marketing communications considerations that build leadership brands. He was an account director at Dentsu Young and Rubicam Malaysia for Colgate Palmolive Singapore and Malaysia, and regional account director at Leo Burnett in Singapore for McDonalds Asia before returning to the Philippines in 1994. He was, at one time, the chairman and the president of the Association of Accredited Advertising Agencies of the Philippines or 4As, and a board director of AdBoard. He is the founding chairman of the Araw Values Awards, and was the director-in-charge of the first 4As Advertising Summit in 2002. Prior to joining the Company, he was managing director of Leo Burnett Manila, where he has worked extensively to expand the agencys capability as a holistic communications organization that provide clients with the most effective communication and brand building programs. He was also responsible for directing the total marketing communications programs for clients whose brands are now leaders in their category. He was also concurrent President of Arc Worldwide Philippines, the newly established marketing services company aligned with Leo Burnett. Mr. Ventosa graduated with a marketing degree from De La Salle University and was honored in 2004 by his alma mater as one of its alumni achievers for having made a significant contribution in the field of advertising. Ma. Lourdes N. Santos, Filipino, age 55 Managing Director, ABS-CBN Film Productions Inc. and Star Records, Inc. Ms. Santos holds more than 2 decades of experience in the local film industry having started as a production assistant for Vanguard Films in 1982. She went on to become head of the movie division of Gryk Ortaleza, Inc., an entertainment company, then a line producer for Regal Films in 1986 and the general manager of Vision Films in 1989. She joined the company as executive producer for its drama programs. In 1995, she became the Managing Director of ABS-CBN Film Productions, Inc. Concurrent with her current position as ABS-CBN Film Production, Inc.s Managing Director. Ms. Santos was appointed Senior Vice-President of the Television Drama Division for the Companys Entertainment Group in 2003. In 2006, she was likewise assigned to handle Star Records, Inc. Ms. Santos graduated cum laude in BS Hotel and Restaurant Management at the University of Santo Tomas. Rafael L. Lopez, Filipino, age 55 Chief Operating Officer, ABS-CBN Global Limited

Mr. Lopez assumed the position of Senior Vice President and Chief Operating Officer of ABS-CBN Global Limited in 2004. He concurrently serves as the Managing Director of ABS-CBN International in North America and has held this position since 1998. He started as the Information Technology Head of ABS-CBN International in North America in 1994. Prior to this, he spent 12 years working as a systems analyst for Bell Atlantic. He graduated from the San Francisco State University with a Bachelor of Arts degree in Music. He also obtained a degree in computer programming from Control Data Institute and completed the Stanford Business Executive Program for Executives in 2002. Nelson Edison M. Aguiflor, Filipino, age 50 Head, ABS-CBN Global Manila Operations Mr. Aguiflor was appointed ABS-CBN Global Manila Operations Head in 2008. He has strategic responsibility for its management and operations. He brings with him 17 years of television experience from the ABS-CBN family. From segment producer/writer in Channel 2 in 1991, he was invited to join SkyCable as Production Supervisor in 1992 and later served as Creative Director for both Programming and Marketing. In 1996, Edson returned to television as part of the group that would launch Studio 23. He has a Bachelor of Science Degree in Commerce Major in Accounting from the University of Santo Tomas. Carlo Katigbak, Filipino, age 42 Managing Director, SkyCable As Managing Director, Mr. Katigbak is spearheading the expansion of SkyCables business from being a national leader in the pay TV industry, to becoming a key provider for broadband and communication services. He began his career as a financial analyst with First Pacific Capital Corp. in 1992. He joined SkyCable in 1994 as Corporate Finance Manager and has held various positions in Corporate Planning, Provincial Operations and Finance. In 1998, he served as the first Managing Director of Pilipino Cable Corporation which was a result of the merger between Sky Cable's provincial systems and Sun Cable. He was then assigned to ABS-CBN Interactive as Managing Director in 1999. ABS-CBN Interactive pioneered various digitals services such as mobile downloads, interactive TV, online advertising and online video-on-demand. He returned to SkyCable as Managing Director in 2005. Mr. Katigbak has a Bachelor of Science in Management Engineering from the Ateneo de Manila University. Mr Katigbak also completed the Advanced Management Program at Harvard Business School in 2009. Consuelo Nolasco-Lopez, Filipino, age 39 Managing Director, ABS-CBN Interactive Ms. Lopez was Head of International Business prior to her appointment as Managing Director of ABS-CBN Interactive in 2009. She oversaw the expansion of ABS-CBNs internationally-recognized online video-ondemand service, TFCNow, and delivered impressive revenue growth during her tenure. She also spearheaded various online and mobile ventures of the Company, including the development and implementation of pioneering mobile services in the Philippines and abroad, and the launch of local music content through international online distribution channels. Prior to joining ABS-CBN Interactive, Ms. Lopez handled Business Development, Finance, and Corporate Planning duties for SkyCable. Ms. Lopez graduated with a degree in Economics and French Studies from Mills College in Oakland, California, USA. Ma. Rosario S. Bartolome, Filipino, age 41 Head, ABS-CBN Corporate Marketing Ms. Bartolome will provide overall leadership in marketing the Companys channels, programs and campaigns to advertisers and media agencies. Ms. Bartolome brings with her more than 17 years of experience in integrated communications planning and media marketing. She is recognized locally and internationally for her innovative and cutting edge media solutions that have shaped the Philippine media landscape. Prior to joining ABS-CBN, she was the Managing Director of Carat Philippines and was Vice President of Universal McCann Philippines. Ms. Bartolome graduated from the Ateneo de Manila University with a degree in Communication Arts. Ma. Regina Ging E. Reyes, Filipino ,age 49 Head, News and Current Affairs Ms. Reyes is responsible for all newsgathering, content and strategic direction of the News and Current Affairs Division of ABS-CBN Corporation. She has over 20 years of solid experience as a broadcast journalist. She joined ABS-CBN in 1986 as a Production Assistant, rose from the ranks to become Executive Producer and Head

Writer of the award-winning "The World Tonight" and other special events, and eventually, Director for News Production. Prior to her appointment as Head of News and Current Affairs, Reyes was ABS-CBNS North America News Bureau Chief from 2002 to 2010. A premier news personality in the Filipino community in the US, Reyes expanded the news operations of ABS-CBN in the US and Canada, contributing to the global content needs of ABS-CBN. In 2007, she was named by the Filipina Womens Network as one of the 100 Most Influential Filipino Women in the U.S. Mark L. Lopez, Filipino, age 39 Chief Information Officer As Chief Information Officer, Mr. Lopez heads and exercises governance on all IT functions and activities which includes IT infrastructure and media systems management, IT standards and strategies, long-term technology and strategic technical services. Before his appointment, he was Vice President and Chief Information Officer of Manila Electric Company (Meralco), where he managed all ICT related assets of the Company covering all its computer, information system and telecommunication related resources. Concurrently, he is the President and CEO of e-Meralco Ventures, Inc. (eMVI), a wholly owned subsidiary of Meralco engaged in the Telecommunications and Broadband business. He is a graduate of Menlo College in California with a degree in Business Administration. He completed Executive MBA Program from the Asian Institute of Management. In 2011, ABS-CBN welcomed 3 new members to the Companys Executive Committee: Below are their qualifications:

Rafael L. Camus, Filipino, age 50 Head, Corporate Planning Mr. Camus joined the company in May, 2003 at the subsidiary ABS CBN Interactive. In March, 2009 he moved to the Parent Company. As head of Corporate Planning, he leads the company in developing corporate strategic plans and monitors the implementation of short, medium, long term corporate goals and objectives. Prior to joining ABS-CBN, he was with Globe Telecom for three years. Mr. Camus obtained his MBA degree from the Wharton School at the University of Pennsylvania, in Philadelphia, Pennsylvania, USA. Evelyn Raymundo, Filipino, age 49 Head, Program Acquisitions, International Sales and Dsitribution and DTT Channels Ms. Raymundo joined the company in 1988. As Head of Program Acquisitions, International Sales and Distribution and DTT Channels, she is in-charge of bringing in international programs that will suit the Philippine market. She also handles the distribution of our local content to the global market. Ms. Raymundo is an experienced media practitioner who helped shape the primetime programming of ABS-CBN through her pioneering work as an executive in Free TV and Cable TV industry for over two decades. Higino Dungo, Filipino, age 51 Head, CommGroup Internal Audit Mr. Dungo joined ABS-CBN in July 2008. As head of Internal Audit, he leads the Division in providing an independent and objective assessment and appraisal of the effectiveness of the Internal Control System throughout the organization through risk based operational, financial, compliance and consulting audit services. Prior to joining the Company, he worked with Meralco for 20 years. Mr. Dungo is a Certified Public Accountant, an Accredited Quality Assurance Reviewer and a Certified Internal Auditor, a global designation for internal auditors.

Family Relationships Mr. Oscar M. Lopez is the brother of Mrs. Presentacion L. Psinakis and Manuel M. Lopez. He is the uncle of Mr. Eugenio L. Lopez III and the father of Mr. Federico R. Lopez. Mr. Eugenio L. Lopez III and Mr. Federico R. Lopez are first cousins. Significant Employees

The Company considers its entire work force as significant employees. Everyone is expected to work together as a team to achieve the Companys goals and objectives. Involvement of Directors and Officers in Certain Legal Proceedings For the past 5 years, the Company is not aware of any bankruptcy proceedings filed by or against any business of which a director, person nominated to become a director, executive officer, or control person of the Company is a party or of which any of their property is subject. For the past 5 years, the Company is not aware of any conviction by final judgment in a criminal proceeding, domestic or foreign, or being subject to a pending criminal proceeding, domestic or foreign, of any of its director, person nominated to become a director, executive officer, or control person. For the past 5 years, the Company is not aware of any order, judgment, or decree not subsequently reversed, superseded, or vacated, by any court of competent jurisdiction, domestic or foreign, permanently or temporarily enjoining, barring, suspending, or otherwise limiting the involvement of a director, person nominated to become a director, executive officer, or control person of the Company in any type of business, securities, commodities, or banking activities. For the past 5 years, the Company is not aware of any findings by a domestic or foreign court of competent jurisdiction (in a civil action), the Commission or comparable foreign body, or a domestic or foreign exchange or electronic marketplace or self regulatory organization, that any of its director, person nominated to become a director, executive officer, or control person has violated a securities or commodities law. Item 10. Executive Compensation Information as to the aggregate compensation paid or accrued during the last 2 fiscal years and to be paid in the ensuing fiscal year to the Companys chief executive and 5 other most highly compensated executive officers follow:

SUMMARY COMPENSATION TABLE Annual Compensation Other Annual Compensation

Name Chief executive and most highly compensated executive officers (in alphabetical order): Eugenio L.Lopez III (CEO) Ma. Rosario N. Santos-Concio Roldeo Theodore T. Endrinal Rolando P. Valdueza Ma. Socorro V. Vidanes

Year 2012E 2011 2010

Salary (P) 118,060,353 107,327,456 97,796,157

Bonus (P)

126,059,719 45,890,188

0 0

All managers and up as a group unnamed

2012E 2011 2010

1,097,907,913 1,035,762,181 586,466,472

451,831,190 154,973,985

0 0

The directors each receive per diems amounting to P5,000.00 for their attendance to board meetings. There are no other arrangements for compensation either by way of payments for committee participation or consulting contracts.

Item 11. Security Ownership of Certain Beneficial Owners and Management Security Ownership of Certain Records and Beneficial Owners as of March 31, 2012:
Title Of class Name and Address of Record Owner Name of Beneficial Owner and Relationship with Record Owner Lopez, Inc.
(Manuel M. Lopez, Chairman, is authorized to vote on behalf of Lopez, Inc.)

Citizenship

No. of Shares Held

Per cent Owned

Common Lopez, Inc. 5/F Benpres Bldg, Exchange Road cor Meralco Ave., Pasig City Common PCD Nominee Corporation G/F Makati Stock Exchange Bldg., Ayala Ave., Makati City (PCD Nominee Corporation is not related to the Company)

Filipino

446,231,607

57.24%

ABS-CBN Holdings Corp.

(Manuel M. Lopez, Chairman, is authorized to vote on behalf of ABS-CBN Holdings Corp.)

Filipino

312,480,820

40.08%

Lopez, Inc. is the holding company of the Lopez family. It is owned by the respective holding companies of the families of Eugenio Lopez, Jr., Oscar M. Lopez, Presentacion L. Psinakis and Manuel M. Lopez. It has issued convertible notes covering the shares in the Company registered and beneficially owned by it in favor of Benpres Holdings Corporation. The Board of Directors of Lopez, Inc. has the power to decide how Lopez Inc.s shares in ABS-CBN Corporation are to be voted. ABS-CBN Holdings Corporation is a participant of PCD. The 271,986,700 shares beneficially owned by ABS-CBN Holdings Corporation form part of the 312,480,820 shares registered in the name of PCD. ABS-CBN Holdings Corporation is owned 50% by Lopez, Inc. and 50% by Oscar M. Lopez, Manuel M. Lopez, Presentacion L. Psinakis, and Eugenio Lopez III. The shares in the Company registered and beneficially owned by it are covered by Philippine Depositary Receipts (PDRs) which gives the holder thereof the right to delivery or sale of the underlying share. The PDRs are listed with the Philippine Stock Exchange. The Board of Directors of ABS-CBN Holdings Corporation has the power to decide how ABS-CBN Holdings Corporations shares in ABS-CBN Corporation are to be voted. Security Ownership of Management as of March 31, 2012: As of March 31, 2012, the Companys directors and senior officers owned an aggregate of 1,585,038 shares of the Company, equivalent to 0.2033% of the Companys total issued and outstanding capital stock.
Title of Class Stockholder Name and Position Nature of Beneficial Ownership Direct Indirect Direct Direct Direct Direct Direct Direct Citizenship Number of Shares Held 651,191 249,833 63,605 1,988 1 146,186 1 2 Percent Held 0.0835% 0.0320% 0.0082% 0.0003% 0.0000% 0.0188% 0.0000% 0.0000%

Common Common Common Common Common Common Common Common

Eugenio Lopez III Chairman and Chief Executive Officer Augusto Almeda-Lopez Vice-Chairman Oscar M. Lopez Director Presentacion L. Psinakis Director Ma. Rosario Santos-Concio Director, President and Chief Operating Officer Manuel M. Lopez Director Federico R. Lopez Director Salvador G. Tirona Director

Filipino Filipino Filipino Filipino Filipino Filipino Filipino Filipino

Common Common Common Common Common Common

Federico M. Garcia Director Vicente Mendoza Independent Director Javier J.Calero Independent Director Rolando P. Valdueza Chief Finance Officer Ma. Socorro V. Vidanes Head, Channel 2 Mega Manila Management Mario Carlo P. Nepomuceno Chief Human Resources and Organization and Development Learning Officer Vivian Tin Chief Research and Business Analysis Officer

Direct Direct Direct Direct Direct Direct

Filipino Filipino Filipino Filipino Filipino Filipino

269,517 1 1 48,500 10,000 35,351

0.0346% 0.0000% 0.0000% 0.0062% 0.0013% 0.0045%

Common

Direct

Filipino

8,600

0.0011%

Common Common

Evelyn Javier Raul Pedro G. Bulaong Managing Director, ABS-CBN Technical Production Operations Leonardo P. Katigbak Head, Special Projects and Licensing Louis Benedict O. Bennett Head, Regional Network Group Johnny C. Sy Head, Digital Consumer Devices and Chief Risk Management Officer Martin L. Lopez

Direct Direct

Filipino Filipino

10,000 15

0.0013% 0.0000%

Common Common Common

Direct Direct Direct

Filipino Filipino Filipino

52,000 600 17,987

0.0067% 0.0001% 0.0023%

Common

Direct

Filipino

19,659

0.0025%

Security Ownership of Directors and Management

1,585,038

0.2033%

Changes in Control There have not been any arrangements that have resulted in a change in control of the Company during the period covered by this report. The Company is not aware of the existence of any voting trust arrangement among the shareholders. Item 12. Certain Relationships and Related Transactions Relationships and Related Transactions / Agreements with Affiliates For a detailed discussion of ABS-CBNs related party transactions, see Notes 4 and 22 of the accompanying notes to the Companys audited consolidated financial statements. Except for transactions discussed in Notes 4 and 22 of the accompanying notes to the Companys audited consolidated financial statements, there had been no material transactions during the past 2 years, nor is any material transaction presently proposed, to which the Company was or is to be a party in which any director, executive officer of the Company, or security holder of more than 10% of the Companys voting securities, any relative or spouse of any such director or executive officer or owner of more than 10% of the Companys voting securities had or is to have direct or indirect material interest. Furthermore, there had been no material transactions during the past 2 years, nor is any material transaction presently proposed, between the Company and parties that fall outside the definition of related parties under PAS No. 24, but with whom the registrants or its related parties have a relationship (e.g., former senior management of the Company or other parties who have some other former or current relationship with the

Company) that enables the parties to negotiate terms of material transactions that may not be availed from other, more clearly independent parties on an arm's length basis. Parent Company Lopez, Inc. is the registered owner of 57.24% of the voting stock of the Company as of December 31, 2011. Lopez, Inc. is the holding company of the Lopez family. It is owned by the respective holding companies of the families of Eugenio Lopez, Jr., Oscar M. Lopez, Presentacion L. Psinakis and Manuel M. Lopez. It has issued convertible notes covering the shares in the Company registered and beneficially owned by it in favor of Lopez Holdings Corporation.

Resignation of Directors Because of Disagreement with Policies No director has resigned or declined to stand for re-election to the Board of Directors since the date of the last annual meeting of security holders of the Company because of a disagreement with the Company on matters relating to the Companys operations, policies and practices. PART IV CORPORATE GOVERNANCE Item 13. Corporate Governance ABS-CBN recognizes the importance of corporate governance in enhancing the stakeholders interests in the Company and the Board of Directors commits itself to the principles of good corporate governance. The principles for corporate governance of ABS-CBN are contained in its Articles of Incorporation, By-laws, as amended, its Manual of Corporate Governance in compliance with SEC Memorandum Circular 2, Series of 2002 with a copy of the manual submitted to the Securities and Exchange Commission (SEC) in the same year. As an organization, ABS-CBN reaffirms its mission of being in the service of the Filipino, and espouses that there is no dichotomy between doing good business and practicing the right values. Through values cascading within the organization, the Company has identified the core values necessary to guide its leaders and employees in formulating and making business decisions, which in the end must always remain consistent with this mission and goal of service. ABS-CBNs commitment to adhere to best corporate governance practices was recognized for three consecutive years on May 26, 2011, May 27, 2010 and April 22, 2009 by the Institute of Corporate Directors (ICD) by naming the Company as one of the highest-scoring companies to garner a score of 90% or higher in the 2010, 2009 and 2008 Corporate Governance Scorecard, a survey of corporate governance practices among 172 publicly-listed companies in the country. ICD further cited that the awarded companies were at par with corporate governance practices of companies in more advanced economies. The ICD conducted the survey in partnership with the Philippine Stock Exchange (PSE), the SEC, and the Ateneo School of Law. They judged publicly-listed companies based on a questionnaire that measured corporate governance practices which include shareholder rights, treatment of shareholders, the role of stakeholders, disclosure policies and transparency, and board responsibility. The SEC mandated the participation of publicly-listed companies in the survey. The Mission of the ABS-CBN Board of Directors The ABS-CBN Board of Directors (the Board) represents the stakeholders interest in pursuing a successful business, including optimizing financial returns. The Boards mission is to determine that the Corporation is managed in such a way to ensure this result while adhering to the laws and rules of jurisdictions in which it operates, observing the highest standards of corporate governance and observing high ethical norms. The

Board establishes the overall goals, strategies and policies of the Company. The Board strives to regularly monitor the effectiveness of managements decisions and the execution of the strategies. In addition to fulfilling its obligations for increased stockholder value, the Board has responsibility to the Companys customers, employees, suppliers and the community. The Board of Directors The Board consists of 11 members, elected by shareholders during the last Annual Stockholders Meeting. For the year 2011, these directors are Eugenio Lopez III, Chairman and Chief Executive Officer; Augusto Almeda Lopez, Vice Chairman; Maria Rosario Santos-Concio, Oscar M. Lopez, Presentacion L. Psinakis, Federico R. Lopez, Federico M. Garcia, Salvador G. Tirona, Manuel M. Lopez, Justice Vicente Mendoza, and Javier Calero. In compliance with the SECs requirement to have independent directors with no material relationship with the Company comprising at least 20% of the Board, two independent directors Mr. Calero, and Justice Mendoza were elected. These directors are independent of management, and free from any relationship that may interfere with their judgment. Selection of Directors The Board itself is responsible, in fact as well as procedure, for screening its own members and in recommending them for election by the stockholders. The Chairman and Chief Executive Officer has direct input in the screening process. The final approval for the nominees as directors is determined by the full Board. In case of vacancies in the Board between annual stockholder meetings, the Board may elect directors to serve until the next annual meeting. Mix of Directors There is a mix of executive, non-executive and independent directors on the Board. Senior management executives other than the Chairman and Chief Executive Officer and the Chief Operating Officer attend Board meetings on a regular basis even though they are not members of the Board. On matters of corporate governance, while the Board assumes decisions will be made by the independent directors, input in any policy formulation and discussion from directors who are employees is welcome and expected unless the issue involves an actual conflict of interest with such directors. Criteria for Independence for Independent Directors The Board assesses the independence of each director and of each individual nominated for election to the Board as an independent director. As part of this analysis, the Board must review and conclude whether each nominee for independent director satisfies the requirements of the rules of the SEC, the by-laws and the Manual of Corporate Governance. Under the Manual of Corporate Governance, a independent directors (i) are not directors or officers or substantial stockholders of the Company or its related companies or any of its substantial shareholders (other than as independent directors of any of the foregoing); (ii) are not relatives of any director, officer or substantial shareholder of the Company, or any of its related companies or any of its substantial shareholders; (iii) are not acting as nominees or representatives of a substantial shareholder of the Company, or any of its related companies or any of its substantial shareholders; (iv) have not been employed in any executive capacity by the Company, or any of its related companies or by any of its substantial shareholders within the last 2 years; (v) are not retained as professional advisers by the Company, any of its related companies or any of its substantial shareholders within the last 2 years, either personally or through their firms; (vi) have not engaged and do not engage in any transaction with the Company or with any of its related companies or with any of its substantial shareholders, whether by themselves or with other persons or through a firm of which they are partners or companies of which they are directors or substantial shareholders, other than transactions which are conducted at arms length and are immaterial; and (vii) do not own more than 2% of the shares of the Company and/or its related companies or any of its substantial shareholders. Mr. Calero and Justice Mendoza do not possess any of the disqualifications enumerated under Section II (5) of the Code of Corporate Governance and Section II (D) of SEC Memorandum Circular No. 16, Series of 2002. Board Performance

The Board regularly meets monthly, as much as possible, to review the performance of the Company and its subsidiaries, approve any pertinent plans, budgets, and financial statements, set guidelines for management, and discuss any various matters requiring Board attention and approval. Any member of the Board may ask management to give special reports and analysis on certain issues. From January 1, 2011 to December 31, 2011, the Board had 11 regular meetings. Board Attendance to Meetings in 2011 Total No. of Board Meetings Eugenio L. Lopez III Ma. Rosario Santos-Concio Oscar M. Lopez Augusto Almeda Lopez Presentacion L. Psinakis Manuel M. Lopez Federico R. Lopez Federico M. Garcia Salvador Tirona 1 Justice Vicente V. Mendoza 2 Javier J. Calero 3 Justice Jose C. Vitug 4 Pedro N. Dy-Liacco
1 2 3 4

No. of Board Meetings Attended 11 9 10 9 10 2 6 9 11 6 6 4 2

Percentage of Attendance 100% 82% 91% 82% 100% 18% 55% 82% 100% 100% 100% 80% 40%

11 11 11 11 10 11 11 11 11 6 6 5 5

Attended Annual Stockholders Meeting? (Y/N) Y Y Y Y Y N N N Y Y Y

Elected June 16, 2011 Elected June 16, 2011 Resigned June 16,2011 Resigned June 16, 2011

Compensation of Directors Members of the Board each receive per diems amounting to Php5,000.00 for their attendance to Board meetings. There are no other arrangements for remuneration either by way of payments for committee participation or consulting contracts. Board Committees There are seven Board committees that have been established to address any issues requiring the directors attention. The Programming Committee deliberates on the programming issues and strategies of the network, and is primarily a business strategy committee. It is composed of Federico M. Garcia, Ma. Rosario Santos-Concio and Javier J. Calero. The Compensation Committee reviews any recommendations on incentive schemes and issuance of stock options to employees. It is composed of Augusto Almeda Lopez, Justice Vicente V. Mendoza and Federico R. Lopez. The Succession Planning Committee ensures that there is a pipeline to key positions in the organization, and that there are ready replacements for any key positions that are suddenly vacated. It oversees the replacement planning table of the organization, and identifies successors and gaps in succession, as well as any measures needed to fill such gaps. It is composed of Salvador G. Tirona, Justice Vicente V. Mendoza and Augusto Almeda Lopez.

The Compensation Committee for the Chairman and the Chief Executive Officer is composed of Augusto Almeda Lopez, Federico M. Garcia, and Justice Vicente M. Mendoza. The Audit Committee reviews the financial reports and risks, examines internal control systems, oversees the audit process as well as the companys compliance with laws, and evaluates the companys business conduct. It is composed of Javier J. Calero, Salvador G. Tirona and Justice Vicente V. Mendoza. In March 2010, the Board approved the creation of two new committees to improve corporate governance: a Risk Management Committee and a Nomination and Election Committee. To highlight the importance of risk management among the Companys strategic priorities, the Board of Directors created the Risk Management Committee to oversee the formulation and establishment of an enterprise-wide risk management system, including the review, analysis and recommendation of policies, frameworks, strategies and systems to be used by the company to manage risks, threats and liabilities. It is composed of Salvador G. Tirona, Federico M. Garcia, and Justice Vicente V. Mendoza. The Nomination and Election Committee will review and evaluate the qualifications of all persons nominated to the Board and other appointments that require Board approval, and assess the effectiveness of the Boards processes and procedures in the election or replacement of directors. It is composed of Eugenio Lopez III, Ma. Rosario Santos-Concio, Justice Vicente V. Mendoza and Javier J. Calero. Audit Internal Audit The Internal Audit Division provides independent assurance and advisory services to the Company's Board of Directors through its Audit Committee by evaluating the adequacy, effectiveness and efficiency of the Company's internal control system, developing necessary recommendations for its improvement, and establishing an effective follow-up system on related implementation. The Group, which is composed of certified public accountants, three certified internal auditors and a certified information systems auditor, report to the Audit Committee. Regular audits of the Company and its Subsidiaries are conducted based on a 3-year audit cycle and an annual audit plan approved by the Audit Committee. Special audits are also undertaken as necessary. In 2011, the Internal Audit Division presented to the Audit Committee audit status updates, highlights and presentations on completed and on-going audit activities in accordance with the Audit Committee-approved internal audit plan. The Internal Audit division also worked closely with the Company's Investor Relations and Corporate Planning group in preparing the Companys responses to the 2008 ,2009 and 2010 Corporate Governance Scorecard for publicly listed companies where the company got high citations as earlier cited.

Audit Committee Report for 2011 The Audit Committee represents and assists the Board of Directors in fulfilling its oversight responsibilities as regards: The integrity of the Companys financial statements, the efficiency of financial reporting process, management of financial risks, and soundness of internal control environment; The independence and adequacy of internal audit functions and processes; The qualifications and fees of the Companys independent external auditors, their annual review of the Companys financial statements and their independence in conducting other audit services; and,

The Companys legal and regulatory compliance.

The roles and responsibilities of the Audit Committee are embodied in an Audit Committee Charter, as approved by the Board of Directors. In compliance with its Charter, the Audit Committee confirms for 2011 that: An independent Director chairs the Audit Committee; Quarterly meetings were held attended to by the members of the Committee; The Audit Committee has discussed and approved the overall scope and audit plans of the Internal Audit including the manpower resources and competencies necessary to carry out the audit as planned; The Audit Committee has reviewed the reports of the internal auditors and ensured, through discussion with management and the internal auditors, that all the necessary corrective and relevant actions have been taken and implemented; The Audit Committee has reviewed and discussed the audited annual financial statements of the Company and its subsidiaries with the management, internal auditors and external auditors within the context: that management is responsible for the Companys financial statements and the related statements of financial condition and results of operations; and, that SGV & Co., the external auditor, is responsible for expressing an opinion on the conformity of the Companys audited financial statements with the Philippine Financial Reporting Standards.

Compliance Officer The Company has appointed a Compliance Officer who is tasked to ensure the Companys observance of corporate governance best practices and provide recommendations to the Board for continuous improvement towards full compliance and adoption of global best practices. The Compliance Officer also issues an annual certification on the compliance of the Board with the Companys Corporate Governance Manual. The Compliance Officer is Mr. Paul Michael V. Villanueva, Jr. The Company submitted to the SEC a certification of the Boards compliance with the Companys Corporate Governance Manual last January 25, 2012. Code of Conduct The Company also has a Code of Conduct. The Code defines the behaviors that are acceptable or not acceptable within the organization. It details the offenses versus the companys or the persons property, the schedule of penalties for each offense according to its gravity, and the grievance process, and defines the roles of the different people involved in disciplinary action. The Code covers all directors, employees, consultants, product and service providers, and anyone who acts in the name of ABS-CBN. Assisting in the dissemination and implementation of this Code of Conduct is the Ethics Committee, which focuses on conflict-of-interest situations. The Committee helps make decisions and clarify stands in cases of personal or professional conflict, or in which the employee or the company stands to gain unfairly from an arrangement, relationship, or procedure. Essential to the idea of good and ethical conduct is the upholding of common corporate and individual values, which are disseminated through a process of values cascading. Risk Management

ABS-CBNs Board of Directors and management are mindful of the potential impact of various risks to the Companys ability to deliver quality content across multiple platforms and consequently, as a result of its operations, value to shareholders. In 2009, the Audit Committee of the Board of Directors provided oversight on Enterprise Risk Management. In 2010 this responsibility was assumed by the newly created Risk Management Committee At the same time the Board of Directors of the Company approved the appointment of Mr. Johnny Sy as Chief Risk Management Officer, reporting directly to the Board of Directors, concurrent with his responsibilities as Head, Digital Consumer Devices. As Chief Risk Management Officer, he will provide the overall leadership, vision and direction for enterprise risk management by establishing and implementing an integrated risk management framework to cover all aspects of risks across the Companys organization, and improve the Companys risk management readiness. The Companys corporate strategy formulation and business decision-making processes always take into account potential risks and the steps and costs necessary to minimize, if not eliminate, such risks. As part of its stewardship responsibility and commitment to deliver optimum value to its stakeholders, ABS-CBN ensures that it has the proper control systems in place, and to the extent possible, adopted global best practices, to identify and assess, analyze and mitigate market, operating, financial, regulatory, community, reputational, and other risks. Disclosures and Financial Reporting ABS-CBNs financial statements comply with Philippine Accounting Standards and Philippine Financial Reporting Standards that in turn conform with International Accounting Standards. The annual consolidated financial statements provide information on the financial condition and results of operations of the businesses of ABS-CBN and its subsidiaries. These financial statements include detailed information on the total assets, total liabilities and shareholders equity, revenues, costs and expenses, operating income and income before tax, net income attributable to shareholders of ABS-CBN and minority interest, earnings per share, and EBITDA. Business segment information is likewise provided for major business categories and includes information such as revenues, operating and net income, assets and liabilities, capital expenditures and depreciation and amortization expenses. Dealings in Securities ABS-CBN requires all members of the Board of Directors and principal officers to report any purchase, sale or change in their shareholdings of the Companys common shares or Philippine Depositary Receipts within five trading days, in compliance with the PSEs requirement for such disclosure.

Shareholder and Investor Relations ABS-CBN fully respects shareholder rights and complies with regulatory and legal requirements that enforce and ensure that such rights are respected. These requirements include due and proper notification for general meetings and provision of adequate, transparent and timely information due shareholders. As a publicly listed corporation, ABS-CBN is subject to reporting requirements prescribed by regulatory authorities, including the SEC and the PSE, among others. ABS-CBN is compliant in submitting timely structured and non-structured reports and disclosure filing required by the SEC and the PSE. To complement these disclosures, ABS-CBNs Investor Relations group also holds regular analyst and press briefings coincident with its quarterly and annual report submissions that further explain, elaborate on and contextualize the Companys operating performance and financial condition and results. ABS-CBNs Chief Finance Officer, Head of Treasury and Compliance, and its Head of Investor Relations are always present at

these investor, analyst and press briefings to address any questions that may be raised concerning the Companys operating and financial results. In addition, ABS-CBNs Chief Finance Officer, Head of Treasury and Compliance, and its Head of Investor Relations, meet with representatives of institutional investors and investment funds upon request and at various investor conferences throughout the year for more intimate and detailed discussions about the Companys businesses, operating and financial results, business prospects and long-term plans. Inquiries from institutional and individual investors received by regular or electronic mail are also duly acknowledged and addressed in a timely and transparent manner. ABS-CBN maintains an investor relations website that contains information on the history and businesses of the company, its Board of Directors and senior management executives, financial information and reports and disclosures filed with the SEC and the PSE, share price performance and dividend history, and investor relations contact information. ABS-CBNs Investor Relations website may be found on http://ir.abs-cbn.com

PART V EXHIBITS AND SCHEDULES Item 14. Exhibits and Reports on SEC Form 17-C For the past 12 months, the Company has filed the following SEC Form 17-C reports and financial statements: EXHIBITS AND REPORTS FILED SEC Form 17-C Special Stockholders' Meeting on March 9, 2011 Cash Dividend Declaration Results of Special Stockholders' Meeting Clarification of News Article: "ABS-CBN net P3B in 2010" Investors', Analysts' and Press Briefing on ABS-CBN's FY 2010 Financial and Operating Results ABS-CBN net income jumps 87% in 2010 to P3.2 billion, and FY 2010 Briefing Presentation Materials Amendment to Previously Disclosed Press Release: ABS-CBN net income jumps 87% in 2010 to P3.2 billion Clarification of News Article: "ABS-CBN posts P3.2B net profit" 1Q 2011 Analysts and Press Briefing Schedule Notice of Annual Stockholders Meeting Press Release ABS-CBN and Lopez Holdings Complete PDR Sale of STT Communications Press Release 1Q 2011 Financial Results and Briefing Materials Preliminary Information Statement for Stockholders Meeting on June 16, 2011 Amended Press Release- ABS-CBN and Lopez Holding Complete PDR Sale to STT Communications Definitive Information Statement for Annual Stockholders Meeting on June 16, 2011 The Presidents Report during the 2010 Annual Stockholders Meeting Results of the 2010 Stockholders Meeting Clarification of News Article: ABS-CBN to build P6B sound stages Creation of Board of Advisors 1H 2011 Analysts and Press Briefing Schedule Press Release-1H2011 Financial Results and Briefing Presentation Materials Investment in Sapientis Holdings Corporation Press Release-9M2011 Financial Results and Briefing Presentation Materials Cash Dividend Declaration and Notice of Stockholders Meeting on June 21,2012 FY2011 Analysts and Press Briefing Schedule Press Release- FY2011 Financial Results and Briefing Presentation Materials DATE January 26, 2011 March 04, 2011 March 09, 2011 March 10, 2011 April 01, 2011 April 15,2011 April 14, 2011 April 14, 2011 May 2, 2011 May 9, 2011 May 12, 2011 May 12, 2011 May 12, 2011 May 12, 2011 May 23, 2011 June 16, 2011 June 16, 2011 June 17, 2011 June 28, 2011 August 1, 2011 August 15, 2011 August 25, 2011 November 14, 2011 March 30, 2012 March 30,2012 April 13, 2012

Quarterly and Annual Reports / Financial Statements 17-A Full Year 2010 17-Q 1st Quarter of 2011 17-Q 2nd Quarter of 2011 17-Q 3rd Quarter of 2011

April 29, 2011 May 14, 2011 August 13, 2011 November 14, 2011

ANNEX A

MANAGEMENTS DISCUSSION & ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 2011 For the year ended December 31, 2011, ABS-CBN Corporation (ABS-CBN or the Company) generated consolidated revenues of P28.2 billion from advertising and consumer sales, P4.1 billion or 13% lower year-on-year. Minus the revenues of P3.1 billion from political advocacies and political advertisements in 2010, consolidated revenues decreased by 4% year-on-year. Advertising revenues contributed 62% of total consolidated revenues while consumer sales made up the balance of 38%. Total operating and other expense in 2011 was at P22.3 billion, or a 5% decline year-on-year. Reported net income was at P2.4 billion in 2011, inclusive of the P1.1 billion gain in sale of Sky Cable Philippine Depositary Receipts (PDRs), a 24% decline year-on-year. Removing the effects of this one-time gain in 2011 and P3.1 billion revenues generated from political advocacies and political advertisements in 2010, net income would still be down by 21% year-on-year. Reported EBITDA reached P6.8 billion for the full year 2011, or a 21% decline year-on-year. Stripping the one-time gain in 2011 and discarding the P3.1 billion revenues generated from political advocacies and political advertisements in 2010, EBITDA would still be down by 14% year-on-year. The table below summarizes the key performance indicators for the period as discussed above. Key Performance Indicators (Amounts in million Pesos) Consolidated Revenues Consolidated Advertising Revenues Consolidated Consumer Sales Operating and Other Expenses Net Income EBITDA Consolidated Revenues For 2011, ABS-CBN generated consolidated revenues of P28.2 billion from advertising revenues and consumer sales, P4.1 billion or 13% lower year-on-year. Minus the revenues of P3.1 billion from political advocacies and political advertisements in 2010, consolidated revenues would have decreased by 4% year-on-year. The contribution of consumer sales to total revenues is higher at 38% from 33% a year ago. 2011 28,200 17,578 10,622 22,252 2,420 6,837 2010 32,291 21,739 10,552 23,515 3,178 8,642 Variance Amount % (4,091) (13) (4,161) (19) 70 1 (1,263) (758) (1,805) (5) (24) (21)

Consolidated Revenues (Amounts in million Pesos) Consolidated Advertising Revenues Consumer Sales Sale of Services Sale of Goods Consolidated Consumer Sales Consolidated Revenues Political Advocacies/Political Advertisements Consolidated Revenues Net of Political Advocacies/ Political Advertisements Advertising Revenues

2011 17,578 10,165 457 10,622 28,200 28,200

2010 21,739 10,073 479 10,552 32,291 3,060 29,231

Variance Amount % (4,161) (19) 92 (22) 70 (4,091) (3,060) (1,031) 1 (5) 1 (13) (100) (4)

Consolidated advertising revenues across all platforms and subsidiaries declined by 19% to P17.6 billion. However, minus the revenues of P3.1 billion from political advocacies and political advertisement in 2010, advertising revenues decreased by 6% year-on-year. This decrease is attributable to a slowdown of advertising spending by corporates. ABS-CBN maintained its national audience share and ratings leadership with prime-time audience share averaging 43% in 2011, with a 13 percentage point lead over GMAs, based on the Kantar National TV Ratings. For the full year 2011, twenty one of the companys shows were in the Top 20, with the following occupying the Top 18 slots: Emil Cruz Jr.s Mara Clara, 100 Days to Heaven, PabloS. Gomezs Mutya, Minsan Lang Kita Iibigin, Ikaw ay Pag-ibig, Budoy, Maalaala Mo Kaya, Noah, Pilipinas Got Talent (Sun), TV Patrol, Guns and Roses, Pilipinas Got Talent (Sat), My Binondo Girl, Imortal, Rated K Handa Na Ba Kayo?,Junior Master Chef Pinoy Edition (Sat), Wansapanataym, Nasaan Ka Elisa?, and Maria La Del Barrio Consumer Sales Consumer sales for the year 2011 amounted to P10.6 billion, or a 1% increase year-on-year. The increase is largely attributable to Sky Cables growth in revenues. The increase is also partly due to the increase in sales of other subsidiaries mainly ABS-CBN Film Productions, which grew 18% in 2011. Consumer Sales (Amounts in million Pesos) ABS-CBN Global Sky Cable Other subsidiaries Consolidated Consumer Sales 2011 4,836 4,331 1,455 10,622 2010 5,266 3,930 1,356 10,552 Variance Amount % (430) (8) 401 10 99 7 70 1

Sky Cables consolidated revenues for the year from cable TV and broadband services grew 10% year-onyear, driven by a 7% growth in postpaid revenues and a 24% growth in broadband revenues. Broadband service subscriptions increased 18% year-on-year, while subscriptions to Sky Cables post-paid TV offering grew by 8%.

ABS-CBN Globals revenues declined year-on-year by 8% in peso terms or 4% in US dollar terms. The stronger decline in peso terms was due to a 4% or P1.80 appreciation of the Philippine peso exchange rate against the US dollar, from P45.10 in 2010 down to P43.30 in 2011. ABS-CBN Globals overall viewer count was an estimated 2.45 million at the end of 2011, almost flat compared to the previous year. Double digit growth continued to be experienced in Canada, and single digit growth in Asia-Pacific and Australia. However, there was a decline in subscriber count in North America, Middle East, Europe and Japan. ABS-CBN Film Productions, Inc. released 16 films in 2011, 4 films more than in 2010. Six of themAng Tanging Ina Mo Last Na To, Dalaw, Catch Me Im In Love , In The Name of Love , No Other Woman and Praybeyt Benjamintopped P100 million in box office receipts, earning blockbuster status by local standards. No Other Woman , a co-production with Viva Films, grossed P282 million. Praybeyt Benjamin, also a co-production with Viva Films, grossed P342 million. Operating and Other Expenses Total operating and other expense in 2011 was at P22.3 billion, or a 5% decline year-on-year. Total Operating and Other Expenses (Amounts in million Pesos) Production Costs Cost of Sales and Services General and Administrative Expenses Other Expenses (Income) Consolidated Total Operating and Other Expenses Production Costs Total production costs rose by almost P2.0 billion or 25% to P9.8 billion. Cash production costs went up by P1.6 billion or 25% year-on-year, mostly from increases from talent fee adjustments, and from new programs that brought talent fees, equipment rentals and service fees, and other expenses substantially higher. Production Costs (Amounts in million Pesos) Personnel Expenses and Talent Fees Facilities-Related Expenses Other Program Expenses Sub-total: Cash Production Costs Non-Cash Production Costs Consolidated Production Costs 2011 4,370 2,164 1,527 8,061 1,774 9,835 2010 3,513 1,683 1,272 6,468 1,397 7,865 Variance Amount % 857 24 481 29 255 20 1,593 25 377 27 1,970 25 2011 9,835 6,700 7,091 (1,374) 22,252 2010 7,865 7,070 8,192 388 23,515 Variance Amount % 1,970 25 (370) (5) (1,101) (13) (1,762) (454) (1,263) (5)

Non-cash production costs went up by 27% to P1.8 billion, due to higher depreciation costs and amortization of program rights.

Cost of Sales and Services Cost of sales and services declined by 5% or P370 million to P6.7 billion.

ABS-CBN Globals cost of sales declined 15% in peso terms declining faster than the 8% year-on-year reduction in its sale of goods and services. Sky Cables cost of sales meanwhile, grew by 8% year-on-year, slower than its 10% growth in gross revenue. Cost of Sales and Services (Amounts in million Pesos) ABS-CBN Global Sky Cable Other Subsidiaries Consolidated Cost of Sales and Services General and Administrative Expenses Total General and Administrative Expenses (GAEX) posted a 13% or P1.1 billion year-on-year decline to P7.1 billion. General and Administrative Expenses (Amounts in million Pesos) Personnel Expenses Contracted Services Facilities-Related Expenses Depreciation and amortization Provision for Doubtful Accounts Other Expenses Consolidated GAEX 2011 3,627 790 515 614 255 1,290 7,091 2010 4,471 782 536 696 420 1,287 8,192 Variance Amount (844) 8 (21) (82) (165) 3 (1,101) 2011 2,274 3,003 1,423 6,700 2010 2,680 2,786 1,604 7,070 Variance Amount (406) 217 (181) (370)

% (15) 8 (11) (5)

% (19) 1 (4) (12) (39) (13)

Cash GAEX went down by P1.0 billion to P6.5 billion, of which more than half is accounted for by personnel expenses. Net Income The company generated a net income of P2.4 billion for the year 2011, inclusive of the P1.1 billion gain in sale of Sky Cable PDRs, a 24% decline year-on-year. Removing the effects of this one-time gain in 2011 and P3.1 billion revenues generated from political advocacies and political advertisement in 2010, net income would still be down by 21% year-on-year. EBITDA Earnings before interest, taxes, depreciation and amortization (EBITDA) for the year was at P6.8 billion, or a 21% decline year-on-year. Stripping the one-time gain in 2011 and removing the P3.1 billion revenues generated from political advocacies and political advertisement in 2010, EBITDA would still be down by 14% year-on-year. Capital Expenditures Capital expenditures and program rights acquisitions for 2011 amounted to P4.2 billion, P521 million or 14% higher year-on-year. These are all programmed expenditures to increase the companys capacity to produce additional shows.

Balance Sheet Accounts As at December 31, 2011, total consolidated assets stood at P44.8 billion, P5.8 billion or 15% higher than total assets of P39.0 billion as at December 31, 2010. Cash and cash equivalents of P8.6 billion is P2.8 billion or 48% higher than the December 31, 2010 balance. Consolidated trade and other receivables stood at P8.1 billion, P880 million or 12% higher than as at the end of 2010. Days sales outstanding of 83 days is 20 days more than the 63 days as at December 31, 2010, as trade accounts receivables amounting to P6.4 billion is P827 million or 15% higher than the P5.6 billion trade accounts receivables at the end of 2010. The corresponding increase in receivables and accretion of DSO are well anticipated with the removal of discount schemes on prompt payment. Total interest-bearing loans went up by P2.9 billion or 30% to P12.5 billion compared with P9.6 billion at the end of last year. Shareholders equity stood at P20.3 billion, P2.6 billion or 15% higher than the P17.7 billion shareholders equity at the end of December 2010. The companys net debt-to-equity ratio improved at 0.19x compared with the ratio at the end of last year of 0.22x. The companys debt ratios remain well within the limits prescribed under its loan covenants.

MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS FOR 2010 ABS-CBN Corporation (ABS-CBN or the Company) generated unprecedented profits of P3.2 billion in 2010, almost double the net income of P1.7 billion recorded in 2009 primarily from the surge of political ads in the first half of the year and later sustained by the growth momentum in recurring advertising revenues in the second half of the year. Consolidated revenues for the year reached an exceptional level of P32.2 billion, posting a 30% growth from a year ago. Advertising revenues accounted for 68% of consolidated revenues, while consumer sales accounted for the remaining 32%. Net of revenues from political advertisements and political advocacies, the contribution share of consumer sales would be at 36%. Total expenses in 2010 grew by P3.8 billion or 20% year-on-year to P23.4 billion, stemming from higher production costs brought about by increased original programming that better suits our viewers changing needs. Reported EBITDA hit a record high of P8.6 billion, 33% or P2.1 billion higher than reported EBITDA in 2009. Net income for 2010 jumped 87% to P3.2 billion, P1.5 billion higher than the reported net income a year ago. Consolidated Revenues For the year ending December 31, 2010, ABS-CBN generated consolidated revenues of P32.2 billion, P7.3 billion or 30% higher than a year ago. Because of the extraordinary boost to advertising revenues by election-related advertising this year, the contribution of consumer sales to total revenues is consequently lower at 32%, from 43% a year ago. Without revenues from political advertisements and political advocacies, the contribution share of consumer sales would be at 36%. Consolidated Revenues (Amounts in million Pesos) Consolidated Advertising Revenues Consumer Sales Sale of Services Sale of Goods Consolidated Consumer Sales Consolidated Revenues Political Advertisements/Political Advocacies Consolidated Revenues Net of Political Advertisement / Political Advocacies Consolidated 2010 21,739 9,967 479 10,446 32,185 2,994 29,195 2009 14,463 9,865 521 10,386 24,849 712 24,137 Variance Amount 7,276 102 (42) 60 7,336 2,282 5,058 % 50 1 (8) 1 30 321 21

Advertising Revenues Consolidated advertising revenues across all platforms and subsidiaries rose 50% or P7.3 in 2010 reaching P21.7 billion. This total includes approximately P3 billion of advertising revenues from political advertisements and political advocacies.

Without political advertisements and political advocacies, consolidated advertising revenues reached P18.7 billion, registering growth of 36% year-on-year or P5 billion. The increase is attributable to the surge in total advertising minutes sold this year and programmed rate increases that took effect in February. Total advertising minutes sold by Channel 2 for twelve months leaped 43%, driven by strong growth in regular advertising minutes which likewise grew 35%. Regular advertising minutes during the year accounted for 95% of total minutes, while election-related advertisements in the first semester contributed 5%. Underpinning the surge in advertising growth is the strong national program ratings and high audience shares. ABS-CBN maintained its national audience share and ratings leadership with total-day audience share averaging 43% in 2010, with a lead of ten percentage points over GMA7s 37%, going by Kantar Media National TV Ratings figures. ABS-CBNs programs continued to dominate the Top 20 programs list. In 2010, ABS-CBN programs held over 15 of the top 20 slots for weekdays and weekends, enjoying ratings of as high as 39% . Weekday and week-end entertainment programs launched or aired in 2010 Agua Bendita, Dahil May Isang Ikaw, Habang May Buhay, Imortal, Kokey@Ako, Kung Tayoy Magkakalayo, Mara Clara (remake), Noah, Pilipinas Got Talent, Tanging Yaman, Wansapanataym, Rosalka and the Agimat Series with Ang Mahiwagang Daigdig ni Elias Paniki, Pepeng Agimat, Tiagong Akyat and Tonyong Bayawak.kept the audience enthralled and enjoyed national program ratings prominence in their respective timeslots. The high-rating entertainment shows were ably complemented by erstwhile but constantly relevant and evolving news and current affairs shows Bandila, Matanglawin, Rated K, TV Patrol, Umagang Kay Ganda, to name a few. These programs have become a staple not only in the delivery of news but also a source of knowledge. We endeared to a greater number of audiences as the nation turns its focus to the national elections last year. The documentaries, the sponsored debates with our pioneering efforts in the use of Wireless Automatic Response System or WARS and through Boto Mo, iPatrol Mo: Ako Ang Simula campaign of news and current affairs, kept the viewers informed and properly educated. These programs became a source of empowerment and made people more vigilant and protective of their respective votes. Consumer Sales Consumer Sales in 2010 amounted to more than P10 billion, posting a slight 1% increase or P60 million from a year ago, mainly from Sky Cable. Consumer Sales (Amounts in million Pesos) ABS-CBN Global Sky Cable Other subsidiaries Consolidated consumer sales Consolidated 2010 5,160 3,930 1,356 10,446 2009 5,266 3,582 1,538 10,386 Variance Amount (106) 348 (182) 60 % ( 2) 10 (12) 1

ABS-CBN Globals revenues rose by 3% year-on-year in US dollar terms. In peso terms, however, it declined by 2% as the appreciation of the peso stunted the growth. The Philippine pesos exchange rate to the US dollar has appreciated by 5% or P2.53, from an average of P47.63 in 2009 to P45.10 in 2010.

Strong double-digit subscriber growth in cable TV subscriptions hoisted the growth in ABS-CBN Globals overall viewer count as it increased by 2% year-on-year. With new cable distribution partnerships driving subscriber acquisition, overall subscriber count grew at a double-digit rate in Canada. In Australia, satellite TV subscriber generated a 10% growth as affordable and flexible plans continued to attract new direct-to-home subscribers. Sky Cables consolidated revenues from cable TV and broadband services grew 10% year-on-year, powered by a 64% increase in broadband service revenues. Broadband service subscriptions that carry higher ARPUs surged 36% year-on-year, while subscriptions to Sky Cables post-paid cable TV offering grew by 5%. Sky Cable pursued its thrust to enhance viewing experience for its customers with continued move towards digitization. Together with the introduction of a tiered pricing mechanism, penetration rates in cable TV viewing steadily improved. In 2010, Sky Cable launched the Sky Broadband Ultra High Speed Internet connection subscription that offers speeds of up to 112 mbps. This offering greatly complemented the revolutionary online access to entertainment product- iWantv, which also originated in 2010. ABS-CBN Film Productions, Inc., continued to produce and or co-produce compelling genres that are well received by the public. In 2010 the movie arm released a total of twelve movies with four of them I Love You, Goodbye, Miss You Like Crazy, Here Comes the Bride, and My Amnesia Girlexceeding P100 million in box office receipts and earning local blockbuster status. Our consolidated net revenues in 2010which are consolidated revenues minus revenue deductions amounted to P27.8 billion, 26% or P5.7 billion higher than consolidated net revenues of P22.0 billion registered in 2009. These revenue deductions consist of agency commissions, sales incentives and co-production partners share of revenues, as prescribed under the new income statement presentation standards that took effect this year.

Expenses Total expenses grew by P3.8 billion or 20% year-on-year to P23.4 billion, driven mostly by higher production costs and general and administrative expenses (GAEX). Total Expenses (Amounts in million Pesos) Production Costs Cost of Sales and Services General and Administrative Expenses Other expenses (income) Total expenses Consolidated 2010 7,865 6,964 8,192 388 23,409 2009 6,287 6,868 6,224 205 19,584 Variance Amount 1,578 96 1,968 183 3,825 % 25 1 32 89 20

Production Costs Total production costs in 2010 rose by P1.6 billion or 25% to P7.9 billion, as we strategically increased programming hours of in-house produced primetime dramas, afternoon programs, and variety shows to meet viewer needs and advertiser demand. Cash production costs went up by P1.5 billion or 31% year-on-year, mostly from increases in talent fees, and salaries and benefits of production personnel. New programs also

raised equipment rentals and service fees, and other expenses for sets and set rentals, transportation and catering. Production Costs (Amounts in million Pesos) Personnel expenses and talent fees Facilities-related expenses Other program expenses Sub-total: Cash production costs Non-cash production costs Total production costs Consolidated 2010 3,513 1,683 1,272 6,468 1,398 7,866 2009 2,900 1,170 875 4,945 1,342 6,287 Variance Amount 613 513 397 1,523 56 1, 579 % 21 44 45 31 4 25

Non-cash production costs increased by 4% or P56 million to P1.4 billion, even as amortisation of program rights fell by P74 million. The decrease is offset by the increase in depreciation charges of P130 million or 16% to P920 million following the accretion in our capital expenditures. Cost of Sales and Services Cost of sales and services grew by only 1% or P96 million to almost P7.0 billion. ABS-CBN Globals cost of sales rose at a faster rate of 4% than versus the 1% growth in its subscription and merchandising revenues in peso terms. In contrast, Sky Cables cost of sales grew by 5% year-on-year even as its revenues accelerated at rate of 10%.

Cost of Sales and Services (Amounts in million Pesos) ABS-CBN Global Sky Cable Other subsidiaries Cost of sales and services

Consolidated 2010 2,573 2,786 1,605 6,964 2009 2,478 2,645 1,745 6, 868 Variance Amount 95 141 (140) 96 % 4 5 (8) 1

General and Administrative Expenses Among all the major expense buckets, total General and Administrative Expenses (GAEX) rose the highest with a 32% or P2.1 billion year-on-year increase to P8.2 billion, inclusive of P1.3 billion one-time expenses for performance-based pay and non-recurring corporate initiatives. Setting aside these one-time expenses, recurring consolidated GAEX amounts to P6.8 billion, and the corresponding year-on-year GAEX increase is only 10% for the period. General and Administrative Expenses (Amounts in million Pesos) Personnel expenses Contracted services Facilities-related expenses Consolidated 2010 4,471 782 536 2009 3,033 778 529 Variance Amount 1,438 4 7 % 47 1 1

Depreciation Provision for doubtful accounts Other expenses Consolidated GAEX

669 420 1,314 8,192

609 292 983 6,224

60 128 331 1,968

10 45 34 32

Cash GAEX went up by P1.9 billion to P7.5 billion, of which more than half is accounted for by personnel expenses for reasons explained and cited above. The growth in the three major expense buckets is programmed and well within expectations and budget. Net Income With strong advertising revenue inflows and continuing financial discipline, the Company generated net income of P3.2 billion in 2010, 87% or nearly P1.5 billion more than last year, and increasing net profit margin this year by three percentage points to 10%. EBITDA Total reported EBITDA for the year ending December 31, 2010 reached P8.6 billion, a 33% or P2.1 billion increase from the P6.5 billion total reported EBITDA in the same year-ago period. This translates to an EBITDA margin of 27% versus 26% from a year ago.

Capital Expenditures Capital expenditures and film and program rights acquisitions in 2010 amounted to P3.7 billion, P738 million or 25% higher than the level of spending in the same period last year. Capital expenditures went up by P748 million or 32% to P3.1 billion, and film and program rights acquisitions declined by P10 million or 2% to P575 million due to lesser program acquisitions for our newer cable channels. The Company fully utilised the capital expenditures and film rights acquisition budget as at year end. Balance Sheet Accounts As at December 31, 2010, total consolidated assets stood at P39.3 billion, P4.5 billion or 13% higher than total assets of P34.8 billion as at December 31, 2009. Cash and cash equivalents of P5.8 billion is P2.5 billion or 74% higher than the December 31, 2009 balance. Consolidated trade and other receivables stood at P7.2 billion, P1.5 billion or 27% higher than as at the end of 2009. Days sales outstanding of 63 days is 7 days less than the 70 days as at December 31, 2009, with net trade accounts receivables amounting to P5.6 billion being P0.8 billion or 16% higher than the P4.8 billion trade accounts receivables at the end of 2009. Total interest-bearing loans went up by P679 million or 8% to P9.6 billion compared with nearly P9.0 billion at the end of last year. The increase is due to the additional borrowing by both parent and Sky Cable for working

capital purposes. companies.

The additional amount was availed simultaneous with the loan refinancing by both

Shareholders equity stood at P17.7 billion, P1.6 billion or 10% higher than the P16.2 billion shareholders equity at the end of December 2009. The companys net debt-to-equity ratio improved further to 0.22x as a result of higher cash and cash equivalents versus 0.35x at the end of last year. The companys debt ratios remain well within the limits prescribed under its existing loan covenants as at December 31, 2010. On October 29, 2010, the Company successfully signed a syndicated term loan for P10.0 billion. The loan is intended to refinance existing debt facilities totalling P6.6 billion and to fund working capital requirements. The loan is unsecured and unsubordinated with interest at 3-month PDST-F plus 0.65% per annum for the floating rate portion and 7-year PDSTF plus 0.65% per annum for the fixed rate portion. The loan is amortizing with a final maturity of November 9, 2017. This capital-raising exercise takes advantage of prevailing low interest rates and the Companys stronger financial performance in recent years to lower its cost of debt and fund its expansion requirements. Consequently, ABS-CBNs effective interest cost on all its interest-bearing debt will go down by about two percentage points, from which the Company expects to generate savings in annual interest expenses of over P90 million. Apart from the savings that will be generated, the new loan agreement also incorporates more relaxed covenants.

MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS FOR 2009 Management is pleased to report that for the calendar year ended December 31, 2009, despite a weak first quarter and a six-month deferral of airtime rate increases to August 2009, as well as weakened household spending affecting many of its subscribers locally and in major economies overseas, ABS-CBN Broadcasting Corporation (ABS-CBN or the Company) delivered consolidated revenues from advertising and consumer sales of P24.85 billion, posting an increase of P2.54 billion or 11% year-on-year inclusive of full-year gross revenue contribution from Sky Cable of P3.72 billion. Sky Cable contributed P3.58 billion in consumer sales and P137.90 million in airtime revenues. Consolidated revenues in the fourth quarter of 2009 increased by P758.77 million or 13% year-on-year to P6.51 billion. Consolidated Revenues (Amounts in million Pesos) Advertising revenues Consumer Sales Sale of Services Sale of Goods Revenues before Sky Cable Add: Sky Cable revenues Consolidated revenues Consolidated 2009 14,325 6,283 521 21,129 3,721 24,850 2008 13,419 5,702 513 19,634 2,673 22,307 Variance Amount 906 581 8 1,495 1,048 2,543 % 7 10 2 8 39 11

Our fast-growing consumer sales businesses continued to raise their contribution to total revenues, reaching 42% of consolidated revenues in 2009 with double-digit growth in the subscription businesses of ABS-CBN Global and in the contribution of Sky Cable. A tight control of operating expenses and prudent financial management resulted in core net income reaching P1.79 billion in 2009, 37% or P481 million higher than the P1.31 billion posted in 2008. Net income attributable to shareholders for 2009 went up by 23% year-on-year or P318.93 million, to P1.70 billion, from 2008s net income attributable to shareholders of P1.38 billion, after an P85.25 million accounting adjustment required under Philippine Financial Reporting Standard 3. Earnings before interest, taxes, depreciation and amortization (EBITDA) reached P6.51 billion, yielding an EBITDA margin of 26% for 2009, and is 7% or P405.65 million better than 2008 EBITDA of P6.11 billion. Revenues Advertising Revenues In January 2009, global recession worries prompted major advertisers to reduce their annual advertising budgets and request for a six-month rate increase moratorium, which we granted in consideration of longstanding business relationships. Despite a weak start to the year, we invested on further improving our content. ABS-CBN sustained its dominance in local television with heart-warming and inspiring dramas, light and amusing comedy shows, and engaging reality programs in the afternoons and on primetime, such as the

Precious Hearts Romances drama mini-series, Kambal sa Uma, May Bukas Pa, Tayong Dalawa, Katorse, Showbiz News Ngayon, Banana Split and Pinoy Big Brother Double Up, along with the long-running daily noontime show Wowowee and Sunday musical variety program ASAP. This high-quality entertainment fare was complemented by relevant weekday and weekend news and current affairs programs that armed viewers with information and knowledge to face the days challenges and concerns -- Umagang Kay Ganda, TV Patrol World, Bandila, Matanglawin and Rated K!, among others. Our special coverages and documentaries of issues and events of national importance on our media platforms did more than just deliver relevant news and information. Through the Boto Mo, iPatrol Mo: Ako Ang Simula campaign launched in June 2009, the voting public, the youth especially, are empowered to vigilantly protect their right to register and vote, to be properly educated about the election process and adequately informed of their choices, and to protect their ballot in 2010. Volunteer Boto Patrollers, now numbering more than 60,000, can communicate their stories and submit their content through online and mobile media. We enabled the nation to mourn together as well as to relive and celebrate the spirit of unity with our special coverage of the wake and funeral cortege of former President Corazon Aquino in August 2009. From late September through early October, the multi-platform special coverage of typhoons Ondoy and Pepeng on our television and radio network, the internet and on mobile, kept the public informed and connected throughout the harrowing ordeal, and enabled us to harness and channel the generosity and volunteerism of fellow Filipinos and corporations toward affected families and communities through ABS-CBN Foundations Sagip Kapamilya. With such compelling and engaging content, the first nine of the Top 10 and fourteen of the Top 20 programs in 2009 were from ABS-CBN. ABS-CBN solidified its national leadership position based on Taylor Nelson Sofres National Philippines Television Audience Measurement, which started in February 2009. Audience shares for the period February to December 2009 averaged 49% in primetime (6pm to 11pm) and 45% for total day (6am to 12mn), leading our nearest competitor with comfortable margins of 14 and 11 percentage points in primetime and total day, respectively. In December 2009, ABS-CBN posted a 50% primetime audience share and 48% for total day, a 16 and 17 percentage point lead over our nearest competitor. Backed by strong afternoon and primetime program ratings and audience shares, we were able to implement rate increases in August as recession concerns eased, with some advertisers even increasing their spending with ABS-CBN beyond their commitments. The combined airtime revenues of Channel 2, Manila Radio and the Regional Network Group grew by P471.97 million or 16% year-on-year to P3.51 billion in the fourth quarter. Consolidated advertising revenues grew by P951.97 million or 7% year-on-year to P14.46 billion, with 92% coming from Channel 2, Manila Radio and the Regional Network Group. Advertising Revenues (Amounts in million Pesos) Parent airtime revenues Other platforms Advertising revenues before Sky Cable Add: Sky Cable airtime revenues Consolidated 2009 13,312 1,013 14,325 138 2008 12,466 953 13,419 92 Variance Amount 846 60 906 46 % 7 6 7 50

Consolidated Advertising Revenues

14,463

13,511

952

Consumer Sales Consumer sales in the fourth quarter of 2009 rose by P354.47 million or 15% to P2.72 billion. Our fast-growing consumer sales businesses continued to increase their contribution to total revenues in 2009, reaching 42% of consolidated revenues in 2009 with double-digit growth in the subscription businesses of ABS-CBN Global and in the contribution of Sky Cable. Consumer sales in 2009 rose by P1.59 billion to P10.39 billion, an 18% rise over 2008 consumer sales of P8.80 billion. ABS-CBN Globals contribution share to total consumer sales amounted to 51%, while Sky Cables contribution share increased to 34% with its full-year contribution, from 29% in 2008 with only three quarters of consumer sales contribution. Despite weak economic conditions and depressed consumer spending in major economies worldwide, overall viewer count increased by 15% to an estimated 2.16 million worldwide by year-end. Driven by strong doubledigit subscriber growth in the United States, the Middle East, Australia, Canada and the Asia-Pacific, ABS-CBN Globals subscription and other service revenues grew 8% year-on-year in US dollar terms as it delivered 19% growth in sale of services in the fourth quarter of 2009. In peso terms, ABS-CBN Globals subscription and service revenues increased by 16% for the full year and by 29% in the fourth quarter of 2009. ABS-CBN Film Productions, Inc. released nine films in 2009 and maintained its leadership in local film production. Four films surpassed P100 million in gross box office receipts, the local industrys benchmark for a blockbuster hit -- Ang Tanging Ina Nyong Lahat, You Changed My Life, Best Friends Forever, and In My Life. The sale of consumer products such as magazines, and audio and video CDs and DVDs grew 2% in 2009 to P521.13 million with ABS-CBN Global accounting for 42% of total. Consumer Sales (Amounts in million Pesos) ABS-CBN Global Other subsidiaries Consumer sales before Sky Cable Add: Sky Cable consumer sales Consolidated consumer sales Consolidated 2009 5,266 1,538 6,804 3,583 10,387 2008 4,568 1,647 6,215 2,581 8,796 Variance Amount 698 (109) 589 1,002 1,591 % 15 (7) 9 39 18

Sky Cables full-year contribution of P3.58 billion in subscription and other service revenues is P1.00 billion or 39% more than its three-quarter revenue contribution of P2.58 billion in 2008. Sky Cable expanded its product portfolio with the launch of Sky Broadband, the fastest residential broadband service with speeds of up to 12 Mbps, and Sky Voice, the most affordable international voice-calling service, to further enhance its product portfolio while complementing its post-paid and pre-paid cable TV services. To address the cable entertainment needs of a broader segment of the market, Sky Cable introduced its lowpriced post-paid cable TV package at only P280 a month -- Sky Cable Select. Through digitization and the rollout of the Digibox, Sky Cable is able to offer its subscribers the option to add more channels on an a la carte basis. Sky Cable also offered the countrys first pre-paid cable TV packages and the first HD cable TV content with Sky Cable HD. Expenses

Total expenses grew by P2.52 billion or 13% year-on-year to P22.40 billion, driven mostly by higher costs of sales and services and general and administrative expenses (GAEX), with an additional quarter of expenses from Sky Cable. Total expenses, prior to Sky Cables consolidation, rose by P1.38 billion or 8% to P18.99 billion in 2009, mostly from increases in cost of sales and services, other expenses, and from general and administrative expenses particularly, personnel expenses and contracted services. The increase in personnel expenses are due to CBArelated increases, structural pay adjustments to keep compensation packages competitive, and performance pay. Total Expenses (Amounts in million Pesos) Production Costs General and Administrative Expenses Cost of Sales and Services Revenue deductions Other expenses (income) Expenses before Sky Cable Add: Sky Cable expenses Total expenses Consolidated 2009 6,287 5,595 4,099 2,819 188 18,989 3,415 22,404 2008 6,154 4,874 3,729 2,676 174 17,606 2,283 19,889 Variance Amount 133 722 370 143 14 1,383 1,132 2,515 % 2 15 10 5 8 8 50 13

Sky Cables full-year expense contribution of P3.42 billion is P1.13 billion or 50% more than its P2.28 billion expense contribution over three quarters in 2008, coming from higher cost of sales in line with subscription revenue growth, as it expanded its pre-paid cable TV and broadband services business. Production Costs Total production costs in 2009 rose by only P133.04 million or 2% to P6.29 billion. The addition of locally-produced comedy, drama, and entertainment news programs in the afternoon and primetime blocks resulted in personnel expenses and talent fees increasing by P191.94 million or only 7% yearon-year to P2.90 billion, from P2.71 billion in 2008. Facilities-related expenses likewise increased by only 7% year-on-year to P1.17 billion. Efforts to contain cost increases by limiting the number of taping days brought other program expenses lower by P79.38 million or 8% year-on-year to P875.44 million, benefiting from production process improvements and tighter control of production-related expenses. Production Costs (Amounts in million Pesos) Personnel expenses and talent fees Facilities-related expenses Other program expenses Sub-total: Cash production costs Non-cash production costs Consolidated production costs Consolidated 2009 2,900 1,170 875 4,945 1,342 6,287 2008 2,708 1,092 956 4,756 1,398 6,154 Variance Amount 192 78 (81) 189 (56) 133 % 7 7 (8) 4 (4) 2

Non-cash production costs are also 4% lower at P1.34 billion, due to lower amortization of program rights. Cost of Sales and Services Cost of sales and services before Sky Cable grew by only 10% or P369.88 million to P4.10 billion. ABS-CBN Globals cost of sales rose by P233.30 million or 11% in peso terms, well below the growth of its sale of services and goods. In US dollar terms, cost of sales of ABS-CBN Global went up by only 4%, which is attributable to higher production and satellite transmission costs, offset by lower merchandise costs and termination costs for telecommunication services. The 8% or P132.58 million increase in total cost of sales and services (cash and non-cash) of other subsidiaries to P1.75 billion -- lower than 2008s increase of 18% -- is largely attributable to reduced cable channels program rights amortization and facilities-related expenses. Cost of Sales and Services (Amounts in million Pesos) ABS-CBN Global Other subsidiaries Sub-total: Cash cost of sales and services before Sky Cable Non-cash cost of sales and services before Sky Cable Cost of sales and services before Sky Cable Add: Sky Cable cost of sales and services Consolidated cost of sales and services Consolidated 2009 2,338 1,236 3,574 525 4,099 2,645 6,744 2008 2,105 1,125 3,230 499 3,729 1,969 5,698 Variance Amount % 233 11 111 10 344 26 370 676 1,046 11 5 10 34 18

Total cost of sales and services reached P6.74 billion, an increase of P1.05 billion or 18% year-on-year with Sky Cables P2.65 billion cost of sales and services included. Sky Cables cost of sales and services contribution in 2009 is for the full year, and is 35% or P675.74 million higher than the P1.97 billion cost of sales and services for nd th three quarters (2 to 4 ) in 2008. General and Administrative Expenses General and Administrative Expenses (GAEX) before Sky Cable posted a 15% or P721.58 million increase to P5.60 billion, mostly from increases in personnel expenses in free TV and radio operations, and from higher depreciation and an increase in contracted services fees of ABS-CBN Global. ABS-CBN Globals GAEX went up by 4% in peso terms but is down by 3% in US dollar terms. Cash GAEX before Sky Cable of P4.87 billion for the full year is P623.86 million or 15% higher than in 2008, while non-cash GAEX of P724.48 million is P97.72 million, or also 15% higher than last year. General and Administrative Expenses (Amounts in million Pesos) Personnel expenses Advertising and promotions Facilities-related expenses Contracted services Taxes and licenses Consolidated 2009 2,762 133 463 600 177 2008 2,213 121 471 520 187 Variance Amount 549 12 (8) 80 (10) % 25 10 (2) 15 (5)

Entertainment, amusement and recreation Other expenses Sub-total: Cash GAEX before Sky Cable Non-cash GAEX before Sky Cable GAEX before Sky Cable Add: Sky Cable GAEX Consolidated GAEX

90 645 4,870 725 5,595 754 6,349

100 634 4,246 628 4,874 698 5,572

(10) 11 624 97 721 56 777

(10) 2 15 15 15 8 14

Sky Cables full-year contribution to total GAEX amounted to P753.91 million, of which P692.89 million are cash GAEX, while P61.02 million are non-cash. With Sky Cables additional operating expenses, consolidated GAEX amounted to P6.35 billion, P776.40 million or 14% higher than in 2008. Non-cash Expenses Non-cash expenses rose slightly by 3% or P66.73 million, to P2.59 billion. Depreciation increased by 15% resulting from investments in production equipment and broadcast network infrastructure. Amortization went down by 12% or P142.12 million mainly as a result of reduced program acquisitions for cable channels. Non-cash Expenses (Amounts in million Pesos) Depreciation Amortization Non-cash expenses before Sky Cable Add: Non-cash expenses of Sky Cable Consolidated non-cash expenses Net Income and EBITDA Core net income reached P1.79 billion in 2009, 37% or P481 million higher than the P1.31 billion posted in 2008. After deducting an P85.25 million accounting adjustment required under Philippine Financial Reporting Standard 3 (relating to the recognition of amortised intangible assets relating to the consolidation of Sky Cable in April 2008), net income attributable to shareholders for 2009 (after minority interest) is P1.70 billion, an improvement of 23% or P318.93 million over 2008s net income attributable to shareholders of P1.38 billion. Earnings before interest, taxes, depreciation and amortization (EBITDA) reached P6.51 billion, 7% or P405.65 million better than 2008 EBITDA of P6.11 billion, and yielding an EBITDA margin of 26% for 2009. Capital Expenditures Capital expenditures and film and program rights acquisitions in 2009 amounted to P2.95 billion, just P33.23 million or 1% higher year-on-year. Capital expenditures increased by P232.03 million or 11% year-on-year to P2.36 billion, for production equipment upgrades and replacement, broadcast network infrastructure upgrade and expansion, digital media asset archiving and management equipment, cable network conversion to digital signal delivery and broadband services expansion. Consolidated 2009 1,558 1,034 2,592 745 3,337 2008 1,349 1,176 2,525 562 3,087 Variance Amount % 209 15 (142) (12) 67 3 183 33 250 8

Film and program rights acquisitions went down by 25% or P198.80 million, to P584.82 million in 2009 mainly as a result of lower program acquisitions for cable channels. Balance Sheet Accounts As at December 31, 2009, total consolidated assets stood at P34.82 billion, P1.78 billion or 5% higher than yearend 2008 total assets of P33.04 billion. Cash and cash equivalents of P3.34 billion is P813.50 million or 32% higher than the year-end 2008 balance. Consolidated trade receivables stood at P5.72 billion, P679.39 million or 13% higher than as at the end of 2008. Days sales outstanding of 70 days, is just 1 day longer than the 69 days as at December 31, 2008, even as trade accounts receivables of P4.79 billion is P600.40 million or 14% higher than the P4.19 billion trade accounts receivables at the end of 2008. Total interest-bearing loans increased by about P249.63 million or 3% to P8.96 billion versus P8.71 billion a year ago. Of this amount, P400.00 million are short term bank loans with about 5% annual interest, while P2.63 billion are amortising loans. The remainder of about P5.93 billion are bullet payment loans falling due between 2011 and 2014. In 2009, ABS-CBN borrowed P400.00 million for working capital needs and paid down P338.00 million of short-term bank loans, while Sky Cable borrowed P500.00 million of long-term funds for capital expenditures and paid down P212.31 million of their outstanding debt. Shareholders equity stood at P16.15 billion, P1.01 billion or 7% higher than the P15.15 billion shareholders equity at the end of 2008. The companys net debt-to-equity ratio improved to 0.35x as a result of higher cash and cash equivalents versus 0.41x at the end of 2008. The companys debt and coverage ratios remain well within the limits prescribed under its loan covenants.

STATEMENT OF MANAGEMENTS RESPONSIBILITYFOR FINANCIAL STATEMEN

ABSCBN Corporation and Subsidiaries

Consolidated Financial Statements December 31, 2011 and 2010 and Years Ended December 31, 2011, 2010 and 2009 and Independent Auditors Report

SyCip Gorres Velayo & Co.

SyCip Go rres Velayo & Co. 6760 Ayala Avenue 1226 Makati City Philippines Phone: (632) 891 0307 Fax: (632) 819 0872 www.sgv.com.ph BOA/PRC Reg. No. 0001 SEC Accreditation No. 0012-FR-2

INDEPENDENT AUDITORS REPORT

The Stockholders and the Board of Directors ABS-CBN Corporation We have audited the accompanying consolidated financial statements of ABS-CBN Corporation and Subsidiaries, which comprise the consolidated statements of financial position as at December 31, 2011 and 2010, and the consolidated statements of income, statements of comprehensive income, statements of changes in equity and statements of cash flows for each of the three years in the period ended December 31, 2011, and a summary of significant accounting policies and other explanatory information. Managements Responsibility for the Consolidated Financial Statements Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with Philippine Financial Reporting Standards, and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error. Auditors Responsibility Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We conducted our audits in accordance with Philippine Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on the auditors judgment, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entitys preparation and fair presentation of the consolidated financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entitys internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

A member firm of Ernst & Young Global Limited

*SGVMC214977*

-2Opinion In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of ABS-CBN Corporation and Subsidiaries as at December 31, 2011 and 2010, and their financial performance and their cash flows for each of the three years in the period ended December 31, 2011 in accordance with Philippine Financial Reporting Standards. SYCIP GORRES VELAYO & CO.

Aldrin M. Cerrado Partner CPA Certificate No. 86735 SEC Accreditation No. 0113-AR-2 (Group A), March 4, 2010, valid until March 3, 2013 Tax Identification No. 129-433-783 BIR Accreditation No. 08-001998-45-2009, June 1, 2009, valid until May 31, 2012 PTR No. 3174586, January 2, 2012, Makati City March 2, 2012

*SGVMC214977*

ABS-CBN CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

(Amounts in Thousands)

December 31 2011 ASSETS Current Assets Cash and cash equivalents (Note 6) Trade and other receivables (Notes 7 and 22) Inventories (Note 8) Program rights and other intangible assets (Note 12) Other current assets (Note 9) Total Current Assets Noncurrent Assets Property and equipment (Notes 10, 18 and 30) Goodwill (Notes 4 and 16) Program rights and other intangible assets - net of current portion (Note 12) Available-for-sale investments (Note 13) Investment properties (Notes 11 and 18) Investments in associates (Note 14) Deferred tax assets - net (Note 28) Other noncurrent assets (Note 15) Total Noncurrent Assets P8,635,053 = 8,128,166 134,867 576,699 1,016,047 18,490,832 15,242,115 3,749,496 3,595,881 264,892 57,796 41,084 689,173 2,676,807 26,317,244 P44,808,076 = = P5,821,334 7,248,284 152,527 770,493 589,252 14,581,890 15,195,293 2,143,832 2,740,423 265,066 58,912 41,113 961,391 2,970,930 24,376,960 = P38,958,850 2010

LIABILITIES AND EQUITY Current Liabilities Trade and other payables (Notes 4, 17 and 22) Interest-bearing loans and borrowings (Notes 10, 11 and 18) Obligations for program rights (Note 19) Income tax payable Total Current Liabilities Noncurrent Liabilities Interest-bearing loans and borrowings - net of current portion (Notes 10, 11 and 18) Accrued pension obligation (Note 29) Deferred tax liabilities (Note 28) Convertible note (Note 4) Obligations for program rights - net of current portion (Note 19) Other noncurrent liabilities (Notes 4, 20 and 22) Total Noncurrent Liabilities P9,078,164 = 663,101 606,597 171,086 10,518,948 = P9,303,464 675,691 607,365 109,649 10,696,169

11,848,780 889,308 438,055 211,389 97,808 468,130 13,953,470 24,472,418

8,967,022 625,406 442,681 96,478 385,588 10,517,175 21,213,344

(Forward)

*SGVMC214977*

-2December 31 2010 = P779,583 725,276 (313,752) 110,005 17,449,596 (1,154,064) 17,596,644 148,862 17,745,506 = P38,958,850

2011 Equity Attributable to Equity Holders of the Parent Company Capital stock (Note 21) Additional paid-in capital Cumulative translation adjustments Unrealized gain on available-for-sale investments (Note 13) Retained earnings (Note 21) Philippine depository receipts convertible to common shares (Note 21) Noncontrolling Interests (Notes 4 and 16) Total Equity

P779,583 = 725,276 (358,536) 119,823 18,232,540 (1,164,146) 18,334,540 2,001,118 20,335,658 P44,808,076 =

See accompanying Notes to Consolidated Financial Statements.

*SGVMC214977*

ABS-CBN CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME

(Amounts in Thousands, Except Per Share Amounts)

Years Ended December 31 2010 2009 (As restated - (As restated Note 2) Note 2) 2011 NET REVENUES Airtime (Notes 22 and 23) Sale of services (Notes 22, 23 and 30) Sale of goods (Note 23) PRODUCTION COSTS (Notes 10, 12, 22, 24, 29 and 30) COST OF SERVICES (Notes 10, 12, 22, 25, 29 and 30) COST OF SALES (Notes 10, 22, 25, 29 and 30) GROSS PROFIT General and administrative expenses (Notes 7, 10, 11, 12, 22, 26, 29 and 30) Finance costs (Notes 18 and 27) Interest income (Note 6) Foreign exchange gain (loss) - net Equity in net earnings (losses) of associates (Note 14) Other income - net (Notes 4, 13, 18, 22, 27, 30 and 32) INCOME BEFORE INCOME TAX PROVISION FOR INCOME TAX (Note 28) NET INCOME Attributable to: Equity holders of the Parent Company (Note 33) Noncontrolling interests P14,793,465 = 9,795,453 457,658 25,046,576 (9,834,966) (6,425,499) (274,526) 8,511,585 (7,091,456) (726,871) 177,061 (43,508) (29) 1,967,810 2,794,592 287,429 P2,507,163 = = P17,695,929 9,684,850 478,897 27,859,676 (7,865,277) (6,791,186) (278,396) 12,924,817 (8,192,045) (1,042,849) 106,738 218,231 142 329,887 4,344,921 1,107,710 = P3,237,211 = P11,994,723 9,693,610 521,128 22,209,461 (6,286,787) (6,760,279) (287,127) 8,875,268 (6,224,600) (912,911) 93,291 90,119 (2,330) 524,604 2,443,441 684,055 = P1,759,386

P2,420,072 = 87,091 P2,507,163 =

= P3,178,631 58,580 = P3,237,211

= P1,702,397 56,989 = P1,759,386

Basic/Diluted Earnings per Share Attributable to Equity Holders of the Parent Company (Note 33)
See accompanying Notes to Consolidated Financial Statements.

P3.207 =

= P4.211

= P2.225

*SGVMC214977*

ABS-CBN CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Amounts in Thousands)

2011 NET INCOME OTHER COMPREHENSIVE INCOME Exchange differences on translation of foreign operations Unrealized fair value gain on available-for-sale investments (Note 13) OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAX TOTAL COMPREHENSIVE INCOME, NET OF TAX Attributable to: Equity holders of the Parent Company Noncontrolling interests P2,507,163 =

Years Ended December 31 2010 2009 = P3,237,211 = P1,759,386

(44,784)
9,818 (34,966) P2,472,197 =

(177,150)
11,762 (165,388) = P3,071,823

56,749
74,405 131,154 = P1,890,540

P2,385,106 = 87,091 P2,472,197 =

= P3,013,243 58,580 = P3,071,823

= P1,833,551 56,989 = P1,890,540

See accompanying Notes to Consolidated Financial Statements.

*SGVMC214977*

ABS-CBN CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY FOR THE YEARS ENDED DECEMBER 31, 2011, 2010 AND 2009 (Amounts in Thousands)
Attributable to Equity Holders of the Parent Company Unrealized Gain on Availablefor-Sale Investments (Note 13) P110,005 = 9,818 9,818 P119,823 = = P98,243 11,762 11,762 = P110,005 = P23,838 74,405 74,405 = P98,243 Philippine Depository Receipts (PDRs) Retained Earnings Convertible to Appropriated Unappropriated Common Shares (Note 21) (Note 21) (Note 21) P8,300,000 = P9,149,596 = (P1,154,064) = 2,420,072 2,420,072 (1,637,128) (10,082) P8,300,000 = P9,932,540 = (P1,164,146) = = P8,300,000 = P8,300,000 = P8,300,000 = P8,300,000 = P6,836,304 3,178,631 3,178,631 (865,339) = P9,149,596 = P5,821,334 1,702,397 1,702,397 (687,427) = P6,836,304 (P553,724) = (996,240) 395,900 (P1,154,064) = (P376,324) = (178,523) 1,123 (P553,724) = Noncontrolling Interests Total Equity

At January 1, 2011 Net income Other comprehensive income Total comprehensive income Cash dividends declared Acquisitions of PDRs Increase in noncontrolling interests At December 31, 2011 At January 1, 2010 Net income Other comprehensive income Total comprehensive income Cash dividends declared Acquisitions of PDRs Issuances of PDRs Decrease in noncontrolling interests At December 31, 2010 At January 1, 2009 Net income Other comprehensive income Total comprehensive income Cash dividends declared Acquisitions of PDRs Issuances of PDRs Decrease in noncontrolling interests (Note 4) At December 31, 2009

Capital Stock (Note 21) P779,583 = P779,583 = = P779,583 = P779,583 = P779,583 = P779,583

Additional Paid-in Capital P725,276 = P725,276 = = P725,276 = P725,276 = P725,276 = P725,276

Cumulative Translation Adjustments (P313,752) = (44,784) (44,784) (P358,536) = (P136,602) = (177,150) (177,150) (P313,752) = (P193,351) = 56,749 56,749 (P136,602) =

Total P17,596,644 = 2,420,072 (34,966) 2,385,106 (1,637,128) (10,082) P18,334,540 = = P16,049,080 3,178,631 (165,388) 3,013,243 (865,339) (996,240) 395,900 = P17,596,644 = P15,080,356 1,702,397 131,154 1,833,551 (687,427) (178,523) 1,123 = P16,049,080

P148,862 = 87,091 87,091 1,765,165 P2,001,118 = = P104,030 58,580 58,580 (13,748) = P148,862 = P67,046 56,989 56,989 (20,005) = P104,030

P17,745,506 = 2,507,163 (34,966) 2,472,197 (1,637,128) (10,082) 1,765,165 P20,335,658 = = P16,153,110 3,237,211 (165,388) 3,071,823 (865,339) (996,240) 395,900 (13,748) = P17,745,506 = P15,147,402 1,759,386 131,154 1,890,540 (687,427) (178,523) 1,123 (20,005) = P16,153,110

See accompanying Notes to Consolidated Financial Statements.

*SGVMC214977*

ABS-CBN CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS

(Amounts in Thousands)

2011 CASH FLOWS FROM OPERATING ACTIVITIES Income before income tax Adjustments for: Depreciation and amortization (Notes 10 and 11) Gain on sale of investments (Note 27) Amortization of: Program rights and other intangibles (Note 12) Deferred charges (Note 15) Debt issue costs (Note 27) Interest expense (Note 27) Provision for pension expense (Note 29) Interest income (Note 6) Gain on settlement of a liability (Note 27) Net unrealized foreign exchange gain Loss (gain) on sale of property and equipment Equity in net losses (earnings) of associates Mark-to-market loss on derivative instruments - net (Note 27) Income before working capital changes Provisions for: Doubtful accounts (Note 26) Other employee benefits Decline in value of inventory Decrease (increase) in: Trade and other receivables Other current assets Increase (decrease) in: Trade and other payables Obligations for program rights Other noncurrent liabilities Contribution to pension plan (Note 29) Cash generated from operations Income taxes paid Net cash provided by operating activities CASH FLOWS FROM INVESTING ACTIVITIES Additions to: Property and equipment (Notes 10 and 34) Program rights and other intangible assets (Notes 12 and 34) Increase in noncontrolling interests (Note 4) Proceeds from sale of investments, net of cash of subsidiary disposed (Note 4) (Forward) P2,794,592 =

Years Ended December 31 2010 2009 = P4,344,921 2,575,023 1,020,372 52,578 99,945 915,812 351,525 (106,738) (134,980) 434 (142) 9,118,750 420,236 329,780 32,092 (1,912,612) 331,970 2,095,793 (374,929) (160,054) (527,815) 9,353,211 (1,706,641) 7,646,570 = P2,443,441 2,257,368 1,286,179 46,510 31,075 852,712 135,919 (93,291) (122,440) (1,399) 2,330 1,233 6,839,637 292,472 123,213 5,406 (987,447) (368,742) 350,488 (117,936) (17,064) (11,795) 6,108,232 (637,769) 5,470,463

2,588,969 (1,146,716) 1,252,183 56,271 16,969 698,461 508,711 (177,061) (143,616) (43,021) (7,316) 29 6,398,455 254,947 209,133 (1,033,298) (342,598) (1,670,484) 1,720 (372,484) (78,894) 3,366,497 (273,229) 3,093,268

(3,518,922) (933,863) 1,765,165 1,037,283

(3,109,010) (716,816)

(2,361,435) (740,937)

*SGVMC214977*

-2Years Ended December 31 2010 2009 2011 Acquisition of subsidiaries, net of cash acquired (Note 4) Decrease (increase) in other noncurrent assets Proceeds from sale of: Property and equipment Investment in bonds Interest received Net cash used in investing activities CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from: Long-term debt Bank loans Payments of: Dividends Interest Bank loans Long-term debt Obligations under finance lease Acquisition of Philippine depository receipts (PDRs) (Note 21) Settlement of derivatives (Note 32) Issuances of: PDRs (Note 21) Convertible note Net cash provided by (used in) financing activities EFFECTS OF EXCHANGE RATE CHANGES AND TRANSLATION ADJUSTMENTS ON CASH AND CASH EQUIVALENTS NET INCREASE IN CASH AND CASH EQUIVALENTS CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR CASH AND CASH EQUIVALENTS AT END OF YEAR (Note 6)
See accompanying Notes to Consolidated Financial Statements.

(P352,858) = (408,350) 981,459 217,377 (1,212,709)

= P782 330,889 96,680 108,291 (3,289,184)

= P (193,752) 89,484 21,342 108,123 (3,077,175)

3,154,255 (1,541,807) (610,532) (132,000) (112,432) (39,831) (10,082) 211,389 918,960

7,670,083 532,000 (828,166) (904,723) (400,000) (7,269,106) (104,146) (996,240) 395,900 (1,904,398)

900,000 400,000 (682,950) (903,095) (737,600) (259,769) (119,880) (178,523) 14,990 1,123 (1,565,704)

14,200 2,813,719 5,821,334 P8,635,053 =

30,595 2,483,583 3,337,751 = P5,821,334

(14,087) 813,497 2,524,254 = P3,337,751

*SGVMC214977*

ABS-CBN CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in Thousands Unless Otherwise Specified)

1. Corporate Information ABS-CBN Corporation (ABS-CBN or Parent Company) is incorporated in the Philippines on July 11, 1946. The Parent Companys core business is television and radio broadcasting. Its subsidiaries and associates are involved in the following related businesses: cable and direct-tohome (DTH) television distribution and telecommunications services overseas, movie production, audio recording and distribution, video/audio post production, and film distribution. Other activities of the subsidiaries include merchandising, internet and mobile services and publishing. The Parent Company is 57%-owned by Lopez, Inc., a Philippine entity, the ultimate parent company. The common shares of ABS-CBN were listed beginning July 8, 1992 and have been traded in the Philippine Stock Exchange (PSE) since then. On June 17, 1994, the Board of Directors (BOD) approved the extension of the corporate term of the Parent Company for another 50 years from April 20, 1994. On July 27, 1994, the Philippine Securities and Exchange Commission (SEC) approved the said extension. On August 16, 2010, the Philippine SEC approved the change in the Parent Companys corporate name from ABS-CBN Broadcasting Corporation to ABS-CBN Corporation. The registered office address of the Parent Company is Mother Ignacia Street corner Sgt. Esguerra Avenue, Quezon City. The accompanying consolidated financial statements were approved and authorized for issuance by the BOD on March 2, 2012.

2. Summary of Significant Accounting and Financial Reporting Policies Basis of Preparation The consolidated financial statements of ABS-CBN and all its subsidiaries (collectively referred to as the Company) have been prepared on a historical cost basis, except for available-for-sale (AFS) investments that have been measured at fair value. The consolidated financial statements are presented in Philippine peso, which is the functional and presentation currency of the Parent Company. All values are rounded to the nearest thousand, except for number of shares, per share amounts and when otherwise indicated. Statement of Compliance The consolidated financial statements of the Company were prepared in compliance with Philippine Financial Reporting Standards (PFRS). PFRS includes statements named PFRS and Philippine Accounting Standards (PAS) and Philippine Interpretations issued by the Financial Reporting Standards Council (FRSC).

*SGVMC214977*

-2Changes in Accounting Policies and Disclosures The accounting policies adopted are consistent with those of the previous financial year, except for the adoption of the following new and amended PFRS and Philippine Interpretations that became effective during the year. Except as otherwise indicated, adoption of the new and amended PFRS and Philippine Interpretations has no impact on the Companys consolidated financial statements. PAS 24 (Amendment), Related Party Disclosures (effective for annual periods beginning on or after January 1, 2011) PAS 24 clarifies the definitions of a related party. The new definitions emphasize a symmetrical view of related party relationships and clarify the circumstances in which persons and key management personnel affect related party relationships of an entity. In addition, the amendment introduces an exemption from the general related party disclosure requirements for transactions with government and entities that are controlled, jointly controlled or significantly influenced by the same government as the reporting entity. PAS 32 (Amendment), Financial Instruments: Presentation - Classification of Rights Issues (effective for annual periods beginning on or after February 1, 2010) The amendment alters the definition of a financial liability in PAS 32 to enable entities to classify rights issues and certain options or warrants as equity instruments. The amendment is applicable if the rights are given pro rata to all of the existing owners of the same class of an entitys non-derivative equity instruments, to acquire a fixed number of the entitys own equity instruments for a fixed amount in any currency. Philippine Interpretation IFRIC 14 (Amendment), Prepayments of a Minimum Funding Requirement (effective for annual periods beginning on or after January 1, 2011, with retrospective application) The amendment removes an unintended consequence when an entity is subject to minimum funding requirements and makes an early payment of contributions to cover such requirements. The amendment permits a prepayment of future service cost by the entity to be recognized as a pension asset. The Company is not subject to minimum funding requirements in the Philippines. Improvements to PFRS (Issued in 2010) Improvements to PFRSs, an omnibus of amendments to standards, deal primarily with a view to removing inconsistencies and clarifying wording. There are separate transitional provisions for each standard. The adoption of the following amendments resulted in changes to accounting policies but did not have any impact on the financial position or performance of the Company. PFRS 3, Business Combinations: The measurement options available for non-controlling interest were amended. Only components of non-controlling interest that constitute a present ownership interest that entitles their holder to a proportionate share of the entitys net assets in the event of liquidation should be measured at either fair value or at the present ownership instruments proportionate share of the acquirees identifiable net assets. All other components are to be measured at their acquisition date fair value. The amendments to PFRS 3 are effective for annual periods beginning on or after 1 July 2011. The Company, however, adopted these as of January 1, 2011 and changed its accounting policy accordingly as the amendment was issued to eliminate unintended consequences that may arise from the adoption of PFRS 3.

*SGVMC214977*

-3 PFRS 7, Financial Instruments - Disclosures: The amendment was intended to simplify the disclosures provided by reducing the volume of disclosures around collateral held and improving disclosures by requiring qualitative information to put the quantitative information in context. The Company reflected the revised disclosure requirements in Notes 31 and 32. PAS 1, Presentation of Financial Statements: The amendment clarifies that an entity may present an analysis of each component of other comprehensive income maybe either in the statement of changes in equity or in the notes to the financial statements. The Company provided the analysis in the consolidated statement of changes in equity.

Other amendments resulting from the 2010 improvements to PFRSs to the following standards did not have any impact on the accounting policies, financial position or performance of the Company: PFRS 3, Business Combinations [contingent consideration arising from business combination prior to adoption of PFRS 3 (as revised in 2008)] PFRS 3, Business Combinations (un-replaced and voluntarily replaced share-based payment awards) PAS 27, Consolidated and Separate Financial Statements PAS 34, Interim Financial Statements

The following interpretation and amendments to interpretations did not have any impact on the accounting policies, financial position or performance of the Company: Philippine Interpretation IFRIC 13, Customer Loyalty Programmes (determining the fair value of award credits) Philippine Interpretation IFRIC 19, Extinguishing Financial Liabilities with Equity Instruments

Change in Presentation of Consolidated Statement of Income. In 2011, the Company changed the presentation of outbound telecommunication revenues to gross amount before charges billed to the Company, where applicable, by other carriers. In doing so, interconnection costs are then presented as separate line item in the expenses section under Cost of services account. Prior to 2011, outbound telecommunication revenues are presented net of the share of other carriers. The Company made this change to present outbound telecommunication revenue on a gross basis to align the Companys presentation of outbound telecommunication revenues with the predominant global practice in the telecommunications industry. The Company accounted for the change retroactively and accordingly, restated the comparative consolidated statement of income. The change pertains to presentation only and it has no impact on the Companys net income, cash flows and statement of financial position. Revenues increased by P105 million and P179 million for the years ended December 31, 2010 and 2009, respectively, = = with a corresponding increase in expenses for the same amount.

*SGVMC214977*

-4Basis of Consolidation and Noncontrolling Interests The consolidated financial statements include the financial statements of the Parent Company and its subsidiaries as of December 31 each year. Control is normally evidenced when the Parent Company owns, either directly or indirectly, more than 50% of the voting rights of an entitys capital stock. Following is a list of the subsidiaries or companies, which ABS-CBN controls as of December 31, 2011, 2010 and 2009:
Place of Company Incorporation ABS-CBN Global Ltd. (ABS-CBN Cayman Islands Global) (a) (j) ABS-CBN Europe Ltd. (ABS-CBN United Kingdom Europe) (b) (c) (j) ABS-CBN Europe Remittance Inc. (d) United Kingdom
(j) (u)

ABS-CBN Japan, Inc. (ABS-CBN Japan) (d) (j) ABS-CBN Middle East FZ-LLC (ABS-CBN Middle East) (b) (j) ABS-CBN Middle East LLC (b) (j) E-Money Plus, Inc. (b)
ABS-CBN Global Hungary Kft. (ABS-CBN Hungary) (j) (l)

Japan Dubai, UAE Dubai, UAE Philippines Budapest, Hungary California, USA Victoria, Australia Canada California, USA California, USA

Functional Currency United States dollar (USD) Cable and satellite Great Britain pound programming services (GBP) Services - money GBP remittance Cable and satellite Japanese yen (JPY) programming services Cable and satellite USD programming services Trading USD Services - money Philippine peso remittance Holding company USD Principal Activities Holding company Cable and satellite programming services Cable and satellite programming services Cable and satellite programming services Services - money remittance Telecommunications Services - money remittance Intermediate holding and financing company Educational/training Non-vessel operations common carrier Movie production Real estate Services - interactive media Digital electronic content distribution Print publishing Print publishing Services - support USD Australian dollar (AUD) Canadian dollar (CAD) USD USD CAD European monetary union (EUR) Philippine peso Philippine peso Philippine peso Philippine peso Philippine peso Philippine peso Philippine peso Philippine peso Singapore dollar (SGD) Philippine peso

Effective Interest 2010 2009 2011 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 70.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 98.9 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 98.9

ABS-CBN International, Inc. (ABS-CBN International) (j) (n) ABS-CBN Australia Pty. Ltd. (ABS-CBN Australia) (j) (k) ABS-CBN Canada, ULC (ABS-CBN Canada) (j) (k)
ABS-CBN Global Remittance Inc.(j)
(k)

ABS-CBN Telecom North America, Inc. (j) (k)

ABS-CBN Canada Remittance Inc.
(n) (r)

(j)

Canada Amsterdam, Netherlands Philippines Philippines Philippines Philippines Philippines Philippines Philippines Philippines Singapore Philippines Philippines Philippines Philippines

ABS-CBN Global Netherlands B.V. (ABS-CBN Netherlands)

(j) (n)

ABS-CBN Center for Communication Arts, Inc. (e) ABS-CBN Global Cargo Corporation ABS-CBN Film Productions, Inc. (ABS-CBN Films) ABS-CBN Integrated and Strategic Property Holdings, Inc. ABS-CBN Interactive, Inc. (ABSCBN Interactive) ABS-CBN Multimedia, Inc. (ABSCBN Multimedia) (f) ABS-CBN Publishing, Inc. (ABSCBN Publishing) Culinary Publications, Inc. (g) ABS-CBN Shared Service Center PTE. Ltd. (j) (m) Creative Programs, Inc. (CPI) Professional Services for Television & Radio, Inc. Roadrunner Network, Inc. (Roadrunner) (see Note 4) Sapientis Holdings Corporation (Sapientis) (see Note 4)
Columbus Technologies, Inc. (CTI)

Content development and programming services Services - production Philippine peso Services - post production Holding company Holding company

Philippine peso Philippine peso Philippine peso

(q)

(see Note 4)

Philippines

*SGVMC214977*

-5Place of Incorporation Philippines Philippines Philippines Philippines Philippines Philippines Functional Currency Philippine peso Philippine peso Philippine peso Philippine peso Philippine peso Philippine peso Effective Interest 2010 2009 2011 66.5 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0

Company
Multi-Media Telephony, Inc. (MTI)
(q) (s) (see Note 4) Sarimanok News Network, Inc.

Principal Activities Telecommunication Content development and programming services Audio and video production and distribution Music publishing Content development and programming services Digital film archiving and central library, content licensing and transmission Services - restaurant and food Cable television services Cable television services Cable television services Cable television services Cable television services Cable television services Cable television services Cable television services Cable television services Cable television services Cable television services Cable television services Cable television services Holding company Cable television services Cable television services Cable television services Holding company Cable television services Cable television services Cable television services Cable television services Cable television services Cable television services Cable television services Cable television services

Star Recording, Inc. Star Songs, Inc. Studio 23, Inc. (Studio 23) The Big Dipper Digital Content & Design, Inc. (Big Dipper) TV Food Chefs, Inc. Sky Cable Corporation (Sky Cable) (see Note 4) Bisaya Cable Television Network, Inc. (h) (i) Bright Moon Cable Networks, Inc. (h) Cavite Cable Corporation (h) Cepsil Consultancy and Management Corporation (h)
Davao Cableworld Network, Inc. (h)
(o) (t)

Philippines Philippines Philippines Philippines Philippines Philippines Philippines Philippines Philippines Philippines Philippines Philippines Philippines Philippines Philippines Philippines Philippines Philippines Philippines Philippines Philippines Philippines Philippines Philippines Philippines Philippines Philippines

Philippine peso Philippine peso Philippine peso Philippine peso Philippine peso Philippine peso Philippine peso Philippine peso Philippine peso Philippine peso Philippine peso Philippine peso Philippine peso Philippine peso Philippine peso Philippine peso Philippine peso Philippine peso Philippine peso Philippine peso Philippine peso Philippine peso Philippine peso Philippine peso Philippine peso Philippine peso Philippine peso

100.0 56.7 56.7 56.7 56.7 56.7 56.7 56.7 56.7 56.7 56.7 56.7 56.7 56.7 56.7 56.7 56.7 56.7 56.7 53.9 53.3 52.4 51.9 51.6 51.6 39.7 34.0

100.0 79.3 79.3 79.3 79.3 79.3 47.6 79.3 79.3 79.3 79.3 79.3 79.3 79.3 79.3 79.3 79.3 79.3 79.3 75.3 74.5 73.7 72.2 72.2 72.2 55.5 47.6

100.0 79.3 79.3 79.3 79.3 79.3 47.6 79.3 79.3 79.3 79.3 79.3 79.3 79.3 79.3 79.3 79.3 79.3 79.3 75.3 50.8 73.7 72.2 72.2 72.2 55.5 47.6

HM Cable Networks, Inc. (h) HM CATV, Inc. (h) Hotel Interactive Systems, Inc. (h) Isla Cable TV, Inc. (h) Moonsat Cable Television, Inc. (h)
(o)

Pilipino Cable Corporation (PCC) (h) Satellite Cable TV, Inc. (h) Sun Cable Holdings, Incorporated (SCHI) (h) Sun Cable Systems Davao, Inc. (h) (i) Sunvision Cable, Inc. (h) Tarlac Cable Television Network, Inc. (h) Telemondial Holdings, Inc. (h) (i) JMY Advantage Corporation (h) Cebu Cable Television, Inc. (h) (o) (p) Suburban Cable Network, Inc. (h) Pacific CATV, Inc. (Pacific) (h) (o) First Ilocandia CATV, Inc. (h) (o) Mactan CATV Network, Inc. (h) (o)
(p)

Discovery Cable, Inc. (h) (t) Home-Lipa Cable, Inc. (h) (t)
(a) (b)

With branches in the Philippines and Taiwan Through ABS-CBN Global (c) With branches in Italy and Spain (d) Subsidiary of ABS-CBN Europe (e) Nonstock ownership interest (f) Through ABS-CBN Interactive (g) Through ABS-CBN Publishing (h) Through Sky Cable (i) Subsidiary of SCHI (j) Considered as foreign subsidiary (k) Subsidiary of ABS-CBN International (l) With a branch in Luxembourg (m) With a regional operating headquarters in the Philippines (n) Through ABS-CBN Hungary (o) Subsidiary of PCC (p) Through Pacific (q) Through Sapientis

*SGVMC214977*

-6Incorporated and started commercial operations in 2011 Subsidiary of CTI (t) A subsidiary of Sky Cable where Sky Cable effectively owns more than 50% interest (u) Incorporated and started commercial operations in 2010
(s) (r)

Subsidiaries are fully consolidated from the date of acquisition, being the date on which the Company obtains control. Control is achieved when the Company has the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities. The financial statements of the subsidiaries are prepared for the same reporting year as the Parent Company, using consistent accounting policies. All significant intra-Company balances, transactions, income and expenses and profits and losses resulting from intra-group transactions that are recognized in assets and liabilities, are eliminated in full on consolidation. Unrealized gains and losses are eliminated unless costs cannot be recovered. Consolidation of subsidiaries ceases when control is transferred out of the Company. The results of subsidiaries acquired or disposed of during the year are included in the consolidated statement of income from the date of acquisition or up to the date of disposal, as appropriate. Noncontrolling interests represent the portion of profit or loss and net assets not held by the Company and are presented separately in the consolidated statement of income and within the equity section of the consolidated statement of financial position, separately from equity attributable to equity holders of the Parent Company. This includes the equity interests in Sapientis and its subsidiaries and Sky Cable and its subsidiaries. A change in the ownership interest of a subsidiary, without a loss of control, is accounted for as an equity transaction. If the Company loses control over a subsidiary, it: Derecognizes the assets (including goodwill) and liabilities of the subsidiary Derecognizes the carrying amount of any noncontrolling interest Derecognizes the cumulative translation differences, recorded in equity Recognizes the fair value of the consideration received Recognizes the fair value of any investment retained Recognizes any surplus or deficit in profit or loss Reclassifies the parents share of components previously recognized in other comprehensive income to profit or loss or retained earnings, as appropriate.

Losses within a subsidiary are attributed to the noncontrolling interest even if that results in a deficit balance. Prior to January 1, 2010 Certain of the above-mentioned requirements were applied on a prospective basis. The following differences, however, are carried forward in certain instances from the previous basis of consolidation: Acquisition of noncontrolling interest was accounted for using the parent entity extension method, whereby, the difference between the fair value of the consideration and net book value of the share in the net assets acquired was presented as goodwill.

*SGVMC214977*

-7 Any losses applicable to the noncontrolling interest in a consolidated subsidiary in excess of the noncontrolling interests equity in the subsidiary were charged against the noncontrolling interest to the extent that the noncontrolling interest has binding obligation to, and is able to, make good of the losses. Upon loss of control, the Company accounted for the investment retained at its proportionate share of net asset value at the date control was lost.

Business Combination and Goodwill Business combinations are accounted for using the acquisition method. The cost of an acquisition is measured as the aggregate of the consideration transferred, measured at acquisition date fair value and the amount of any noncontrolling interest in the acquiree. For each business combination, the acquirer measures the noncontrolling interest in the acquiree either at fair value or at the proportionate share of the acquirees identifiable net assets. Acquisition costs incurred are expensed and included in administrative expenses. When the Company acquires a business, it assesses the financial assets and liabilities assumed for appropriate classification and designation in accordance with the contractual terms, economic circumstances and pertinent conditions as at the acquisition date. This includes the separation of embedded derivatives in host contracts by the acquiree. If the business combination is achieved in stages, the acquisition date fair value of the acquirers previously held equity interest in the acquiree is remeasured to fair value at the acquisition date through profit or loss. Any contingent consideration to be transferred by the acquirer will be recognized at fair value at the acquisition date. Subsequent changes to the fair value of the contingent consideration which is deemed to be an asset or liability, will be recognized in accordance with PAS 39 either in profit or loss or as a change to other comprehensive income. If the contingent consideration is classified as equity, it should not be remeasured until it is finally settled within equity. Goodwill acquired in a business combination is initially measured at cost being the excess of the cost of business combination over the interest in the net fair value of the acquirees identifiable assets, liabilities and contingent liabilities. If the cost of acquisition is less than the fair value of the net assets of the acquiree, the difference is recognized directly in the consolidated statement of income. If the initial accounting for business combination can be determined only provisionally by the end of the period by which the combination is effected because either the fair value to be assigned to the acquirees identifiable assets, liabilities or contingent liabilities or the cost of the combination can be determined only provisionally, the Company accounts the combination using provisional values. Adjustment to these provisional values as a result of completing the initial accounting shall be made within 12 months from the acquisition date. The carrying amount of an identifiable asset, liability, or contingent liability that is recognized from that date and goodwill or any gain recognized shall be adjusted from the acquisition date by the amount equal to the adjustment to the fair value at the acquisition date of the identifiable asset, liability or contingent liability being recognized or adjusted.

*SGVMC214977*

-8After initial recognition, goodwill is measured at cost less any accumulated impairment losses. For the purpose of impairment testing, goodwill acquired in a business combination is, from the acquisition date, allocated to each of the Companys cash-generating units that are expected to benefit from the combination, irrespective of whether other assets or liabilities of the acquiree are assigned to those units. Where goodwill forms part of a cash-generating unit and part of the operation within that unit is disposed of, the goodwill associated with the operation disposed of is included in the carrying amount of the operation when determining the gain or loss on disposal of the operation. Goodwill disposed of in this circumstance is measured based on the relative values of the operation disposed of and the portion of the cash-generating unit retained. Prior to January 1, 2010 In comparison to the above-mentioned requirements, the following differences applied: Business combinations are accounted for using the purchase accounting method. This involves recognizing identifiable assets (including previously unrecognized intangible assets) and liabilities (including contingent liabilities and excluding future restructuring) of the acquired business at fair value. Transaction costs directly attributable to the acquisition formed part of the acquisition costs. The noncontrolling interest is measured at the proportionate share of the acquirees identifiable net assets. Business combinations achieved in stages are accounted for as separate steps. Any additional acquired share of interest does not affect previously recognized goodwill. When the Company acquired a business, embedded derivatives separated from the host contract by the acquiree were not reassessed on acquisition unless the business combination resulted in a change in the terms of the contract that significantly modified the cash flows that otherwise would have been required under the contract. Contingent consideration was recognized if, and only if, the Company had a present obligation, the economic outflow was more likely than not and a reliable estimate was determinable. Subsequent adjustments to the contingent consideration were recognized as part of goodwill. Foreign Currency Translation and Transaction Functional and Presentation Currency. The consolidated financial statements are presented in Philippine peso, which is the Parent Companys functional and presentation currency. Each entity determines its own functional currency, which is the currency that best reflects the economic substance of the underlying events and circumstances relevant to that entity, and items included in the financial statements of each entity are measured using that functional currency.

*SGVMC214977*

-9The functional currency of all the subsidiaries, except foreign subsidiaries, is the Philippine peso. The functional currencies of the foreign subsidiaries are disclosed under the Basis of Consolidation section. As of financial reporting date, the assets and liabilities of foreign subsidiaries are translated into the presentation currency of the Parent Company (the Philippine peso) at the rate of exchange ruling at financial reporting date and, their statements of income are translated at the weighted average exchange rates for the year. The exchange differences arising on the translation are taken directly to Exchange differences on translation of foreign operations in the consolidated statement of comprehensive income and Cumulative translation adjustments account within the equity section of the consolidated statement of financial position. Upon disposal of any of these foreign subsidiaries, the deferred cumulative amount recognized in equity relating to that particular foreign entity will be recognized in the consolidated statement of income. Foreign Currency-denominated Transactions. Transactions in foreign currencies are initially recorded in the functional currency exchange rate ruling at the date of the transactions. Monetary assets and liabilities denominated in foreign currencies are retranslated at the functional currency closing exchange rate at financial reporting date. All differences are taken to the consolidated statement of income. Nonmonetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rates at the dates of the initial transactions. Nonmonetary items measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value was determined. Cash and Cash Equivalents Cash includes cash on hand and in banks. Cash equivalents are short-term, highly liquid investments that are readily convertible to known amounts of cash with original maturities of three months or less from dates of acquisitions and that are subject to an insignificant risk of change in value. Financial Instruments Date of Recognition. Financial instruments are recognized in the consolidated statement of financial position when the Company becomes a party to the contractual provisions of the instrument. Purchases or sales of financial assets that require delivery of assets within the time frame established by regulation or convention in the marketplace are recognized using trade date accounting. Derivatives are recognized on trade date accounting. Initial Recognition of Financial Instruments. All financial instruments are initially recognized at fair value. The initial measurement of financial instruments includes transaction costs, except for securities at fair value through profit or loss (FVPL). The Company classifies its financial assets in the following categories: financial assets at FVPL, held-to-maturity (HTM) investments, loans and receivables and AFS investments. Financial liabilities are classified as either financial liabilities at FVPL or other financial liabilities at amortized cost. The classification depends on the purpose for which the instruments were acquired and whether they are quoted in an active market. Management determines the classification of its financial instruments at initial recognition and, where allowed and appropriate, re-evaluates this classification at every financial reporting date.

*SGVMC214977*

- 10 Determination of Fair Value. The fair value of financial instruments traded in organized financial markets is determined by reference to quoted market bid prices or dealer price quotations (bid price for long positions and ask price for short positions), without any deduction for transaction costs, that are active at the close of business at financial reporting date. When current bid and asking prices are not available, the price of the most recent transaction is used since it provides evidence of current fair value as long as there has not been significant change in economic circumstances since the time of the transaction. For all other financial instruments not listed in an active market, the fair value is determined by using appropriate valuation techniques. Such techniques include using reference to similar instruments for which observable prices exist, discounted cash flows analyses, and other relevant valuation models. Day 1 Profit. Where the transaction price in a non-active market is different from the fair value of other observable current market transactions in the same instrument or based on a valuation technique whose variables include only data from observable market, the Company recognizes the difference between the transaction price and fair value (a Day 1 profit) in the consolidated statement of income. In cases where unobservable data is used, the difference between the transaction price and model value is only recognized in the consolidated statement of income when the inputs become observable or when the instrument is derecognized. For each transaction, the Company determines the appropriate method of recognizing the Day 1 profit amount. Financial Assets and Liabilities at FVPL. Financial assets and liabilities at FVPL include financial assets and liabilities held for trading and financial assets and liabilities designated upon initial recognition as at FVPL. Financial assets and liabilities are classified as held for trading if they are acquired for the purpose of selling in the near term. Derivatives are also classified under financial assets or liabilities at FVPL, unless they are designated as hedging instruments in an effective hedge. Financial assets or liabilities may be designated by management at initial recognition as at FVPL if any of the following criteria are met: The designation eliminates or significantly reduces the inconsistent treatment that would otherwise arise from measuring the assets or recognizing gains or losses on them on a different basis; The assets and liabilities are part of a group of financial assets, liabilities or both which are managed and their performance are evaluated on a fair value basis in accordance with a documented risk management strategy; or The financial instrument contains an embedded derivative, unless the embedded derivative does not significantly modify the cash flows or it is clear, with little or no analysis that it would not be separately recorded.

Financial assets or liabilities at FVPL are recorded in the consolidated statement of financial position at fair value. Subsequent changes in fair value are recognized directly in the consolidated statement of income. Interest earned or incurred is recorded as interest income or expense, respectively, while dividend income is recorded as other income according to the terms of the contract, or when the right of payment has been established. The Company has no financial assets and liabilities at FVPL as of December 31, 2011 and 2010.

*SGVMC214977*

- 11 Loans and Receivables. Loans and receivables are nonderivative financial assets with fixed or determinable payments that are not quoted in an active market. They are not entered into with the intention of immediate or short-term resale and are not classified as at FVPL, designated as AFS financial asset or HTM investments. After initial measurement, loans and receivables are subsequently carried at amortized cost using the effective interest method, less any allowance for impairment. Gains and losses are recognized in the consolidated statement income when the loans and receivables are derecognized or impaired, as well as through the amortization process. Loans and receivables are included in current assets if maturity is within 12 months from financial reporting date. Otherwise, these are classified as noncurrent assets. This category includes the Companys cash and cash equivalents, trade and other receivables and deposits (see Note 32). HTM Investments. Quoted nonderivative financial assets with fixed or determinable payments and fixed maturities are classified as HTM investments when the Companys management has the positive intention and ability to hold to maturity. Investments intended to be held for an undefined period are not included in this category. After initial measurement, HTM investments are measured at amortized cost. This cost is computed as the amount initially recognized minus principal repayments, plus or minus the cumulative amortization using the effective interest method of any difference between the initially recognized amount and the maturity amount, less allowance for impairment. This calculation includes all fees paid or received between parties to the contract that are an integral part of the effective interest rate, transaction costs and all other premiums and discounts. Gains and losses are recognized in the consolidated statement of income when the investments are derecognized or impaired, as well as through the amortization process. The Company has no HTM investments as of December 31, 2011 and 2010. AFS Investments. AFS investments are those nonderivative financial assets that are designated as AFS or are not classified in any of the three preceding categories. After initial measurement, AFS investments are measured at fair value, with unrealized gains or losses being recognized as other comprehensive income until the investment is derecognized or determined to be impaired, at which time the cumulative gain or loss previously reported in other comprehensive income is included in the consolidated statement of income. Unquoted equity instruments whose fair value cannot be reliably measured, are measured at cost. AFS investments are included in current assets if management intends to sell these financial assets within 12 months from financial reporting date. Otherwise, these are classified as noncurrent assets. The Companys AFS investments include investments in ordinary common shares (see Note 32). Other Financial Liabilities. Financial liabilities are classified in this category if these are not held for trading or not designated as at FVPL upon the inception of the liability. These include liabilities arising from operations or borrowings.

*SGVMC214977*

- 12 Other financial liabilities are initially recognized at fair value of the consideration received, less directly attributable transaction costs. After initial recognition, other financial liabilities are subsequently measured at amortized cost using the effective interest method. Amortized cost is calculated by taking into account any related issue costs, discount or premium. Gains and losses are recognized in the consolidated statement of income when the liabilities are derecognized, as well as through the amortization process. Expenditures incurred in connection with availments of long-term debt are deferred and amortized using effective interest method over the term of the loans. Debt issue costs are netted against the related long-term debt allocated correspondingly to the current and noncurrent portion. Other financial liabilities are included in current liabilities if maturity is within 12 months from financial reporting date. Otherwise, these are classified as noncurrent liabilities. Classified under other financial liabilities are trade and other payables, interest-bearing loans and borrowings, obligations for program rights, due to a related party, convertible note and customers deposits (included under Other noncurrent liabilities account) (see Note 32). Embedded Derivatives An embedded derivative is separated from the host contract and accounted for as derivative if all the following conditions are met: (a) the economic characteristics and risks of the embedded derivative are not closely related to the economic characteristic of the host contract; (b) a separate instrument with the same terms as the embedded derivative would meet the definition of the derivative; and (c) the hybrid or combined instrument is not measured at FVPL. The Company assesses whether embedded derivatives are required to be separated from host contracts when the Company first becomes party to the contract. When reported, the fair value changes are reported in profit or loss. Re-assessment only occurs if there is a change in the terms of the contract that significantly modifies the cash flows that would otherwise be required. Impairment of Financial Assets The Company assesses at each financial reporting date whether there is objective evidence that a financial asset or group of financial assets is impaired. Loans and Receivables. For loans and receivables carried at amortized cost, the Company first assesses whether an objective evidence of impairment exists individually for financial assets that are individually significant, or collectively for financial assets that are not individually significant. If it is determined that no objective evidence of impairment exists for an individually assessed financial asset, whether significant or not, the asset, together with the other assets that are not individually significant and were thus not individually assessed for impairment, is included in a group of financial assets with similar credit risk characteristics and that group of financial assets is collectively assessed for impairment. Assets that are individually assessed for impairment and for which an impairment loss is or continues to be recognized are not included in a collective assessment of impairment. If there is an objective evidence that an impairment loss on loans and receivables carried at amortized cost has been incurred, the amount of loss is measured as the difference between the assets carrying amount and the present value of estimated future cash flows (excluding future credit losses that have not been incurred) discounted at the financial assets original effective interest rate (i.e., the effective interest rate computed at initial recognition).

*SGVMC214977*

- 13 The carrying amount of the asset is reduced either directly or through use of an allowance account and the amount of loss is recognized in the consolidated statement of income. Interest income continues to be accrued on the reduced carrying amount based on the original effective interest rate of the asset. If in case the receivable has proven to have no realistic prospect of future recovery, any allowance provided for such receivable is written off against the carrying value of the impaired receivable. If, in a subsequent year, the amount of the estimated impairment loss increases or decreases because of an event occurring after the impairment was recognized, the previously recognized impairment loss is increased or reduced by adjusting the allowance account. If a future write-off is later recovered, the recovery is recognized in the consolidated statement of income. Any subsequent reversal of an impairment loss is recognized in the consolidated statement of income, to the extent that the carrying value of the asset does not exceed its amortized cost at the reversal date. A provision for impairment is made when there is objective evidence (such as the probability of insolvency or significant financial difficulties of the debtor) that the Company will not be able to collect all of the amounts due under the original terms of the invoice. The carrying amount of the receivable is reduced through use of an allowance account. Impaired debts are derecognized when they are assessed as uncollectible. Likewise, for other receivables, it was also established that accounts outstanding for less than a year should have no provision for impairment but accounts outstanding for over three years should have a 100% provision, which was arrived at after assessing individually significant balances. Provision for individually non-significant balances was made on a portfolio or group basis after performing the regular review of the age and status of the individual accounts and portfolio/group of accounts relative to historical collections, changes in payment terms and other factors that may affect ability to collect payments. Assets Carried at Cost. If there is an objective evidence that an impairment loss on an unquoted equity instrument that is not carried at fair value because its fair value cannot be reliably measured, or on a derivative asset that is linked to and must be settled by delivery of such an unquoted equity instrument has been incurred, the amount of the loss is measured as the difference between the assets carrying amount and the present value of estimated future cash flows discounted at the current market rate of return for a similar financial asset. AFS Investments. In case of equity investments classified as AFS, an objective evidence of impairment includes a significant or prolonged decline in the fair value of the investments below its cost. Where there is evidence of impairment, the cumulative loss, measured as the difference between the acquisition cost and the current fair value, less any impairment loss on that financial asset previously recognized in the consolidated statement of income, is removed from the other comprehensive income and recognized in the consolidated statement of income. Impairment losses on equity investments are not reversed through the consolidated statement of income. Increases in fair value after impairment are recognized directly in other comprehensive income. If there is objective evidence that an impairment loss has been incurred on an unquoted equity instrument that is not carried at fair value because its fair value cannot be reliably measured, or on a derivative asset that is linked to and must be settled by delivery of such an unquoted equity instrument, the amount of the impairment loss is measured as the difference between the carrying amount of the financial asset and the present value of estimated future cash flows discounted at the current market rate of return for a similar financial asset. Such impairment losses shall not be reversed.

*SGVMC214977*

- 14 Derecognition of Financial Assets and Liabilities Financial Assets. A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets) is derecognized where: the rights to receive cash flows from the asset have expired; the Company retains the right to receive cash flows from the asset, but has assumed an obligation to pay them in full without material delay to a third party under a pass-through arrangement; or the Company has transferred its right to receive cash flows from the asset and either (a) has transferred substantially all the risks and rewards of the asset, or (b) has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.

Where the Company has transferred its rights to receive cash flows from an asset and has neither transferred nor retained substantially all the risks and rewards of the asset nor transferred control of the asset, the asset is recognized to the extent of the Companys continuing involvement in the asset. Continuing involvement that takes the form of a guarantee over the transferred asset is measured at the lower of original carrying amount of the asset and the maximum amount of consideration that the Company could be required to repay. Financial Liabilities. A financial liability is derecognized when the obligation under the liability is discharged, cancelled or has expired. Where an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as a derecognition of the original liability and the recognition of a new liability, and the difference in the respective carrying amounts is recognized in the consolidated statement of income. Classification of Financial Instruments Between Liability and Equity A financial instrument is classified as liability if it provides for a contractual obligation to: deliver cash or another financial asset to another entity; exchange financial assets or financial liabilities with another entity under conditions that are potentially unfavorable to the Company; or satisfy the obligation other than by the exchange of a fixed amount of cash or another financial asset for a fixed number of own equity shares.

If the Company does not have an unconditional right to avoid delivering cash or another financial asset to settle its contractual obligation, the obligation meets the definition of a financial liability. The components of issued financial instruments that contain both liability and equity elements accounted for separately, with the equity component being assigned the residual amount after deducting from the instrument as a whole the amount separately determined as the fair value of the liability component on the date of issue.

*SGVMC214977*

- 15 Offsetting Financial Instruments Financial assets and financial liabilities are offset with the net amount reported in the consolidated statement of financial position if, and only if, there is a currently enforceable legal right to offset the recognized amounts and there is an intention to settle on a net basis, or to realize the asset and settle the liability simultaneously. This is not generally the case with master netting agreements, and the related assets and liabilities are presented gross in the consolidated statement of financial position. Inventories Inventories are valued at the lower of cost and net realizable value. Cost is determined using weighted average method. Net realizable value of inventories that are for sale is the selling price in the ordinary course of business, less the cost of marketing and distribution. Net realizable value of inventories not held for sale is the current replacement cost. Unrealizable inventories are written off. Preproduction Expenses Preproduction expenses, included under Other current assets account in the consolidated statement of financial position, represent costs incurred prior to the airing of the programs or episodes. These costs include talent fees of artists and production staff and other costs directly attributable to production of programs. These are charged to expense upon airing of the related program or episodes. Costs related to previously taped episodes determined not to be aired are charged to expense. Property and Equipment Property and equipment, except land, are carried at cost (including capitalized interest), excluding the costs of day-to-day servicing, less accumulated depreciation, amortization and impairment in value. Such cost includes the cost of replacing part of such property and equipment when that cost is incurred if the recognition criteria are met. Land is stated at cost, which includes initial purchase price and other cost directly attributable in bringing such asset to its working condition, less any impairment in value. Subscribers initial installation costs, including materials, labor and overhead costs are capitalized as part of distribution equipment (included in the Television, radio, movie and auxiliary equipment account) and depreciated over a period no longer than the depreciation period of the distribution equipment. The costs of subsequent disconnection and reconnection are charged to current operations. Unissued spare parts and supplies represent major spare parts that can be used only in connection with the distribution equipment. Unissued spare parts and supplies are not depreciated but tested for impairment until these become available for use. These are included in the Other equipment account. When each major inspection is performed, its cost is recognized in the carrying amount of the property and equipment as a replacement if the recognition criteria are satisfied.

*SGVMC214977*

- 16 Depreciation and amortization are computed on a straight-line method over the useful lives of property and equipment. The useful lives of the Companys property and equipment are estimated as follows: Asset Type Land improvements Buildings and improvements Television, radio, movie and auxiliary equipment Other equipment Number of Years 5 to 10 10 to 40 10 to 15 3 to 10

The Company determined the depreciation and amortization for each significant part of an item of property and equipment. The property and equipments residual values, useful lives and method of depreciation and amortization are reviewed, and adjusted if appropriate, at each financial year-end. Construction in progress represents equipment under installation and building under construction and is stated at cost which includes cost of construction and other direct costs. Construction in progress is not depreciated until such time that the relevant assets are completed and become available for operational use. An item of property and equipment is derecognized upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in the consolidated statement of income in the year the asset is derecognized. Asset Retirement Obligation The net present value of legal obligations associated with the retirement of an item of property and equipment that resulted from the acquisition, construction or development and the normal operations of property and equipment is recognized in the period in which it is incurred and a reasonable estimate of the obligation can be made. This is included as part of Other noncurrent liabilities account in the consolidated statement of financial position. The related asset retirement cost is capitalized under Property and equipment account in the consolidated statement of financial position and is being depreciated on a straight-line basis. Intangible Assets Intangible assets acquired separately are measured on initial recognition at cost. The cost of intangible assets acquired in a business combination is the fair value as at the date of acquisition. Following initial recognition, intangible assets are carried at cost less any accumulated amortization in the case of intangible assets with finite lives, and any accumulated impairment losses. The useful lives of intangible assets are assessed to be either finite or indefinite. Intangible assets with finite lives are amortized over the useful economic life and assessed for impairment whenever there is an indication that the intangible asset may be impaired. The amortization period and method for an intangible asset with a finite useful life is reviewed at least at each financial year-end. Changes in the expected useful life or the expected pattern of consumption of future economic benefits embodied in the asset is accounted for by changing the amortization period or method, as appropriate, and treated as changes in accounting estimates. The amortization on intangible assets with finite lives is recognized in the consolidated statement of income in the expense category consistent with the function of the intangible asset.

*SGVMC214977*

- 17 Intangible assets with indefinite useful lives are tested for impairment annually either individually or at the cash-generating unit level. Such intangibles are not amortized. The useful life of an intangible asset with an indefinite life is reviewed annually to determine whether indefinite life assessment continues to be supportable. If not, the change in the useful life assessment from indefinite to finite is made on a prospective basis. A summary of the policies applied to the Companys acquired intangible assets is as follows:
Impairment Testing/ Recoverable Amount Testing If the remaining expected benefit period is shorter than the Companys initial estimates, the Company accelerates amortization of the purchase price or license fee. Program rights are written off when no future economic benefits are expected to flow from the assets.

Intangible Asset Program Rights

Useful Lives Finite (license term or economic life, whichever is shorter)

Amortization Method Used Amortized on the basis of program usage, except for program rights of CPI, which is amortized on a straight-line method over the license term or economic life, whichever is shorter. Episodic program rights are amortized based on the number of episodes and charged to expense upon airing of each episode. Expired program rights are fully amortized on the date of expiry. Unaired program rights with no definite expiration date are amortized after 5 years from acquisition date (i.e., equally over the next five years).

Current and Noncurrent Classification Based on the estimated year of usage except CPI, which is based on license term

*SGVMC214977*

- 18 -

Intangible Asset Story, Music and Publication Rights

Useful Lives Finite (useful economic benefit)

Amortization Method Used Amortized on the basis of the useful economic life

Impairment Testing/ Recoverable Amount Testing If the remaining expected benefit period is shorter than the Companys initial estimates, the Company accelerates amortization of the cost. If the unamortized film cost is higher than the fair value of the film, the asset is written down to its recoverable amount. If the remaining expected benefit period is shorter than the Companys initial estimates, the Company accelerates amortization of the cost. If the remaining expected benefit period is shorter than the Companys initial estimates, the Company accelerates amortization of the cost.

Current and Noncurrent Classification Based on the estimated year of usage

Movie In-process

Finite

No amortization, recognized as expense upon showing

Based on the estimated year of usage

Video Rights and Record Master

Finite (six months or 10,000 copies sold of video discs and tapes, whichever comes first)

Amortized on the basis of number of copies sold

Current

Customer Relationships (see Note 4)

Finite - 22 years

Amortized on a straight-line basis over the estimated customer service life

Noncurrent

Cable Channels CPI

Indefinite

No amortization

Annually and more Noncurrent frequently when an indication of impairment exists

*SGVMC214977*

- 19 -

Intangible Asset Production and Distribution Business - Middle East

Useful Lives Finite - 25 years

Amortization Method Used Amortized on a straight-line basis over the period of 25 years

Impairment Testing/ Recoverable Amount Testing If the remaining expected benefit period is shorter than the Companys initial estimates, the Company accelerates amortization of the cost

Current and Noncurrent Classification Noncurrent

Trademark (see Note 4)

Indefinite

No amortization

Annually and more Noncurrent frequently when an indication of impairment exists

Investment Properties Investment properties, except land, are measured at cost, including transaction costs, less accumulated depreciation and any impairment in value. The carrying amount includes the cost of replacing part of an existing investment property at the time the cost is incurred if the recognition criteria are met, and excludes day-to-day servicing of an investment property. Land is stated at cost less any impairment in value. Transfers are made to or from investment property only when there is a change in use. For a transfer from investment property to owner-occupied property, the deemed cost for subsequent accounting is the carrying value at the date of change in use. If owner-occupied property becomes an investment property, the Company accounts for such property in accordance with the policy stated under Property and equipment account up to the date of change in use. Investment properties are derecognized when either they have been disposed of or when the investment property is permanently withdrawn from use and no future economic benefit is expected from its disposal. Any gains or losses on the retirement or disposal of an investment property are recognized in the consolidated statement of income in the year of retirement or disposal. Investments in Associates The Companys investments in associates are accounted for under the equity method of accounting. An associate is an entity over which the Company has significant influence but not control, generally accompanying a shareholding of between 20% and 50% of the voting rights. Under the equity method, investment in associates is carried in the consolidated statement of financial position at cost plus post-acquisition changes in the Companys share in net assets of the associate. Goodwill relating to an associate is included in the carrying amount of the investment

*SGVMC214977*

- 20 and is not amortized. The consolidated statement of income reflects the share on the financial performance of an associate. When ABS-CBNs share of losses in an associate equals or exceeds its interest in the associate, including any other unsecured receivables, ABS-CBNs does not recognize further losses, unless it has incurred obligations or made payments on behalf of the associate. Where there has been a change recognized directly in the equity of the associate, the Company recognizes its share in any changes and discloses this, when applicable, in the consolidated statement of changes in equity. The reporting dates of the associates and the Company are identical and the associates accounting policies conform to those used by the Company for like transactions and events in similar circumstances. Unrealized intercompany profits arising from the transactions with the associate are eliminated to the extent of the interest in the associate. Tax Credits Tax credits from government airtime sales availed under Presidential Decree (PD) No. 1362 are recognized in the books upon actual airing of government commercials and advertisements. These are included under Other noncurrent assets account in the consolidated statement of financial position. Impairment of Nonfinancial Assets The Company assesses at each financial reporting date whether there is an indication that property and equipment, investment properties, program rights and other intangible assets with finite lives, investments and tax credits may be impaired. If any such indication exists, or when annual impairment testing for an asset is required, the Company makes an estimate of the assets recoverable amount. An assets recoverable amount is the higher of an assets or cash-generating units fair value less costs to sell and its value in use and is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets. Where the carrying amount of an asset exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. Impairment losses are recognized in the consolidated statement of income in those expense categories consistent with the function of the impaired asset. For assets excluding goodwill, an assessment is made at each financial reporting date as to whether there is any indication that previously recognized impairment losses may no longer exist or may have decreased. If such indication exists, the recoverable amount is estimated. A previously recognized impairment loss is reversed only if there has been a change in the estimates used to determine the assets recoverable amount since the last impairment loss was recognized. If that is the case, the carrying amount of the asset is increased to its recoverable amount. The increased amount cannot exceed the carrying amount that would have been determined, net of depreciation and amortization, had no impairment loss been recognized for the asset in prior years. Such reversal is recognized in the consolidated statement of income. After such a reversal, the depreciation and amortization are adjusted in future periods to allocate the assets revised carrying amount, less any residual value, on a systematic basis over its remaining useful life.

*SGVMC214977*

- 21 The following criteria are also applied in assessing impairment of specific nonfinancial assets: Goodwill, Cable Channels and Trademark. Goodwill, cable channels and trademarks are reviewed for impairment, annually or more frequently if events or changes in circumstances indicate that the carrying value may be impaired. Impairment is determined for goodwill, cable channels and trademark by assessing the recoverable amount of the cash-generating units, to which the goodwill, cable channels and trademarks relates. Where the recoverable amount of the cash-generating unit (or group of cash-generating units) is less than the carrying amount of the cash-generating unit (or group of cash-generating units) to which the goodwill, cable channels and trademark has been allocated, an impairment loss is recognized in the consolidated statement of income. Impairment losses relating to goodwill cannot be reversed for subsequent increases in its recoverable amount in future periods. The Company performs its annual impairment test of goodwill, cable channels and trademark as of December 31 of each year. Investments in Associates. After application of the equity method, the Company determines whether it is necessary to recognize any additional impairment loss with respect to the Companys net investments in the associates. The Company determines at each financial reporting date whether there is any objective evidence that the investments in associates are impaired. If this is the case, the Company calculates the amount of impairment as being the difference between the recoverable amount of investment in associate and the carrying value and recognizes the amount in the consolidated statement of income. Customers Deposits Customers deposits, included as part of Other noncurrent liabilities account in the consolidated statement of financial position, are initially recognized at fair value. The discount is recognized as deferred revenue and amortized over the estimated remaining term of the deposits using the effective interest method. Paid-in Capital The Company has issued par value capital stock that is classified as equity. Incremental costs directly attributable to the issuance of new capital stock are shown in equity as a deduction, net of tax, from the proceeds. When the Company issues its par value shares, the proceeds shall be credited to the Capital stock account in the consolidated statement of financial position to the extent of the par value, with any excess being reflected as Additional paid-in-capital account in the consolidated statement of financial position. Where the Company purchases its capital stock (recorded as Philippine depository receipts convertible to common shares account in the consolidated statement of financial position), the consideration paid, including any directly attributable incremental costs (net of applicable taxes) is deducted from equity attributable to the equity holders of the Parent Company until the shares are cancelled or reissued. Where such shares are subsequently reissued, any consideration received, net of any directly attributable incremental transaction costs and the related tax effects, is included in equity attributable to the equity holders of the Parent Company. Retained Earnings Retained earnings includes profit attributable to the equity holders of the Parent Company and reduced by dividends on capital stock. Retained earnings may also include effect of changes in accounting policy as may be required by the standards transitional provisions.

*SGVMC214977*

- 22 Dividends on Common Shares of the Parent Company Dividends on common shares are recognized as liability and deducted from equity when approved by the BOD of the Parent Company. Dividends for the year that are approved after the financial reporting date are dealt with as an event after financial reporting date. Revenue Revenue is recognized when it is probable that the economic benefits associated with the transaction will flow to the Company and the amount of the revenue can be measured reliably. The Company assesses its revenue arrangements against specific criteria to determine if it is acting as principal or agent. Airtime revenue is recognized as income on the dates the advertisements are aired, net of agency commissions, incentives and co-producers share. The fair values of barter transactions from advertising time exchanged for program materials, merchandise or service are included in airtime revenue and the related accounts. Payments received before broadcast (pay before broadcast) for customers without credit terms are initially recognized as liability and are included as part of Deferred revenue under Trade and other payables account in the consolidated statement of financial position. These are applied against receivable upon airing and recognition of related revenue. Pay before broadcast for customers with credit terms are credited directly to Trade receivables under Trade and other receivables account in the consolidated statement of financial position. A right of offset exists between the pay before broadcast balance and the regular trade receivables. These are recognized as income on the dates the advertisements are aired. Sale of Services a. Subscription fees are recognized as follows: DTH Subscribers and Cable Operators. Subscription fees are recognized under the accrual basis in accordance with the terms of the agreements. Share in DirecTV Subscription Revenue. Subscription revenue from subscribers of DirecTV who subscribe to the The Filipino Channel is recognized in accordance with the Deal Memorandum as discussed in Note 30. Subscription Revenue from TFC Now. Subscription revenue from online streaming services of Filipino-oriented content and programming is received in advance (included as Deferred revenue under Trade and other payables account in the consolidated statement of financial position) and is deferred and recognized as revenue over the period during which the service is performed. Cable Subscribers. Subscription fees are recognized under the accrual basis in accordance with the terms of the agreements. Subscription fees billed or collected in advance are deferred and shown as Deferred revenue under Trade and other payables account in the consolidated statement of financial position and recognized as revenue when service is rendered. b. Telecommunications revenue is recognized when earned based on agreed rates with the other telecommunications carriers under existing correspondence and interconnection agreements. Telecommunication revenues where the Company is the primary obligor is recognized at gross amount including the share of the other carriers. Where the Company is the terminating

*SGVMC214977*

- 23 carrier, revenue is recognized only to the extent of termination rates billed by the Company to the originating carrier. Income from prepaid phone cards are realized based on actual usage hours or expiration of the unused value of the card, whichever comes earlier. Income from prepaid card sales for which the related services have not been rendered as of financial reporting date, is presented as Others under Trade and other payables account in the consolidated statement of financial position. c. Channel lease revenue is recognized as income on a straight-line basis over the lease term. d. Income from film exhibition is recognized, net of theater shares, on the dates the films are shown. e. Income from TV rights and cable rights are recognized on the dates the films are permitted to be publicly shown as stipulated in the agreement. f. Pay-per-view fees are recognized on the date the movies or special programs are viewed.

Sale of goods is recognized when delivery has taken place and transfer of risks and rewards has been completed. These are stated net of sales discounts, returns and allowances. Income and related costs pertaining to installation of decoders and set-top boxes which has no stand alone value without the subscription revenue are aggregated and recognized ratably over the longer of subscription contract term or the estimated customer service life. These are presented as part of Other noncurrent assets account (under Deferred charges) and Trade and other payables account (under Deferred revenue), respectively, in the consolidated statement of financial position. Short-messaging-system/text-based revenue, sale of news materials and Company-produced programs included under Sale of services account in the consolidated statement of income are recognized upon delivery. Royalty income, included as part of Sale of services account in the consolidated statement of income, is recognized upon rendering of service based on the terms of the agreement and is reduced to the extent of the share of the composers or co-publishers of the songs produced for original sound recording. Connection/reconnection/disconnection fees, included as part of Other income account in the consolidated statement of income, are recognized when the services are rendered. Management fees, included as part of Other income account in the consolidated statement of income, are recognized based on the terms of the management agreement. Rental income is recognized as income on a straight-line basis over the lease term. Interest income is recognized on a time proportion basis that reflects the effective yield on the asset. Dividends are recognized when the shareholders right to receive payment is established.

*SGVMC214977*

- 24 Agency Commissions, Incentives and Co-producers Share These represent deductions from gross airtime revenues (see Note 23). Agency commissions are recognized at a standard rate of 15%. Incentives include early payment and early placement discounts as well as commissions paid to the Companys account executives and cable operators. Early payment discount is recognized upon payment. Early placement discount, which represents discount given to agencies and advertisers as a result of early request for telecast order, is recognized upon airing. Co-producers share on revenues of specific programs is recognized upon airing. Channel License Fees Channel license fees included under Cost of services account in the consolidated statement of income are charged to operations in the year these fees are incurred. Leases The determination whether an arrangement is, or contains, a lease is based on the substance of the arrangement at the inception date of whether the fulfillment of the arrangement is dependent on the use of a specific asset or the arrangement conveys a right to use the asset. Company as a Lessee. Finance leases, which transfer to the Company substantially all the risks and benefits incidental to ownership of the leased item, are capitalized at the inception of the lease at the fair value of the leased property or, if lower, at the present value of the minimum lease payments. Lease payments are apportioned between the finance charges and reduction of the lease liability so as to achieve a constant rate of interest on the remaining balance of the liability. Finance charges are charged directly against the consolidated statement of income. Capitalized leased assets are depreciated over the shorter of the estimated useful life of the asset and the lease term, if there is no reasonable certainty that the Company will obtain ownership by the end of the lease term. Operating lease payments are recognized as expense in the consolidated statement of income on a straight-line basis over the lease term. Company as a Lessor. Leases where the Company retains substantially all the risks and benefits of ownership of the asset are classified as operating leases. Initial direct costs incurred in negotiating an operating lease are added to the carrying amount of the leased asset and recognized over the lease term on the same basis as rental income. Cost and Expense Recognition Cost and expenses are decreases in economic benefits during the accounting period in the form of outflows or decrease of assets or incurrence of liabilities that result in decrease in equity, other than those relating to distribution to equity participant. Cost and expenses other than those with specific policies are recognized in the consolidated statement of income in the year these are incurred. Provisions Provisions are recognized when the Company has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. If the effect of the time value of money is material, provisions are determined by

*SGVMC214977*

- 25 discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and, where appropriate, the risks specific to the liability. Where discounting is used, the increase in the provision due to the passage of time is recognized as an interest expense. Borrowing Costs Borrowing costs directly attributable to the acquisition, construction or production of an asset that necessarily takes a substantial period of time to get ready for its intended use or sale are capitalized as part of the cost of respective assets. All other borrowing costs are expensed in the period they occur. Borrowing costs consist of interest and other costs that an entity incurs in connection with the borrowing of funds. Pension Costs The Companys pension plans are funded (Parent Company and Sky Cable) and unfunded (other subsidiaries) defined benefit pension plans, except for ABS-CBN International, which has a defined contribution pension plan. The cost of providing benefits under the defined benefit plans is determined separately for each plan using the projected unit credit actuarial valuation method. Actuarial gains and losses are recognized as income or expense when the net cumulative unrecognized actuarial gains and losses for each individual plan at the end of the previous reporting year exceeded 10% of the higher of the defined benefit obligation and the fair value of plan assets at that date. These gains or losses are recognized over the expected average remaining working lives of the employees participating in the plans. The past service cost is recognized as an expense on a straight-line basis over the average period until the benefits become vested. If the benefits are already vested immediately following the introduction of, or changes to, a pension plan, past service cost is recognized immediately. The defined benefit liability is the aggregate of the present value of the defined benefit obligation and net of actuarial gains and losses not recognized, reduced by past service cost not yet recognized and the fair value of plan assets out of which the obligations are to be settled directly. If such aggregate is negative, the asset is measured at the lower of such aggregate or the aggregate of cumulative unrecognized net actuarial losses and past service cost and the present value of any economic benefits available in the form of refunds from the plan or reductions in the future contributions to the plans. For ABS-CBN International, the defined contribution pension plan is composed of the contribution of ABS-CBN International or employee (or both) to the employees individual account. These contributions generally are invested on behalf of the employee through American Funds. Employees ultimately receive the balance in their account, which is based on contributions plus or minus investment gains or losses. The value of each account will fluctuate due to changes in the value of investments. The amount of the Companys contribution to the defined contribution pension plan is recognized as expense in the period incurred. Taxes Current Tax. Current tax assets and liabilities for the current and prior periods are measured at the amount expected to be recovered from or paid to the tax authority. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted as at financial reporting date.

*SGVMC214977*

- 26 Current income tax relating to items recognized directly in equity is recognized in equity and not in the consolidated statement of income. Creditable Withholding Taxes. Creditable withholding tax represents amounts withheld by the Companys customers and deducted from income tax payable. This is included as part of Other current assets account in the consolidated statement of financial position. Deferred Tax. Deferred income tax is provided, using the liability method, on all temporary differences at financial reporting date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes. Deferred income tax liabilities are recognized for all taxable temporary differences, including asset revaluations. Deferred income tax assets are recognized for all deductible temporary differences and carryforward benefits of unused tax credits from excess minimum corporate income tax (MCIT) over the regular corporate income tax (RCIT) and unused net operating loss carryover (NOLCO), to the extent that it is probable that sufficient future taxable profit will be available against which the deductible temporary differences and carryforward benefits of unused tax credits from excess MCIT over RCIT and unused NOLCO can be utilized. Deferred income tax, however, is not recognized when it arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting nor taxable profit. Deferred income tax liabilities are not provided on nontaxable temporary differences associated with investments in domestic subsidiaries and associates. With respect to investments in other subsidiaries and associates, deferred income tax liabilities are recognized except where the timing of the reversal of the temporary difference can be controlled and it is probable that the temporary difference will not reverse in the foreseeable future. The carrying amount of deferred income tax assets is reviewed at each financial reporting date and reduced to the extent that it is no longer probable that sufficient future taxable profit will be available to allow all or part of the deferred income tax assets to be utilized. Unrecognized deferred income tax assets are measured at each financial reporting date and are recognized to the extent that it has become probable that sufficient future taxable profit will allow the deferred income tax to be recovered. Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply in the year when the asset is realized or the liability is settled, based on tax rates and tax laws that have been enacted or substantively enacted as at financial reporting date. Deferred income tax relating to items recognized outside profit and loss is recognized in correlation to the underlying transaction either in other comprehensive income or directly in equity and not in the consolidated statement of income. Deferred income tax assets and liabilities are offset, if a legally enforceable right exists to offset current tax assets against current tax liabilities and the deferred taxes relate to the same taxable entity and the same tax authority.

*SGVMC214977*

- 27 Value-added Tax (VAT). Revenue, expenses and assets are recognized net of the amount of VAT, except: where the VAT incurred on a purchase of assets or services is not recoverable from the tax authority, in which case the VAT is recognized as part of the cost of acquisition of the asset or as part of the expense item as applicable; and receivables and payables that are stated with the amount of VAT included.

The net amount of VAT recoverable from, or payable to, the tax authority is included as part of Other current assets account or Trade and other payables account, respectively, in the consolidated statement of financial position. Earnings Per Share (EPS) attributable to the Equity Holders of the Parent Company Basic EPS amounts are calculated by dividing the net income attributable to equity holders of the Parent Company for the year over the weighted average number of common shares outstanding during the year, with retroactive adjustments for any stock dividends and stock split. Diluted EPS amounts are computed in the same manner, adjusted for the dilutive effect of any potential common shares. As the Company has no dilutive potential common shares outstanding, basic and diluted EPS are stated at the same amount. Contingencies Contingent liabilities are not recognized in the consolidated financial statements. These are disclosed in the notes to consolidated financial statements unless the possibility of an outflow of resources embodying economic benefits is remote. Contingent assets are not recognized in the consolidated financial statements but disclosed in the notes to consolidated financial statements when an inflow of economic benefits is probable. Events after Financial Reporting Date Any event after financial reporting date that provides additional information about the Companys financial position at financial reporting date (adjusting events) are reflected in the consolidated financial statements. Events after financial reporting date that are not adjusting events are disclosed in the notes to consolidated financial statements, when material. Segment Reporting For management purposes, the Companys operating businesses are organized and managed separately into three business activities. Such business segments are the bases upon which the Company reports its operating segment information. The Company operates in three geographical areas where it derives its revenue. Financial information on segment reporting is presented in Note 5. Future Changes in Accounting Policies The Company will adopt the following standards and interpretations enumerated below when these become effective. Except as otherwise indicated, the Company does not expect the adoption of these new and amended standards and interpretations to have significant impact on its financial statements.

*SGVMC214977*

- 28 Effective in 2012 PAS 12, Income Taxes - Recovery of Underlying Assets (effective for annual periods beginning on or after January 1, 2012) The amendment clarified the determination of deferred tax on investment property measured at fair value. The amendment introduces a rebuttable presumption that deferred tax on investment property measured using the fair value model in PAS 40 should be determined on the basis that its carrying amount will be recovered through sale. Furthermore, it introduces the requirement that deferred tax on non-depreciable assets that are measured using the revaluation model in PAS 16 always be measured on a sale basis of the asset. PFRS 7, Financial Instruments: Disclosures - Enhanced Derecognition Disclosure Requirements (effective for annual periods beginning on or after July 1, 2011) The amendment requires additional disclosure about financial assets that have been transferred but not derecognized to enable the user of the Companys financial statements to understand the relationship with those assets that have not been derecognized and their associated liabilities. In addition, the amendment requires disclosures about continuing involvement in derecognized assets to enable the user to evaluate the nature of, and risks associated with, the entitys continuing involvement in those derecognized assets. Effective Subsequent to 2012 PAS 1, Financial Statement Presentation - Presentation of Items of Other Comprehensive Income (effective for annual periods beginning on or after July 1, 2012) The amendments to PAS 1 change the grouping of items presented in other comprehensive income. Items that could be reclassified (or recycled) to profit or loss at a future point in time (for example, upon derecognition or settlement) would be presented separately from items that will never be reclassified. PAS 19, Employee Benefits (Amendment) (effective for annual periods beginning on or after January 1, 2013) Amendments to PAS 19 range from fundamental changes such as removing the corridor mechanism and the concept of expected returns on plan assets to simple clarifications and rewording. The Company is currently assessing the impact of the amendment to PAS 19. PAS 27, Separate Financial Statements (as revised in 2011) (effective for annual periods beginning on or after January 1, 2013) As a consequence of the new PFRS 10, Consolidated Financial Statements, and PFRS 12, Disclosure of Interests in Other Entities, what remains of PAS 27 is limited to accounting for subsidiaries, jointly controlled entities, and associates in separate financial statements. PAS 28, Investments in Associates and Joint Ventures (as revised in 2011) (effective for annual periods beginning on or after January 1, 2013) As a consequence of the new PFRS 11, Joint Arrangements, and PFRS 12, PAS 28 has been renamed PAS 28, Investments in Associates and Joint Ventures, and describes the application of the equity method to investments in joint ventures in addition to associates.

*SGVMC214977*

- 29 PFRS 7, Financial Instruments: Disclosures - Offsetting Financial Assets and Financial Liabilities (effective for annual periods beginning on or after January 1, 2013, with retrospective application) These amendments require an entity to disclose information about rights of set-off and related arrangements (such as collateral agreements). The new disclosures are required for all recognized financial instruments that are set-off in accordance with PAS 32. These disclosures also apply to recognized financial instruments that are subject to an enforceable master netting arrangement or similar agreement, irrespective of whether they are set-off in accordance with PAS 32. The amendments require entities to disclose, in a tabular format unless another format is more appropriate, the following minimum quantitative information. This is presented separately for financial assets and financial liabilities recognized at the end of the reporting period: a) The gross amounts of those recognized financial assets and recognized financial liabilities; b) The amounts that are set-off in accordance with the criteria in PAS 32 when determining the net amounts presented in the statement of financial position; c) The net amounts presented in the statement of financial position; d) The amounts subject to an enforceable master netting arrangement or similar agreement that are not otherwise included in (b) above, including: i. Amounts related to recognized financial instruments that do not meet some or all of the offsetting criteria in PAS 32; and ii. Amounts related to financial collateral (including cash collateral); and e) The net amount after deducting the amounts in (d) from the amounts in (c) above. PFRS 10, Consolidated Financial Statements (effective for annual periods beginning on or after January 1, 2013) PFRS 10 replaces the portion of PAS 27, Consolidated and Separate Financial Statements, that addresses the accounting for consolidated financial statements. It also includes the issues raised in SIC-12, Consolidation - Special Purpose Entities. PFRS 10 establishes a single control model that applies to all entities including special purpose entities. The changes introduced by PFRS 10 will require management to exercise significant judgment to determine which entities are controlled, and therefore, are required to be consolidated by a parent, compared with the requirements that were in PAS 27. PFRS 11, Joint Arrangements (effective for annual periods beginning on or after January 1, 2013) PFRS 11 replaces PAS 31, Interests in Joint Ventures, and SIC-13, Jointly-controlled Entities - Non-monetary Contributions by Venturers. PFRS 11 removes the option to account for jointly controlled entities (JCEs) using proportionate consolidation. Instead, JCEs that meet the definition of a joint venture must be accounted for using the equity method.

*SGVMC214977*

- 30 PFRS 12, Disclosure of Interests in Other Entities (effective for annual periods beginning on or after January 1, 2013) PFRS 12 includes all of the disclosures that were previously in PAS 27 related to consolidated financial statements, as well as all of the disclosures that were previously included in PAS 31 and PAS 28. These disclosures relate to an entitys interests in subsidiaries, joint arrangements, associates and structured entities. A number of new disclosures are also required. PFRS 13, Fair Value Measurement (effective for annual periods beginning on or after January 1, 2013) PFRS 13 establishes a single source of guidance under PFRS for all fair value measurements. PFRS 13 does not change when an entity is required to use fair value, but rather provides guidance on how to measure fair value under PFRS when fair value is required or permitted. The Company is currently assessing the impact that this standard will have on its financial position and performance. Philippine Interpretation IFRIC 20, Stripping Costs in the Production Phase of a Surface Mine (effective for annual periods beginning on or after January 1, 2013) This interpretation applies to waste removal costs that are incurred in surface mining activity during the production phase of the mine (production stripping costs) and provides guidance on the recognition of production stripping costs as an asset and measurement of the stripping activity asset. PAS 32, Financial Instruments: Presentation - Offsetting Financial Assets and Financial Liabilities (effective for annual periods beginning on or after January 1, 2014, with retrospective application) These amendments to PAS 32 clarify the meaning of currently has a legally enforceable right to set-off and also clarify the application of the PAS 32 offsetting criteria to settlement systems (such as central clearing house systems) which apply gross settlement mechanisms that are not simultaneous. While the amendment is expected not to have any impact on the net assets of the Company, any changes in offsetting is expected to impact leverage ratios and regulatory capital requirements. The Company is currently assessing impact of the amendments to PAS 32. PFRS 9, Financial Instruments: Classification and Measurement (effective for annual periods beginning on or after January 1, 2015) PFRS 9 as issued reflects the first phase on the replacement of PAS 39 and applies to classification and measurement of financial assets and financial liabilities as defined in PAS 39. In subsequent phases, hedge accounting and impairment of financial assets will be addressed with the completion of this project expected on the first half of 2012. The adoption of the first phase of PFRS 9 will have an effect on the classification and measurement of the Companys financial assets, but will potentially have no impact on classification and measurements of financial liabilities. The Company will quantify the effect in conjunction with the other phases, when issued, to present a comprehensive picture.

*SGVMC214977*

- 31 Philippine Interpretation IFRIC 15, Agreements for the Construction of Real Estate This interpretation covers accounting for revenue and associated expenses by entities that undertake the construction of real estate directly or through subcontractors. The interpretation requires that revenue on construction of real estate be recognized only upon completion, except when such contract qualifies as construction contract to be accounted for under PAS 11, Construction Contracts, or involves rendering of services in which case revenue is recognized based on stage of completion. Contracts involving provision of services with the construction materials and where the risks and reward of ownership are transferred to the buyer on a continuous basis will also be accounted for based on stage of completion. The SEC and the FRSC have deferred the effectivity of this interpretation until the final revenue standard is issued by International Accounting Standards Board and an evaluation of the requirements of the final revenue standard against the practices of the Philippine real estate industry is completed.

3. Managements Use of Judgments, Estimates and Assumptions The Companys consolidated financial statements prepared under PFRS require management to make judgments and estimates that affect amounts reported in the consolidated financial statements and related notes. Future events may occur which will cause the judgments and assumptions used in arriving at the estimates to change. The effects of any change in judgments and estimates are reflected in the consolidated financial statements as they become reasonably determinable. Judgments and estimates are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. Judgments In the process of applying the Companys accounting policies, management has made the following judgments, apart from those involving estimations, which have the most significant effect on the amounts recognized in the consolidated financial statements. Determination of Functional Currency. The Parent Company and all other subsidiaries and associates, except for foreign subsidiaries, have determined that their functional currency is the Philippine peso. The Philippine peso is the currency of the primary economic environment in which the Parent Company and all other subsidiaries and associates, except for foreign subsidiaries, operate. The Philippine peso is also the currency that mainly influences the sale of goods and services as well as the costs of selling such goods and providing such services. Each foreign subsidiary determines its functional currency (i.e., USD, GBP, JPY, AUD, CAD, EUR or SGD). Thus, the accounts of foreign subsidiaries were translated to Philippine peso for purposes of consolidation to the ABS-CBN Groups accounts. Leases. The evaluation of whether an arrangement contains a lease is based on its substance. An arrangement is, or contains, a lease when the fulfillment of the arrangement depends on a specific asset or assets and the arrangement conveys the right to use the asset.

*SGVMC214977*

- 32 The Company has entered into lease arrangements as a lessor and as a lessee. Such contracts are accounted for as operating leases when the Company, as a lessee, has determined that the lessor retains substantial risks and benefits of ownership of these properties, and as a lessor, the Company retains substantially all the risks and benefits of ownership of the assets due to the following circumstances: the lease term is only for a limited number of years; lease is renewable but there is no purchase option at a significant discount as of date; and the lease payments represents solely compensation for use of asset rather than for purchase of the assets.

The Company has also entered into lease agreements covering certain property and equipment. Such contracts are accounted for as finance leases when the Company has determined that it bears substantially all the risks and benefits incidental to ownership of said properties due to the following: the lease term represents substantially the full economic life in years of the asset under lease; the lease is renewable and there is currently a purchase option at a significant discount which the Company is likely to exercise; and the lease payments represent amortization of the purchase price of the assets.

The carrying amount of property and equipment under finance lease amounted to P38 million and = = P85 million as of December 31, 2011 and 2010, respectively (see Note 10). Financial Assets not Quoted in an Active Market. The Company classifies financial assets by evaluating, among others, whether the asset is quoted or not in an active market. Included in the evaluation on whether a financial asset is quoted in an active market is the determination on whether quoted prices are readily and regularly available, and whether those prices represent actual and regularly occurring market transactions on an arms-length basis. Estimates and Assumptions The key assumptions concerning future and other key sources of estimation at the financial reporting date that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below. Revenue Recognition. The Companys telecommunications revenue recognition policies require the use of estimates and assumptions that may affect the reported amounts of revenue and receivables. Revenue is stated at gross amount including the share of the other telecommunications carriers, but the definite amounts are determined subsequent to financial reporting date. Thus, the Company initially estimates the amounts based on history of sharing. The difference between the amount initially recognized and actual settlement or actual billing is recognized in the next period. However, there is no assurance that such use of estimates will not result in material adjustments in future periods. Fair Value of Financial Instruments. PFRS requires that certain financial assets and liabilities (including derivative instruments) be carried at fair value, which requires the use of accounting estimates. The fair values of financial instruments of short-term nature and those that are subjected to monthly repricing are estimated to approximate their carrying amounts. For certain financial instruments which are not quoted in an active market, fair values are assessed to be the present value of estimated future cash flows discounted at risk-free rates applicable to the financial instrument. The fair values of financial assets and liabilities are set out in Note 32.

*SGVMC214977*

- 33 Allowance for Doubtful Accounts. The Company reviews its loans and receivables, including unbilled receivables, at each financial reporting date to assess whether an allowance for impairment should be recorded in the consolidated statement of income. In particular, judgment by management is required in the estimation of the amount and timing of future cash flows when determining the level of allowance required. Such estimates are based on assumptions about a number of factors and actual results may differ, resulting in future changes in the allowance. The Company evaluates specific balances where management has information that certain amounts may not be collectible. In these cases, the Company uses judgment, based on available facts and circumstances, and a review of the factors that affect the collectibility of the accounts including, but not limited to, the age and status of the receivables, collection experience and past loss experience. The review is made by management on a continuing basis to identify accounts to be provided with allowance. These specific reserves are re-evaluated and adjusted as additional information received affects the amount estimated. In addition to specific allowance against individually significant receivables, the Company also makes a collective impairment allowance against exposures which, although not specifically identified as requiring a specific allowance, have a greater risk of default than when originally granted. This collective allowance is based on historical default experience, current economic trends, changes in customer payment terms and other factors that may affect the Companys ability to collect payments. The amount and timing of recorded expenses for any period would differ if the Company made different judgments or utilized different methodologies. An increase in allowance for doubtful accounts would increase the recorded operating expenses and decrease current assets. The allowance is established by charges to income in the form of provision for doubtful accounts. Provision for doubtful accounts amounted to P255 million, P420 million and P292 million in = = = 2011, 2010 and 2009, respectively (see Note 26). Trade and other receivables, net of allowance for doubtful accounts, amounted to P8,128 million and P7,248 million as of December 31, 2011 = = and 2010, respectively (see Note 7). Allowance for doubtful accounts amounted to P669 million = and P628 million as of December 31, 2011 and 2010, respectively (see Note 7). = Net Realizable Value of Inventories. Inventories are carried at net realizable value whenever net realizable value of inventories becomes lower than cost due to damage, physical deterioration, obsolescence, changes in price levels or other causes. The allowance account is reviewed on a regular basis to reflect the accurate valuation in the financial records. Inventory items identified to be obsolete and unusable are written off and charged as expense in the year such losses are identified. Provision for decline in value of inventory amounted to P17 million, P32 million and P5 million in = = = 2011, 2010 and 2009, respectively. Inventories amounted to P135 million and P153 million as of = = December 31, 2011 and 2010, respectively (see Note 8). Estimated Useful Lives of Property and Equipment, Investment Properties and Intangible Assets. The useful life of each item of the Companys property and equipment, investment properties and intangible assets with finite life is estimated based on the period over which the asset is expected to be available for use. Estimation for property and equipment and investment properties is based on a collective assessment of industry practice, internal technical evaluation and experience with similar assets while for intangible assets with finite life, estimated life is based on the life of agreement covering such intangibles. The estimated useful life of each asset is reviewed periodically and updated if expectations differ from previous estimates due to physical wear and tear, technical or commercial obsolescence and legal or other limits on the use of these assets. However, it is possible that future financial performance could be materially affected by changes in the estimates brought about by changes in the aforementioned factors. The amounts and timing

*SGVMC214977*

- 34 of recording the depreciation and amortization for any year, with regard to the property and equipment, investment properties and intangible assets would be affected by changes in these factors and circumstances. A reduction in the estimated useful life of any of the property and equipment, investment properties or intangible assets would increase the recorded expenses and decrease noncurrent assets. There were no changes in the estimated useful lives of property and equipment, investment properties and intangible assets during the year. The carrying values of property and equipment, investment properties and intangible assets with finite life are as follows (see Notes 10, 11 and 12): Property and equipment Program rights Customer relationships Production and distribution business - Middle East Movie in-process Video rights and record master Investment properties Story, music and publication rights 2011 P15,242,115 = 2,463,419 128,609 92,458 71,460 35,068 27,108 6,030 2010 = P15,195,293 2,375,958 471,391 89,359 97,621 9,250 28,224 7,369

Impairment of AFS Investments. The Company treats AFS investments as impaired when there has been a significant or prolonged decline in the fair value below its cost or where there is objective evidence that impairment exists. The determination of what is significant or prolonged requires judgment. The Company treats significant generally as 20% or more of the original cost of investment, and prolonged as greater than 12 months. In addition, the Company evaluates other factors, including normal volatility in share price for quoted equities and the future cash flows and discount factors for unquoted equities. As of December 31, 2011 and 2010, the carrying value of AFS investments amounted to =265 million P (see Note 13). Provision for impairment loss on investment in stocks amounted to =54 million in P 2010 (see Note 13). Amortization of Program Rights. The Company estimates the amortization of program rights with finite lives based on the program usage, except for program rights of CPI, which is amortized on a straight-line method over the license term or economic life, whichever is shorter. Episodic program rights are amortized based on the number of episodes and charged to expense upon airing of each episode. Expired program rights are fully amortized on the date of expiry. Unaired program rights with no definite expiration date are amortized after five years from acquisition date. As of December 31, 2011 and 2010, program rights amounted to P2,463 million and = = P2,376 million, respectively (see Note 12). Asset Retirement Obligation. Determining asset retirement obligation requires estimation of the costs of dismantling installations and restoring leased properties to their original condition. While it is believed that the assumptions used in the estimation of such costs are reasonable, significant changes in these assumptions may materially affect the recorded expense or obligation in future periods. Asset retirement obligation amounted to P1 million as of December 31, 2011 (see Note 20). =

*SGVMC214977*

- 35 Impairment of Nonfinancial Assets. The Company assesses impairment on nonfinancial assets (enumerated in the table below) whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. The factors that the Company considers important which could trigger an impairment review include the following: significant underperformance relative to expected historical or projected future operating results; significant changes in the manner of use of the acquired assets or the strategy for overall business; and significant negative industry or economic trends.

The Company recognizes an impairment loss whenever the carrying amount of an asset exceeds its recoverable amount. The recoverable amount is computed using the value in use approach. Recoverable amounts are estimated for individual assets or, if it is not possible, for the cash-generating unit to which the asset belongs. The carrying values of assets that are subjected to impairment testing when impairment indicators are present are as follows (see Notes 9, 10, 11, 12, 14 and 15): Property and equipment Program rights Tax credits with tax credit certificates (TCCs) Trademark Preproduction expenses Customer relationships Production and distribution business - Middle East Movie in-process Investment properties Investments in associates Video rights and record master Story, music and publication rights 2011 P15,242,115 = 2,463,419 2,207,661 915,568 323,492 128,609 92,458 71,460 57,796 41,084 35,068 6,030 2010 = P15,195,293 2,375,958 2,354,332 257,249 471,391 89,359 97,621 58,912 41,113 9,250 7,369

Impairment of Goodwill, Cable Channels and Trademark. The Company performs impairment testing annually or more frequently when there are indications of impairment for goodwill and intangible assets with infinite lives. The Company has identified that cable channels of CPI and trademark have an infinite life. Impairment testing requires an estimation of the value in use of the cash-generating units to which goodwill, cable channels and trademark are allocated. Estimating the value in use requires the Company to make an estimate of the expected future cash flows from the cash-generating units and to make use of a suitable discount rate to calculate the present value of those future cash flows. The impairment on the goodwill, cable channels and trademark is determined by comparing: (a) the carrying amount of the cash-generating unit; and (b) the present value of the annual projected cash flows for five years and the present value of the terminal value computed under the discounted cash flow method. The recoverable amount of the cash-generating unit has been determined based on a value in use calculation using cash flow projections which were based on financial budgets approved

*SGVMC214977*

- 36 by senior management of the subsidiaries covering a five-year period. The key assumptions used in the impairment test of goodwill, cable channels and trademark are as follows: a. Gross Revenue On the average, gross revenue of the subsidiaries over the next five years were projected to grow in line with the economy or with nominal Gross Domestic Product. This assumes that the market share of the subsidiaries in their respective industries will be flat on the assumption that the industries also grow at par with the economy. Historically, advertising spending growth had a direct correlation with economic growth. A 0-5% perpetuity growth rate was assumed at the end of the five-year forecast period. b. Operating Expenses On the average, operating expenses were projected to increase at a single-digit growth rate and at a slower pace than revenue. c. Gross Margins Increased efficiencies over the next five years are expected to result in margin improvements. d. Discount Rate The discount rate used to arrive at the present value of future cash flows was the Companys Weighted Average Cost of Capital (WACC). WACC was based on the appropriate weights of debt and equity, which were multiplied with the assumed costs of debt and equity. The discount rate applied to the cash flow projections were 11.60% and 12.55% in 2011 and 2010, respectively. The carrying amount of goodwill amounted to =3,749 million and P2,144 million as of December 31, P = 2011 and 2010, respectively (see Note 16). The carrying amount of the cable channels amounted to = P460 million as of December 31, 2011 and 2010 (see Note 12). The carrying amount of trademark amounted to P916 million as of December 31, 2011 (see Note 12). = Present Value of Pension Obligation. The cost of defined benefit obligation is determined using actuarial valuations. The actuarial valuation involves making assumptions about discount rates, expected rates of return on plan assets, and future salary increases. Due to the long-term nature of these plans, such estimates are subject to uncertainty. The expected rate of return on plan assets was based on average historical premium on plan assets. The assumed discount rates were determined using the market yields on Philippine bonds with terms consistent with the expected employee benefit payout as of financial reporting date (see Note 29). As of December 31, 2011 and 2010, the pension obligation of the Company amounted to = P889 million and P625 million, respectively (see Note 29). Unrecognized net actuarial loss = amounted to P2,139 million and P852 million as of December 31, 2011 and 2010, respectively = = (see Note 29). Recognition of Deferred Tax Assets. The carrying amount of deferred tax assets is reviewed at each financial reporting date and reduced to the extent that it is no longer probable that sufficient future taxable profit will be available to allow all or part of the deferred tax assets to be utilized.

*SGVMC214977*

- 37 Recognized deferred tax assets amounted to P1,129,763 million and P1,349 million as of = = December 31, 2011 and 2010, respectively. Unrecognized deferred tax assets of subsidiaries amounted to P1,010 million and P477 million as of December 31, 2011 and 2010, respectively = = (see Note 28). Contingencies. The Company is currently involved in various legal proceedings. The Companys estimate of the probable costs for the resolution of these claims has been developed in consultation with outside counsel handling defense in these matters and is based upon an analysis of potential results. The Company currently does not believe these proceedings will have a material adverse effect on its consolidated financial position and performance. It is possible, however, that future financial performance could be materially affected by changes in the estimates or in the effectiveness of strategies relating to these proceedings (see Note 35). 4. Business Combinations, Acquisitions, Re-organization and Disposals a. Conversion of Note and Advances On June 30, 2004, Sky Cable (Issuer) issued a convertible note (the Note) to the Parent Company amounting to US$30.0 million (P1,581 million). = The Note was subject to interest of 13.0% compounded annually and matured on June 30, 2006. The principal and accrued interest as of maturity date is mandatorily converted into common shares of the Issuer, based on the prevailing USD to Philippine peso exchange rate on maturity date, at a conversion price equivalent to a 20% discount of: (a) the market value of the shares, in the event of a public offering of the Issuer before maturity date; (b) the valuation of the shares by an independent third party appraiser that is a recognized banking firm, securities underwriter or one of the big three international accounting firms or their Philippine affiliate jointly appointed by Lopez, Inc. and Lopez Holdings Corporation (Lopez Holdings) (collectively referred to as Lopez Group) and Philippine Long Distance Telephone Company and Mediaquest Holdings, Inc. (collectively referred to as PLDT Group) pursuant to the Master Consolidation Agreement dated July 18, 2001, as amended or supplemented. The Note does not specifically state that interest shall accrue after June 30, 2006 in the event that the Note is not converted for any reason. Thus, no interest was charged after June 30, 2006. On May 20, 2008, the Lopez Group and the PLDT Group agreed on valuation for Sky Cable effective March 15, 2008. Based on this final valuation of Sky Cable, the Note amounting to = P1,581 million, accrued interest on the Note from June 30, 2004 to June 30, 2006 amounting to P459 million and ABS-CBNs advances to Sky Cable amounting to P459 million can be = = converted into 269,645,828 Sky Cable shares, representing 65.3% effective interest in Sky Cable. Consequently, for financial reporting purposes, effective March 15, 2008, Sky Cable was considered as a subsidiary of the Parent Company with a 65.3% effective interest. On December 23, 2008, the Parent Company, Sky Vision Corporation (Sky Vision) and Sky Cable entered into an Assignment Agreement, whereby the Parent Company assigned the Note, accrued interest receivable and advances to Sky Cable totaling to P 2,499 million to Sky = Vision in consideration of Philippine Depository Receipts (PDRs) convertible into underlying Sky Cable shares to be issued by Sky Vision upon approval by the Philippine SEC of the increase in the authorized capital stock of Sky Cable. Pursuant to this Assignment Agreement,

*SGVMC214977*

- 38 Sky Vision is contractually bound to issue the PDRs to the Parent Company upon the issuance of the underlying Sky Cable shares to Sky Vision. The PDRs will grant the Parent Company the right, upon payment of the exercise price and subject to certain other conditions, the delivery of Sky Cable shares or the sale of and delivery of the proceeds of such sale of Sky Cable shares. The PDRs may be exercised at any time by the Parent Company, thus, providing potential voting rights to the Parent Company. Any cash dividends or other cash distributions in respect of the underlying Sky Cable shares are received by Sky Vision. After deducting administrative expenses for the maintenance of the PDR structure, Sky Vision shall distribute the proceeds to the Parent Company. While Sky Vision is the legal owner of the subscription to the 65.3% effective interest in Sky Cable, effectively, the Parent Company has the economic interest over the underlying shares by virtue of the PDRs. The voting rights remain with Sky Vision as legal owner but the Parent Company has economic benefits over the underlying Sky Cable shares. The Parent Company will have the voting rights upon exercise of the PDRs. The conversion of the Note is considered as a business combination and accounted for using purchase method in 2008. Accordingly, the consideration of P2,499 million was allocated to = the identifiable assets and liabilities based on the fair values at conversion date. Goodwill arising on the acquisition amounted to P1,328 million (see Note 16). There is no cash outflow = on the acquisition. The 269,645,828 Sky Cable shares were issued to Sky Vision in 2009. Sky Vision issued the 269,645,828 PDRs with underlying Sky Cable shares to ABS-CBN in 2011. On February 19, 2009, the BOD of ABS-CBN approved the additional conversion of = P1,798 million loan to Sky Cable and P900 million advances to Sky Vision to PDRs covering = 278,588,814 Sky Cable shares at conversion price of P9.69 per share. The conversion was = considered as acquisition of noncontrolling interest. Upon conversion of the foregoing loan and advances, the effective interest of ABS-CBN increased from 65.3% to 79.3%. On March 2, 2009, by virtue of a separate Assignment Agreement, ABS-CBN assigned the = P1,798 million loan to Sky Vision. As a consideration for the assignment, Sky Vision agreed to issue ABS-CBN PDRs which shall be convertible into Sky Cable shares. The terms of the agreement are similar to the Assignment Agreement discussed in the foregoing. The effective interest of ABS-CBN in Sky Cable increased from 65.3% to 79.3%. The 278,588,814 Sky Cable shares were issued to Sky Vision in 2009. Sky Vision issued the 278,588,814 PDRs with underlying Sky Cable shares to ABS-CBN in 2011. b. Acquisition of Noncontrolling Interest in PCC On May 23, 2008, Sky Vision acquired the noncontrolling interest in PCC through the purchase of all the common shares in and convertible notes and advances of Sun Cable Holdings, Incorporated (SCHI) for a cash payment of P1,248 million and an assumption of = the outstanding loan obligation of Telemondial Holdings, Inc. (THI) in the amount of = P100 million. SCHI owns THI, which in turn owns the noncontrolling interest in PCC. On the same date, Sky Vision and Sky Cable agreed that such shares and debt shall be transferred to Sky Cable. Consequently, for financial reporting purposes, PCC became a wholly owned subsidiary of Sky Cable as of that date. On December 23, 2008, Sky Vision assigned all its common shares in SCHI to Sky Cable pursuant to this agreement. The difference between

*SGVMC214977*

- 39 the fair value of the consideration transferred and liability assumed and the carrying value of the noncontrolling interest in PCC, amounting to P558 million, is recognized as goodwill = (see Note 16). c. Acquisition of Noncontrolling Interest in ABS-CBN International In December 2009, the Parent Company acquired from Bayan Telecommunications, Inc. (Bayantel) its 2% interest in ABS-CBN International for US$6 million (P277 million) which = is payable over a period of three years beginning January 2010 until December 2012 or as maybe extended for a longer period as agreed by both parties. The parties also agreed that the Parent Company shall have the option to pay the consideration by way of the following products and services of the Parent Company which may be availed by Bayantel during the payment term: commercial advertising airtime for Bayantels products and services; sponsorship in various ABS-CBN-produced programs and/or ABS-CBN-organized special events; co-branded marketing and promotional campaigns; and other media-related projects.

The excess of the consideration over the carrying value of the noncontrolling interest in ABS-CBN International amounting to US$4.9 million (P217 million) was recognized as = goodwill in the consolidated statements of financial position (see Note 16). In December 2009, the Parent Company assigned its 2% share in ABS-CBN International to ABS-CBN Global in exchange for additional common shares in ABS-CBN Global. Consequently, ABSCBN Global became the 100% owner of ABS-CBN International. This assignment has no impact on the consolidated financial statements. As of December 31 2010, payable arising from the transaction amounted to P250 million. The = current portion amounting to P158 million was presented as part of Due to related parties in = the Trade and other payables account (see Note 17) while the noncurrent portion amounting to P92 million was presented as part of Due to a related party in the Other noncurrent = liabilities account (see Note 20). In June 2011, ABS-CBN and Bayantel agreed that settlement of the liability shall be paid in the form of immediately available and unencumbered funds amounting to US$2.7 million. ABS-CBN paid the US$2.7 million (P118 million) and recognized gain from settlement of the = liability amounting to P144 million in 2011 (see Note 27). = d. Re-organization of ABS-CBN Global On January 7, 2009, ABS-CBN Hungary was incorporated to be the holding company of certain international subsidiaries. On May 19, 2009 and June 19, 2009, ABS-CBN Hungary incorporated ABS-CBN Netherlands and established a branch in Luxembourg, respectively, which are intended to conduct the management of other business enterprises within the ABS-CBN Group.

*SGVMC214977*

- 40 In December 2009, ABS-CBN Global transferred its 100% ownership interest in ABS-CBN International to ABS-CBN Hungary in exchange for the issue of a US$81 million equity note and the assumption of an existing US$5 million note by ABS-CBN Hungary. Consequently, ABS-CBN Hungary became the new holding company for ABS-CBN International as of December 31, 2009. The re-organization has no impact on the consolidated financial statements. e. Acquisition of Sapientis On October 15, 2010, the Parent Company acquired from PCCI Equities, Inc. all its subscription rights over the 250,000 shares in Sapientis, with a par value of P1 per share, for = = P63 thousand. The purchase price allocation which was determined provisionally in 2010 was finalized in 2011. There was no change in the fair value of identifiable assets and liabilities of Sapientis at acquisition date. The following are the fair values of the identifiable assets and liabilities of Sapientis at acquisition date and the corresponding carrying amounts immediately before the acquisition based on the final purchase price allocation: Fair Value Recognized on Acquisition Carrying Value = P845 = P845 130,657 130,657 (8,640) (8,640) (132,000) (132,000) (9,138) (P9,138) = 9,201 = P63

Cash Deposits for future stock subscriptions Trade and other payables Short-term loans Net assets Goodwill arising on acquisition (see Note 16) Consideration paid by cash Net cash flow on the acquisition are as follows: Net cash acquired with the subsidiary Cash paid Net cash inflow

= P845 (63) = P782

From acquisition date, Sapientis incurred net loss amounting to P2 million. If the combination = had taken place at the beginning of 2010, the Companys consolidated net income would have been P3,229 million for the year ended December 31, 2010. = f. Acquisition and Assignment of Sky Cable Shares On September 9, 2010, the Parent Company purchased from Legaspi Capital Holdings Corporation and Beacon Diversified Holdings, Inc. an aggregate of 5,772,869 Sky Cable shares for P56 million. = On October 4, 2010, the Parent Company, as the assignee, and Unilink Communications Corporation and The Philippine Home Cable Holdings, Inc., collectively as the assignors, signed deeds of conditional sale for the purchase of an aggregate of 53,251,835 Sky Cable shares for P516 million payable in installments. =

*SGVMC214977*

- 41 On December 15, 2010, the Parent Company agreed to sell 59,024,704 Sky Cable shares to Sky Vision for =572 million, the same value that ABS-CBN has purchased the said Sky Cable P shares. On January 13, 2011, Lopez, Inc. executed a Contract to Sell with the Parent Company where Lopez, Inc. agreed to sell all its rights to the 8,944,544 Sky Cable shares it beneficially owns for P87 million. On March 30, 2011, the Parent Company agreed to sell all these shares to = Sky Vision for the same value. The acquisition and subsequent assignment of Sky Cable shares to Sky Vision had no financial impact to the consolidated financial statements in 2011 and 2010.

g. Sale of Sky Cable PDRs and Issuance of Convertible Note

On February 14, 2011, ABS-CBN, Lopez, Inc, Lopez Holdings, Sky Vision, Sky Cable, STT Communications Ltd. (STTC) and Sampaquita Communications Pte. Ltd. (Sampaquita, a subsidiary of STTC), entered into a Subscription and Purchase Agreement (SPA) wherein Sampaquita agreed to purchase PDRs from ABS-CBN and Lopez Holdings and to subscribe to originally issued PDRs from Sky Vision and convertible note to be issued by Sky Cable. On March 30, 2011, ABS-CBN completed the sale of 143,107,174 PDRs with underlying Sky Cable shares to Sampaquita for P1,816 million. Simultaneously, Sampaquita completed the = subscription of originally issued 149,711,934 PDRs with underlying Sky Cable shares from Sky Vision for =1,450 million and Sky Cable convertible note for P250 million. P = For financial reporting purposes, as of March 30, 2011, the effective economic interest of ABS-CBN decreased from 79.3% to 47.1%. Consequently, ABS-CBN derecognized the assets, including the goodwill, and liabilities of Sky Cable and noncontrolling interest in Sky Cable. Gain on the sale of investments amounting to P1,147 million (including gain on fair = value of retained interest of P323 million) was recognized in the 2011 consolidated statement = of income (see Note 27). On May 12, 2011, Sky Cable, as provided in the SPA dated February 14, 2011, completed the issuance of the P250 million note to Sampaquita convertible into 25,812,403 shares of Sky = Cable at the option of Sampaquita any time from issue date to maturity date, which is 10 years from date of issuance. The convertible note bears 0% interest rate for the first three years, subject to adjustment every three years upon mutual agreement of the parties, provided that the interest rate shall not exceed 10% per annum. The interest rate shall be agreed upon by Sky Cable and Sampaquita at least 30 days prior to the commencement of each 3-year period. If no such agreement is reached, the interest rate for the succeeding period shall be the same as the interest rate for the preceding 3-year period. Such interest shall accrue from and including the first day of such interest period to but not including the last day of such interest period. The convertible note was accounted for under split accounting. The equity component of the convertible note was recognized as part of noncontrolling interests in the 2011 consolidated financial statements of ABS-CBN.

*SGVMC214977*

- 42 h. Acquisition of CTI and MTI On December 29, 2011, the SEC approved the increase in authorized capital stock of CTI to accommodate the subscription of Sapientis. Sapientis aquired 70% interest in CTI through conversion of the deposits into common stock. The acquisition indirectly includes the acquisition of MTI, a 95%-owned subsidiary of CTI. The Company elected to measure the noncontrolling interests in CTI at the proportionate share of its interest in CTIs identifiable net assets. The fair values of the identifiable assets and liabilities of CTI, including MTI, at acquisition date and the corresponding carrying amounts immediately before the acquisition were: Fair Value Recognized on Acquisition Carrying Value = P49,122 = P49,122 12,934 12,934 2,324 2,324 143,729 143,729 116,339 116,339 12,091 12,091 (649,889) (649,889) (27,418) (27,418) (362,233) (362,233) (1,215) (1,215) (31,524) (31,524) (735,740) (P735,740) = 220,722 (515,018) 1,037,646 = P522,628

Cash and cash equivalents Trade and other receivables Inventories Prepaid expenses and other current assets Property and equipment Other noncurrent assets Trade and other current liabilities Loan payable Long-term debt Asset retirement obligation Deferred tax liability Net liabilities Noncontrolling interests (30.0% of fair value of net liabilities) Net liabilities acquired Goodwill arising on acquisition (see Note 16) Consideration paid by cash Net cash flow on the acquisition are as follows: Net cash acquired with the subsidiary Cash paid Net cash outflow

= P49,122 (522,628) (P473,506) =

The purchase price allocation has been determined provisionally pending completion of an independent valuation and as such, is still subject to change. The Company recognized the entire excess of the consideration paid over the provisional values of CTIs identifiable assets and liabilities as goodwill. None of the goodwill recognized is expected to be deductible for income tax purposes. The fair value and gross amount of trade and other receivables amounted to P13 million. If = the combination had taken place at the beginning of 2011, the Companys consolidated net income and revenue would have been P2,334 million and =25,050 million, respectively, for = P the year ended December 31, 2011.

*SGVMC214977*

- 43 i. Acquisition of Bayantel Wireless Land Line (WLL) Business and Related Assets On December 7, 2011, the National Telecommunications Commission (NTC) approved the sale and transfer of Bayantel WLL Business and related assets to MTI. Prior to date of NTCs approval, Bayantel obtained the approval of its BOD and Rehabilitation Court to sell the WLL Business to MTI. On January 27, 2012, Bayantel executed an asset purchase agreement with MTI. The agreement includes the transfer of the related Code Division Multiple Access (CDMA) telecommunications equipment needed to operate the WLL Business. The transfer also includes the required frequencies, licenses, interconnection trunks, subscribers and employees. In addition, MTI assumed the related outstanding liabilities to CDMA telecommunications equipment amounting to P866 million. On February 1, 2012, Bayantel successfully = transferred all its rights, titles, interests and obligations related to the WLL Business to MTI. The acquisition of Bayantel WLL Business and related assets will be accounted for as an acquisition of a business. Total purchase consideration amounting to P1,066 million will be = paid in cash of P200 million and through assumption of Bayantels outstanding liabilities = amounting to P866 million. As of March 2, 2012, the initial accounting for the business = combination is not yet complete. j. Acquisition of Sky Cable PDRs On March 31, 2011, Sky Vision agreed to issue 67,969,248 PDRs with underlying Sky Cable shares to ABS-CBN for P659 million. For financial reporting purposes, the economic interest = of the Company increased from 47.1% to 56.7%. The acquisition of PDRs with underlying Sky Cable shares is accounted for as a business combination using acquisition method. The Company elected to measure the noncontrolling interest in Sky Cable at the proportionate share of its interest in Sky Cables identifiable net assets. The fair values of the identifiable assets and liabilities of Sky Cable at the date of acquisition and the corresponding carrying amounts immediately before the acquisition were: Fair Value Recognized on Acquisition Carrying Value = P779,270 = P779,270 2,047,695 2,047,695 15,443 15,443 437,917 437,917 4,469,987 4,355,649 133,148 915,568 404,789 404,789 1,071,627 1,071,627 1,080,328 (2,583,229) (2,583,229)

Cash and cash equivalents Trade and other receivables Inventories Other current assets Property and equipment Customer relationships (see Note 12) Trademark (see Note 12) Deferred tax asset Other noncurrent assets Goodwill Trade and other current liabilities (Forward)

*SGVMC214977*

- 44 -

Unearned revenue Long-term debt Income tax payable Accrued pension obligation Deferred tax liability Other noncurrent liabilities Net assets Consideration transferred Noncontrolling interests (43.3% of fair value of net assets) Fair value of previously held interest Goodwill arising on acquisition (see Note 16) Net cash flow on the acquisition are as follows: Net cash acquired with the subsidiary Cash paid Net cash inflow

(P190,323) = (1,440,338) (46,275) (389,699) (363,768) (328,241) 4,933,571 658,622 2,134,710 4,606,075 7,399,407 = P2,465,836

(P190,323) = (1,489,843) (46,275) (389,699) (328,241) = P5,165,108

= P779,270 (658,622) = P120,648

The fair value and gross amount of trade and other receivables amounted to P2,048 million = and P3,476 million, respectively. Trade and other receivables amounting to P1,428 million = = are doubtful of collection and were provided with full valuation allowance. From the acquisition date, Sky Cable has contributed P132 million to the consolidated net = income of the Company. The goodwill of =2,466 million comprises the fair value of expected synergies arising from P acquisition. k. Acquisition of Noncontrolling Interests in Roadrunner In December 2011, the Parent Company acquired the 1% interest in Roadrunner from the noncontrolling shareholders for P3 million. Consequently, Roadrunner became a wholly = owned subsidiary of the Parent Company.

5. Segment Information Segment information is prepared on the following bases: Business Segments For management purposes, the Company is organized into three business activities - broadcasting, cable and satellite, and other businesses. This segmentation is the basis upon which the Company reports its primary segment information. Broadcasting segment is principally the television and radio broadcasting activities which generates revenue from sale of national and regional advertising time.

*SGVMC214977*

- 45 Cable and satellite business primarily develops and produces programs for cable television, including delivery of television programming outside the Philippines through its DTH satellite service, cable television channels and blocked time on television stations. The cable and satellite business includes cable television services of Sky Cable and its subsidiaries in Metro Manila and in certain provincial areas in the Philippines. Other businesses include movie production, consumer products and services.

Geographical Segments Although the Company is organized into three business activities, it operates in three major geographical areas. In the Philippines, its home country, the Company is involved in broadcasting, cable operations and other businesses. In the United States and in other locations (which include Middle East, Europe, Australia, Canada and Japan), the Company operates its cable and satellite operations to bring television programming outside the Philippines. Inter-segment Transactions Segment revenue, segment expenses and operating results include transfers among business segments and among geographical segments. The transfers are accounted for at competitive market prices charged to unrelated customers for similar services. Such transfers are eliminated upon consolidation. Management monitors operating results of its business segments separately for the purpose of making decisions about resource allocation and performance assessment. Segment performance is evaluated based on operating profit or loss and is measured consistently with operating profit and loss in the consolidated financial statements. On a consolidated basis, the Companys performance is evaluated based on consolidated net income for the year, core net income, earnings before interest, taxes and depreciation and amortization (EBITDA) and EBITDA margin. Net income for the year is measured consistent with consolidated net income attributable to equity holders of the Parent Company in the consolidated financial statements. EBITDA margin pertains to EBITDA divided by gross revenues. Core net income for the year is measured as consolidated net income attributable to equity holders of the Parent Company before adjustments required under PFRS 3 which relate to the amortization of customer relationships and depreciation and amortization of fair value increase in property and equipment, gain on acquisition and exchange of debt and elimination of interest income pertaining to the accretion of receivable discount, net of related tax effect, arising from the acquisition of Sky Cable.

*SGVMC214977*

- 46 The following table shows the reconciliation of the core net income to consolidated net income attributable to equity holders of the Parent Company for the years ended December 31, 2011, 2010 and 2009:
Core net income PFRS 3 adjustments: Depreciation and amortization Amortization of customer relationships (see Note 12) Gain on acquisition and exchange of debt Interest income Income tax effect Consolidated net income attributable to equity holders of the Parent Company 2011 P2,468,884 = (59,896) (9,835) 2010 = P3,300,762 (153,287) (21,186) 2009 = P1,787,646 (153,287) (45,836) 121,879 (44,540) 36,535 = P1,702,397

20,919
P2,420,072 =

52,342
= P3,178,631

The following table shows the reconciliation of the consolidated EBITDA to consolidated net income attributable to equity holders of the Parent Company for the years ended December 31, 2011, 2010 and 2009:
Consolidated EBITDA Depreciation and amortization Amortization of intangible assets* Finance costs** Interest income Provision for income tax Consolidated net income attributable to equity holders of the Parent Company
**Excluding bank service charges.

2011 P6,837,846 = (2,588,969) (1,003,007) (715,430) 177,061 (287,429) P2,420,072 =

2010 = P8,642,520 (2,575,023) (872,137) (1,015,757) 106,738 (1,107,710) = P3,178,631

2009 = P6,513,997 (2,257,368) (1,079,681) (883,787) 93,291 (684,055) = P1,702,397

**Excluding amortization of story, music and publication rights, movie in-process and video rights and record master.

*SGVMC214977*

- 47 Business Segment Data The following tables present revenue and income information and certain asset and liability information regarding business segments for each of the three years in the period ended December 31, 2011:
2011 Revenue External sales Inter-segment sales Total revenue Results Operating results Finance costs Foreign exchange gains (losses) - net Interest income Equity in net earnings (losses) of associates Other income - net Income tax Net income Core Net Income EBITDA EBITDA Margin Assets and Liabilities Operating assets Investments in associates - at equity Deferred tax assets Total assets P16,410,687 = 188,277 P16,598,964 = Broadcasting 2010 = P20,427,712 148,525 = P20,576,237 2009 = P13,353,621 87,909 = P13,441,530 2011 P10,316,852 = 351,668 P10,668,520 = Cable and Satellite 2010 = P10,450,113 334,886 = P10,784,999 2009 2011 P1,472,409 = 1,357,920 P2,830,329 = Other Businesses 2010 = P1,413,175 1,520,572 = P2,933,747 2009 2011 P = (1,897,865) (P1,897,865) = Eliminations 2010 = P (2,003,983) (P2,003,983) = 2009 = P (988,497) (P988,497) = 2011 P28,199,948 = P28,199,948 = Consolidated 2010 = P32,291,000 = P32,291,000 2009 = P25,028,606 = P25,028,606

= P10,130,380 237,908 = P10,368,288

= P1,544,605 662,680 = P2,207,285

(P463,199) = (557,464) (29,086) 118,111 (29) 2,081,133 (32,087) P1,117,379 =

= P3,090,341 (967,922) 57,877 154,921 142 663,847 (911,126) = P2,088,080

= P1,015,023 (746,179) (13,518) 419,618 (2,330) 777,555 (437,300) = P1,012,869

P1,151,147 = (167,780) 62,586 57,942 162,680 (128,809) P1,137,766 =

= P1,145,993 (140,131) 88,044 17,715 (71,470) (97,508) = P942,643

= P1,109,601 (205,486) 55,978 43,185 72,649 (220,532) = P855,395

P863,660 = (5,087) 14,266 4,468 220,734 (126,533) P971,508 =

= P1,002,235 (3,777) (51,480) 3,083 166,349 (99,076) = P1,017,334

= P563,040 (538) 38,232 2,612 151,241 (91,165) = P663,422

(P131,479) = 3,460 (91,274) (3,460) (496,737) (P719,490) =

(P505,797) = 68,981 123,790 (68,981) (428,839) (P810,846) =

(P36,996) = 39,292 9,427 (372,124) (476,841) 64,942 (P772,300) =

P1,420,129 = (726,871) (43,508) 177,061 (29) 1,967,810 (287,429) P2,507,163 = P2,468,884 = P6,837,846 = 24%

= P4,732,772 (1,042,849) 218,231 106,738 142 329,887 (1,107,710) = P3,237,211 = P3,300,762 = P8,642,520 27%

= P2,650,668 (912,911) 90,119 93,291 (2,330) 524,604 (684,055) = P1,759,386 = P1,787,646 = P6,513,997 26%

P22,442,259 = 15,365,149 424,373 P38,231,781 =

= P20,106,664 13,505,574 347,900 = P33,960,138

= P22,202,654 8,808,070 31,071 = P31,041,795

P19,860,916 = 183,941 P20,044,857 =

= P15,287,402 571,877 = P15,859,279

= P15,163,011 567,560 = P15,730,571

P5,949,024 = 112,078 P6,061,102 =

= P4,031,279 66,466 = P4,097,745

= P2,630,990 43,523 = P2,674,513

= = (P4,174,380) (P1,468,999) (P5,859,709) = (8,767,099) (15,324,065) (13,464,461) (24,852) (31,219) = = (P19,529,664) (P14,958,312) (P14,626,808) =

P44,077,819 = 41,084 689,173 P44,808,076 =

= P37,956,346 41,113 961,391 = P38,958,850

= P34,136,946 40,971 642,154 = P34,820,071

Operating liabilities Interest-bearing loans and borrowings Deferred tax liabilities Obligations under finance lease Total liabilities Other Segment Information Capital expenditures: Property and equipment Intangible assets Depreciation and amortization Noncash expenses other than depreciation and amortization

P6,433,355 = 10,921,712 53,363 P17,408,430 =

= P6,683,814 7,869,520 108,211 = P14,661,545

= P6,559,720 7,531,219 179,991 = P14,270,930

P5,139,546 = 1,521,789 402,690 15,017 P7,079,042 =

= P4,829,210 1,532,982 438,586 = P6,800,778

= P5,776,239 3,058,823 490,928 14,462 = P9,340,452

P2,180,901 = 35,365 P2,216,266 =

= P1,026,948 132,000 4,095 = P1,163,043

= P809,817 5,037 = P814,854

(P2,231,320) = (P2,231,320) =

(P1,412,022) = (P1,412,022) =

(P3,955,805) = (1,820,463) 16,993 (P5,759,275) =

P11,522,482 = 12,443,501 438,055 68,380 P24,472,418 =

= P11,127,950 9,534,502 442,681 108,211 = P21,213,344

= P9,189,971 8,769,579 512,958 194,453 = P18,666,961

P1,795,418 = 869,454 2,219,092 40,517

= P1,838,587 483,593 1,992,112 136,493

= P1,128,157 1,097,815 2,035,466 96,460

P1,624,596 = 1,272,185 1,662,401 220,787

= P1,235,511 339,589 1,470,544 384,148

= P1,195,116 (100,201) 1,225,069 199,632

P119,181 = 232,143 345,667 11,812

= P80,248 239,520 327,037 14,609

= P75,193 154,200 282,770 33,012

P = (386,008)

= P (194,298)

= P 242

P3,539,195 = 2,373,782 3,841,152 273,116

= P3,154,346 1,062,702 3,595,395 535,250

= P2,398,466 1,151,814 3,543,547 329,104

*SGVMC214977*

- 48 Geographical Segment Data The following tables present revenue and expenditure and certain asset information regarding geographical segments for each of the three years in the period ended December 31, 2011:
2011 Revenue External sales Inter-segment sales Total revenue Assets
Operating assets

Philippines 2010

2009

2011 P3,412,628 = P3,412,628 = P2,734,800 = 97,639 P2,832,439 =

United States 2010

2009

2011 P1,153,520 = P1,153,520 = P2,906,488 = P2,906,488 =

Others 2010 = P844,361 = P844,361 = P438,342 15,526 = P453,868

2009

2011

Eliminations 2010

2009

2011

Consolidated 2010 = P32,291,000 = P32,291,000 = P37,956,346 41,113 961,391 = P38,958,850

2009

= P P23,633,800 P26,946,010 =19,565,045 = 2,003,983 988,497 1,897,865 = = P25,531,665 P28,949,993 P20,553,542 = P42,610,912 = 15,365,149 622,753 P58,598,814 = = P33,994,455 13,505,574 879,248 = P48,379,277 =35,655,234 P 8,808,070 532,625 =44,995,929 P

= P4,500,629 = P3,365,429 = P4, 500,629 =3, 365,429 P = P4,992,548 91,469 = P5,084,017 = P2,766,736 94,740 = P2,861,476

= P2,098,132 = P P = (1,897,865) (2,003,983) = P2,098,132 (P1,897,865) (P2,003,983) = =

= P P28,199,948 = (988,497) (P988,497) P28,199,948 = =

= P25,028,606 = P25,028,606 = P34,136,946 40,971 642,154 = P34,820,071

Investments in associates - at equity Deferred tax assets Total Assets Other Segment Information Capital expenditures: Property and equipment Intangible assets

= P1,574,685 (P4,174,381) (P1,468,999) (P5,859,709) P44,077,819 = = = = (15,324,065) (13,464,461) (8,767,099) 41,084 14,789 (24,852) (31,219) 689,173 = P1,589,474 (P19,529,665) (P14,958,312) (P14,626,808) P44,808,076 = = = =

P3,334,705 = 2,373,782

= P2,891,094 1,062,702

= P2,190,162 1,151,814

P91,653 =

= P162,358

= P68,767

P112,837 =

= P100,894

= P139,537

P =

= P

= P

P3,539,195 = 2,373,782

= P3,154,346 1,062,702

= P2,398,466 1,151,814

*SGVMC214977*

- 49 -

6. Cash and Cash Equivalents Cash on hand and in banks Cash equivalents 2011 P3,531,105 = 5,103,948 P8,635,053 = 2010 = P2,869,464 2,951,870 = P5,821,334

Cash in banks earn interest at the respective bank deposit rates. Cash equivalents are short-term placements, which are made for varying periods of up to three months depending on the immediate cash requirements of the Company, and earn interest at the respective short-term placement rates. Interest earned from cash and cash equivalents amounted to P 177 million, P107 million and = = = P93 million in 2011, 2010 and 2009, respectively.

7. Trade and Other Receivables 2011 Trade: Airtime Subscriptions Others Advances to suppliers Advances to employees and talents Due from related parties (see Note 22) Others Less allowance for doubtful accounts P5,049,461 = 768,248 1,182,149 1,103,880 261,834 171,328 260,195 8,797,095 668,929 P8,128,166 = 2010 = P4,236,682 882,327 1,014,030 1,286,293 224,733 31,319 200,750 7,876,134 627,850 = P7,248,284

Trade receivables are noninterest-bearing and are generally on 60 to 90 days term upon receipt of invoice by the customer. For terms and conditions relating to due from related parties, refer to Note 22. Other trade receivables are other revenue generated from the sale of goods and services and usually collected within one year. Advances to employees and talents are usually settled within one year. Advances to suppliers are generally applied against future billings within next year.

*SGVMC214977*

- 50 Movements in the allowance for doubtful accounts are as follows:

Airtime = P338,482 323,733 (170,969) 491,246 38,863 (4,666) P525,443 = Trade Subscriptions = P98,511 43,913 (87,705) 54,719 132,199 (128,390) P58,528 = Others = P46,577 35,142 (59,448) 22,271 83,731 (82,181) P23,821 = Nontrade = P47,647 17,448 (5,481) 59,614 154 1,369 P61,137 = Total = P531,217 420,236 (323,603) 627,850 254,947 (213,868) P668,929 =

Balance at January 1, 2010 Provisions (see Note 26) Write-offs and others Balance at December 31, 2010 Provisions (see Note 26) Write-offs and others Balance at December 31, 2011

Allowance for doubtful accounts are based on specific and collective assessment by the Company. Airtime receivables include unbilled airtime arising from advertisements which have been aired during the year but billing or acceptance by the customer has been delayed due to time lag in completing all required documents. Invoicing normally takes around 7 to 30 days from airing. Subscription receivables include unbilled subscription, where revenue has been accrued based on the rates in the subscription agreements multiplied by the estimated number of subscribers based on the latest report from the cable providers. Billing has been delayed due to 30 to 60 days lag in the submission of actual subscribers report from cable providers. The aging analysis of the unbilled receivables follows: Less than 30 days 31to 60 days 61to 90 days 2011 P780,702 = 2,479 29,342 P812,523 = 2010 = P631,401 14,824 39,183 = P685,408

8. Inventories 2011 At net realizable value: Merchandise inventory Materials, supplies and spare parts At cost Office supplies P90,405 = 43,769 693 P134,867 = 2010 = P119,659 32,323 545 = P152,527

Merchandise inventory consists mainly of records and other consumer products held for sale by other subsidiaries. Materials, supplies and spare parts comprise materials and supplies of the Parent Company and cable, construction and installation supplies of Sky Cable. The cost of inventories carried at net realizable value amounted to P260 million and P297 million as of = = December 31, 2011 and 2010, respectively.

*SGVMC214977*

- 51 -

9. Other Current Assets Creditable withholding and prepaid taxes Preproduction expenses Prepaid expenses and others 2011 P463,656 = 323,492 228,899 P1,016,047 = 2010 = P171,966 257,249 160,037 = P589,252

Prepaid expenses include prepayments for rentals, transponder services, license fees, membership dues, advertisement and other expenses.

10. Property and Equipment

2011 Television, Radio, Movie, and Auxiliary Equipment P13,622,658 = 1,936,472 (1,649,933) (57,689) (6,108) 13,845,400 7,855,073 1,351,320 (689,825) (92,865) 1,800 8,425,503 P5,419,897 = 2010 Television, Radio, Movie, and Auxiliary Equipment = P12,563,998 1,414,730 (270,749) (38,745) (46,576) 13,622,658 6,993,865 1,253,298 (266,959) (76,986) (48,145) 7,855,073 = P5,767,585

Land and Land Improvements Cost Balance at beginning of year Additions Effect of business combination (see Note 4) Disposals/retirements Reclassifications Translation adjustments Balance at end of year Accumulated Depreciation and Amortization Balance at beginning of year Depreciation and amortization (see Notes 24, 25 and 26) Effect of business combination (see Note 4) Disposals/retirements Reclassifications Translation adjustments Balance at end of year Net Book Value P505,611 = 41,312 (1,233) 87,450 633,140 4,066 3,391 785 8,242 P624,898 =

Buildings and Improvements P10,298,092 = 112,218 207,772 (86,123) 57,753 (1,106) 10,588,606 4,012,738 467,704 206,486 (64,665) (783) 6,584 4,628,064 P5,960,542 =

Other Equipment P6,238,789 = 919,271 1,414,017 (87,688) 266,567 (3,248) 8,747,708 4,088,350 765,451 1,298,964 (96,344) 93,648 21,626 6,171,695 P2,576,013 =

Construction in Progress P490,370 = 529,922 (354,081) (5,446) 660,765 P660,765 =

Total P31,155,520 = 3,539,195 1,621,789 (1,824,977) (15,908) 34,475,619 15,960,227 2,587,866 1,505,450 (850,834) 30,795 19,233,504 P15,242,115 =

Land and Land Improvements Cost Balance at beginning of year Additions Disposals/retirements Reclassifications Translation adjustments Accumulated Depreciation and Amortization Balance at beginning of year Depreciation and amortization (see Notes 24, 25 and 26) Disposals/retirements Reclassifications Translation adjustments Balance at end of year Net Book Value = P494,702 10,909 505,611 3,884 182 4,066 = P501,545

Buildings and Improvements = P10,175,525 244,246 (162,200) 48,404 (7,883) 10,298,092 3,585,897 527,213 (95,140) 20 (5,252) 4,012,738 = P6,285,354

Other Equipment = P5,201,757 1,105,782 (240,822) 174,224 (2,152) 6,238,789 3,434,592 793,182 (214,558) 76,966 (1,832) 4,088,350 = P2,150,439

Construction in Progress = P296,676 378,679 (183,883) (1,102) 490,370 = P490,370

Total = P28,732,658 3,154,346 (673,771) (57,713) 31,155,520 14,018,238 2,573,875 (576,657) (55,229) 15,960,227 = P15,195,293

*SGVMC214977*

- 52 Certain property and equipment of Sky Cable and PCC with a carrying value of P492 million as of = December 31, 2009 were pledged as collateral to secure the long-term debt of Sky Cable and PCC. On October 26, 2010, the loans were fully paid. As of March 2, 2012, the release of security interest on the pledged properties is still in process (see Note 18). Certain property and equipment with cost amounting to P13,547 million and P10,979 million as of = = December 31, 2011 and 2010, respectively, were fully depreciated but are still being used by the Company. Unamortized borrowing costs capitalized as part of property and equipment amounted to = P802 million and P834 million as of December 31, 2011 and 2010, respectively. There were no = borrowing costs capitalized in 2011 and 2010. Property and equipment includes the following amounts where the Company is a lessee under a finance lease (see Note 30): Cost - capitalized finance lease Accumulated depreciation Net book value 2011 P531,761 = (494,160) P37,601 = 2010 = P597,885 (512,734) = P85,151

11. Investment Properties This account pertains to a parcel of land purchased by ABS-CBN International, with a two-storey house constructed thereon, located in Redwood City, California, USA. The real property which was acquired in July 2008 at a purchase price of US$1.4 million (P67 million) was intended to be = held by ABS-CBN International as investment properties. To fund the acquisition, ABS-CBN International obtained loan from Citibank, North America amounting to US$1.05 million (P50 million) for which the property was pledged as collateral (see Note 18). = Cost and related accumulated depreciation of investment properties are as follows: Land Cost Balance at beginning and end of year Accumulated depreciation: Balance at beginning of year Depreciation (see Note 26) Translation adjustments Balance at end of year Net book value P30,688 = P30,688 = 2011 Building P30,688 = 2,464 1,103 13 3,580 P27,108 = Total P61,376 = 2,464 1,103 13 3,580 P57,796 =

*SGVMC214977*

- 53 2010 Building = P32,340 (1,652) 30,688 1,421 1,148 (105) 2,464 = P28,224

Land Cost: Balance at beginning of year Translation adjustments Balance at end of year Accumulated depreciation: Balance at beginning of year Depreciation (see Note 26) Translation adjustments Balance at end of year Net book value = P32,340 (1,652) 30,688 = P30,688

Total = P64,680 (3,304) 61,376 1,421 1,148 (105) 2,464 = P58,912

As of December 31, 2011, the fair market value of land and building, which is based on market price of similar properties within the area, amounted to P59 million. = Rental income derived from the investment properties amounted to P2 million in 2011, 2010 and = 2009. Direct operating expenses, which consist mainly of depreciation, amounted to P1 million = in 2011, 2010 and 2009. 12. Program Rights and Other Intangible Assets
2011 Story, Music and Publication Rights P7,369 = 1,372 (2,711) 6,030 79 P5,951 = Video Rights and Record Customer Master Relationships P9,250 = 31,670 (5,852) 35,068 35,068 P = P471,391 = 133,148 (9,835) (466,095) 128,609 P128,609 = 2010 Story, Music and Publication Rights = P7,492 101 Video Rights and Record Customer Master Relationships = P1,336 12,351 = P492,577 Cable Channels CPI = P459,968 Production and Distribution Business Middle East Cable Channels CPI P459,968 = 459,968 P459,968 = Production and Distribution Business Middle East

Program Rights Balance at beginning of year Additions Effect of business combination (see Note 4) Amortization and writeoff (see Notes 24, 25 and 26) Disposals Translation adjustments Balance at end of year Less current portion Noncurrent portion P2,375,958 = 1,077,572 (990,111) 2,463,419 481,051 P1,982,368 =

Movie In-Process P97,621 = 214,452 (240,613) 71,460 60,501 P10,959 =

Trademark P = 915,568 915,568 P915,568 =

Total

P89,359 P3,510,916 = = 1,325,066 1,048,716

(3,061) (1,252,183) (466,095) 6,160 6,160 92,458 4,172,580 576,699 P92,458 P3,595,881 = =

Program Rights Balance at beginning of year Additions Amortization and write-off (see Notes 24, 25 and 26) Translation adjustments Balance at end of year Less current portion Noncurrent portion = P2,377,015 844,368

Movie In-Process = P35,313 205,882

Trademark = P

Total

= P99,830 P3,473,531 = 1,062,702

(845,425) 2,375,958 664,667 = P1,711,291

(224) 7,369 7,369 = P

(143,574) 97,621 89,207 = P8,414

(4,437) 9,250 9,250 = P

(21,186) 471,391 = P471,391

= P

459,968 = P459,968

(5,526) (1,020,372) (4,945) (4,945) 89,359 3,510,916 770,493 = P89,359 P2,740,423 =

*SGVMC214977*

- 54 Costs and related accumulated amortization of other intangible assets are as follows:
2011 Cable Channels CPI P574,960 = (114,992) P459,968 = Production and Distribution Business Middle East P212,358 = (119,900) P92,458 = 2010 Cable Channels CPI = P574,960 (114,992) = P459,968 Production and Distribution Business Middle East = P212,358 (122,999) = P89,359

Cost Accumulated amortization Net book value

Customer Relationships P133,148 = (4,539) P128,609 =

Total P920,466 = (239,431) P681,035 =

Customer Relationships = P607,166 (135,775) = P471,391

Total = P1,394,484 (373,766) = P1,020,718

The customer relationships acquired in a business combination relate to the core subscribers of Sky Cable postpaid, prepaid and platinum, broadband and other Sky Cables subsidiaries at conversion date who have sustained their relationship with Sky Cable and subsidiaries for more than a year (see Note 4). The cable channels include Lifestyle Channel, Cinema One, and Myx Channel acquired by CPI from Sky Vision. Based on the Companys analysis of all the relevant factors, there is no foreseeable limit to the period over which this business is expected to generate net cash inflows for the Company and therefore, these were assessed to have an indefinite life. As such, yearly amortization has been discontinued in 2001. The carrying amount is net of previously recognized amortization amounting to P115 million. As of December 31, 2011 and 2010, cable channels = were tested for impairment. Production and distribution business for Middle East operations represents payments arising from the sponsorship agreement between Arab Digital Distribution (ADD) and ABS-CBN Middle East. This agreement grants the Company the right to operate in the Middle East with ADD as sponsor for a period of 25 years. Trademark pertains to Sky Cable distinctive sign to promote and distinguish its products and services from those of other entities. Based on the Companys analysis of all the relevant factors, there is no foreseeable limit to the period over which the business is expected to generate net cash inflows for the Company and therefore, this was assessed to have an indefinite life. As of December 31, 2011, trademark was tested for impairment.

13. Available-for-Sale Investments Balance at beginning of year Additions Disposals Unrealized fair value gain on AFS investments Impairment loss (see Note 27) Translation adjustments and others Balance at end of year 2011 P265,066 = 21,993 (31,985) 9,818 P264,892 = 2010 = P414,276 25,000 (130,918) 11,762 (53,868) (1,186) = P265,066

AFS investments consist mainly of investments in quoted and unquoted ordinary shares. The fair value gain on AFS investments amounting to P10 million, P12 million and = = = P74 million in 2011, 2010 and 2009, respectively, were recognized in other comprehensive income.

*SGVMC214977*

- 55 On November 12, 2008, ABS-CBN Global, a subsidiary, purchased a total of 2,524,488 shares of Series P common stock of Multiply, Inc. (Multiply), a Delaware, US corporation engaged in independent social networking site, equivalent to 5% equity interest. ABS-CBN Global purchased the investment at US$1.98 per share for an aggregate purchase price of US$5 million. The Stock Purchase Agreement provides that during the two-year period immediately following the Initial Closing date, Multiply may issue additional 1,964,051 shares of Series P common stock at the same price per share as the original purchase for an aggregate purchase price of up to US$4 million, in exchange for in-kind contributions of marketing and advertising supplied by ABS-CBN Global, intended to be used to acquire new users of Multiplys services. On August 29, 2010, ABS-CBN Global sold 1,390,993 shares of Series P common stock comprising approximately 3.25% of the outstanding shares of Multiply. The remaining equity of ABS-CBN Global in Multiply is 2.64%.

14. Investments in Associates The following are the associates of the Company as of December 31, 2011 and 2010: Entity Amcara Broadcasting Network, Incorporated (Amcara) Star Cinema Productions, Inc. (Star Cinema) Sky Vision Details of the account are as follows: 2011 Acquisition costs: Balance at beginning and end of year Addition Balance at end of year Accumulated equity in net losses: Balance at beginning of year Dividends Equity in net earnings (losses) during the year Balance at end of year P541,292 = 20,236 561,528 (500,179) (20,236) (29) (520,444) P41,084 = 2010 = P541,292 541,292 (500,321) 142 (500,179) = P41,113 Principal Activities Services Movie production Investment holding Percentage of Ownership 49.0 45.0 18.8

All the associates are incorporated in the Philippines. In 2011, the BOD of Amcara approved the declaration of cash dividends to all stockholders of record as of June 15, 2011. The Parent Companys dividends were subsequently applied as payment for the additional investment in Amcara. As of December 31, 2011 and 2010, the remaining carrying value of investments in associates pertains to Amcara. Investments in Star Cinema and Sky Vision have been reduced to zero due to accumulated equity in net losses.

*SGVMC214977*

- 56 Condensed financial information of the associates follows: Current assets Noncurrent assets Current liabilities Noncurrent liabilities Net equity Revenue Cost and expenses Net income (loss) 2011 P14,726 = 7,311,348 (66,892) (7,084,197) P174,985 = P39,937 = (32,009) P7,928 = 2010 = P11,865 444,659 (61,333) (228,134) = P167,057 = P30,614 (30,960) (P346) =

15. Other Noncurrent Assets Tax credits with TCCs - net Deposits and bonds Deferred charges Others 2011 P2,207,661 = 204,400 119,572 145,174 P2,676,807 = 2010 = P2,354,332 130,906 232,027 253,665 = P2,970,930

Tax Credits Tax credits represent claims from the government arising from airing of government commercials, advertisements and cablecast services. Pursuant to PD No. 1362, these will be collected in the form of tax credits which the Company can use in paying for import duties and taxes on its broadcasting and cable equipment. The tax credits cannot be used to pay for any other tax obligation to the government. The Company expects to utilize these tax credits within the next 10 years until 2021. On January 9, 2012, the Department of Finance issued a favorable ruling on the request of the Company to utilize the tax credits in the payment of duties and taxes on the importation of digital terrestrial television boxes which will subsequently be distributed or made available to its customers and end-users. Deferred charges pertain to excess of cost over revenue from installation of decoders and set-top boxes. Amortization of deferred charges amounted to P56 million, P53 million and = = = P47 million in 2011, 2010 and 2009, respectively (see Note 25).

*SGVMC214977*

- 57 -

16. Goodwill Analysis of movement in goodwill follows: 2011 Cost: Balance at beginning of year Effect of business combination (see Note 4) Disposal (see Note 4) Translation adjustment Balance at end of year Accumulated impairment loss Balance at beginning and end of year P2,166,397 = 3,503,482 (1,886,150) (11,668) 3,772,061 (22,565) P3,749,496 = 2010 = P2,157,196 9,201 2,166,397 (22,565) = P2,143,832

Goodwill arose from the following acquisitions and business combination: Sky Cable (see Note 4) CTI (see Note 4) ABS-CBN International ABS-CBN Interactive Sapientis ABS-CBN Multimedia PCC 2011 P2,465,836 = 1,037,646 216,752 13,389 9,201 6,672 P3,749,496 = 2010 = P1,327,696 228,420 13,389 9,201 6,672 558,454 = P2,143,832

Goodwill pertaining to investment in Roadrunner amounting to P23 million was fully provided = with an allowance for impairment loss.

17. Trade and Other Payables Trade Accrued expenses: Production costs and other expenses Salaries and other employee benefits Taxes Interest Deferred revenue Installment payable Due to related parties (see Notes 4 and 22) Dividend payable Others 2011 P1,158,343 = 3,164,157 1,361,094 632,141 221,015 1,283,434 362,233 339,345 163,338 393,064 P9,078,164 = 2010 = P1,776,889 2,690,865 1,844,920 746,184 133,086 1,125,270

727,708 68,018 190,524 = P9,303,464

Trade payables are noninterest-bearing and are normally settled on 30 to 90-day term. For terms and conditions relating to due to related parties, refer to Note 22. Accrued expenses are normally settled within the next financial year.

*SGVMC214977*

- 58 Accrued production costs and other expenses represent accruals for various expenses related to the production of shows. Accrual for salaries and other employee benefits includes accrual for the Companys retention program. The Company allocated specified number of notional shares for selected key employees. This will be paid in full after the holding period of 5 or 6 years from date of grant which is January 1, 2011. Deferred revenue pertains to payments received before broadcast and subscription fees billed or received in advance. Installment payable relates to a contract entered into by MTI in 2004 with a supplier for the purchase of certain equipment amounting to $12 million which bears interest of 5% per annum. In December 2008, MTI signed a restructuring agreement with the supplier which stipulates payment of the outstanding balance over a period of 36 months. The contract stipulates the existence of suppliers lien over the purchased equipment and that this shall remain in force until such time that MTI has paid up to 40% of the contract price. As of December 31, 2011, MTI has only paid 31% of the contract price. Outstanding balance as of December 31, 2011 amounted to P362 million = (US$8 million). Accrued interest amounted to P122 million as of December 31, 2011. = Other current liabilities include statutory liabilities which are payable within the next financial year.

18. Interest-bearing Loans and Borrowings

Current Portion P529,391 = 12,193 120,000 1,517 P663,101 = 2011 Long-term Portion P10,445,684 = 984,345 378,500 40,251 P11,848,780 = Current Portion = P531,259 10,000 1,000 1,432 132,000 = P675,691 2010 Long-term Portion = P7,446,472 980,284 498,500 41,766 = P8,967,022

Borrower Parent Company Sky Cable PCC ABS-CBN International Sapientis

Total P10,975,075 = 996,538 498,500 41,768 P12,511,881 =

Total = P7,977,731 990,284 499,500 43,198 132,000 = P9,642,713

Parent Company The details of interest-bearing loans and borrowings of the Parent Company are as follows:
Current Portion P400,000 = 87,698 41,693 P529,391 = 2011 Long-term Portion P = 9,731,649 702,364 11,671 P10,445,684 = Current Portion = P400,000 57,326 73,933 = P531,259 2010 Long-term Portion = P 6,756,288 655,906 34,278 = P7,446,472

Bank loans Term loans: Loan agreement Syndicated loans Obligations under finance lease (see Note 30)

Total P400,000 = 9,819,347 702,364 53,364 P10,975,075 =

Total = P400,000 6,813,614 655,906 108,211 = P7,977,731

Bank Loans. This represents unsecured peso-denominated loans obtained from local banks which bear an average annual interest rates of 3.5% in 2011 and 2010.

*SGVMC214977*

- 59 Loan Agreement. On October 29, 2010, the Parent Company successfully signed a syndicated loan for P10 billion with Allied Banking Corporation, Allied Savings Bank, Banco de Oro = Unibank, Inc., Banco de Oro Unibank, Inc. - Trust and Investment Group, Bank of the Philippine Islands, Insular Life Assurance Company Ltd., Philippine National Bank, PNB Life Insurance, Inc., Security Bank Corporation (collectively, the Lenders), Bank of the Philippine Islands (BPI) Capital Corporation (the Lead Arranger), BDO Capital & Investment Corporation and Security Bank Corporation (collectively, the Arrangers) and PNB Capital & Investment Corporation and Insular Life Assurance Company Ltd. (collectively the Co-Arranger). Bank of the Philippine Islands - Asset Management and Trust Group shall serve as the loans facility agent. The loan is intended to refinance existing indebtedness and fund working capital requirements. The loan is unsecured and unsubordinated with interest at 3-month PDST-F plus 0.65% per annum for the floating rate portion and 7-year PDST-F plus 0.65% per annum for the fixed rate portion. The loan is payable annually with a lump sum payment of the remaining balance on November 9, 2017. The loan is pre-payable subject to a break cost. The loan agreement contains provision regarding the maintenance of certain financial ratios and limiting, among others, the payment of dividends, making investments, the issuing or selling of the Parent Companys capital stock or some of its subsidiaries, the selling or exchange of assets, the creation of liens and the effecting of mergers. As of December 31, 2011, the Parent Company is in compliance with the provisions of this facility. On November 9, 2010, the Parent Company availed the amount of P6,906 million from the Loan = Agreement to prepay existing debt facilities, namely, the Senior Credit Agreement (SCA) facility, the BDO facility, the P800 million Syndicated Loan facility and the Combined facility = agreements. On March 11, 2011, the Parent Company availed the remaining amount of P3,094 million from = the Loan Agreement for working capital purposes. Term Loans under the SCA. On June 18, 2004, the Parent Company entered into an SCA with several foreign and local banks (Original Lenders) for a US$120 million dual currency syndicated term loan facility for the purpose of refinancing existing indebtedness incurred for the construction of the Eugenio Lopez, Jr. Communications Center, additional investment in the cable television business and funding capital expenditures and working capital requirements. The SCA is classified into three groups namely: Tranche A, a floating rate facility (3.5% + LIBOR) amounting to US$62 million; Tranche B, a floating rate facility (3.5% + MART1 T-bill) amounting to P2,688 million; and = Tranche C, a fixed rate facility (3.5% + FXTN) amounting to P560 million. =

On November 9, 2010, the Parent Company prepaid all outstanding obligations under the SCA facility from the proceeds of P6,906 million loan availed under the Loan Agreement. = Term Loan Facility with BDO. On December 13, 2007, the Parent Company together with BDO, signed a P1,350 million secured facility to refinance the entire Tranche A of the SCA facility = equivalent to US$31 million. The refinancing effectively extended the maturity from June 2009 to December 2012 with an interest rate of 3-month PDSTF plus 2.15%. On November 9, 2010, the Parent Company prepaid all outstanding obligations under the BDO facility from the proceeds of P6,906 million loan availed under the Loan Agreement. =

*SGVMC214977*

- 60 Syndicated Loans for Sky Cable Debt. In the invitation dated July 27, 2007, ABS-CBN invited holders of outstanding loan obligations of Sky Cable evidenced by promissory notes issued under the Facility Agreement dated July 2, 2004 among Sky Vision, Sky Cable, Philippine Home Cable Holdings, Inc. (Home Cable) and certain institutions and Equitable PCI Bank - Trust Banking (Sky Cable Debt) to offer to:
i.

sell their Sky Cable Debt to ABS-CBN for up to 70% of the principal amount of the Sky Cable Debt (Cash Offer); or exchange their Sky Cable Debt for notes at up to 100% of the principal amount of the Sky Cable Debt to be exchanged (Exchange Offer).

ii.

Holders of P944 million Sky Cable Debt opted for the Cash Offer while holders of P854 million = = opted for the Exchange Offer. The total loans acquired by ABS-CBN amounted to P1,798 million = or 66% of Sky Cable total outstanding debt of P2,800 million. Thus, ABS-CBN became Sky = Cables majority creditor. Cash Offer. On September 20, 2007, ABS-CBN settled the P944 million Sky Cable loans in the = amount of P662 million. To finance the settlement of the loans, ABS-CBN signed a syndicated = loan for P800 million with ING Bank N.V. and Mizuho Corporate Bank, Ltd., Manila Branch with = Mizuho Corporate Bank, Ltd., Manila Branch acting as the facility agent. The loan is unsecured and unsubordinated with interest rate of 3-month PHIBOR plus 2.75% per annum with final maturity on September 20, 2012. The total amount of money withdrawn is P662 million. = On November 9, 2010, the Parent Company prepaid all outstanding obligations under the = P800 million syndicated loan facility from the proceeds of P6,906 million loan availed under the = Loan Agreement. Exchange Offer. On September 18, 2007, ABS-CBN successfully signed a syndicated loan for = P854 million with the previous lenders of Sky Cable, namely, United Coconut Planters Bank, BPI, Mega International Commercial Bank Co., Ltd., Olga Vendivel and Wise Capital Investment & Trust Company, Inc., with BDO - EPCI, Inc. acting as the facility agent. The loan is unsecured and unsubordinated with a fixed coupon of 2.11% with final maturity on September 18, 2014. The =854 million syndicated loan facility contain provisions regarding the maintenance of certain P financial ratios and limiting, among others, the incurrence of additional debt, the payment of dividends, making investments, the issuing or selling of the Companys capital stock or some of its subsidiaries, the selling or exchange of assets, creation of liens and effecting mergers. As of December 31, 2011 and 2010, the Company is in compliance with the provisions of the = P854 million syndicated loan facility. The Parent Companys obligation under these facilities is jointly and severally guaranteed by its principal subsidiaries. Debt discount which represents the difference between the nominal value and fair value of the debt issued related to the Exchange Offer amounted to P298 million. = On February 21, 2008, ABS-CBN and the remaining third party creditors of Sky Cable approved the 2nd amendment of the Sky Cable Debt under a Facility Agreement. The amendment included the rescheduling of the principal amortization to commence in December 2011 with final maturity in September 2016.

*SGVMC214977*

- 61 Term Loan Facility with Security Bank. On August 15, 2008, the Parent Company successfully signed a P1 billion loan facility with Security Bank jointly arranged by BPI Capital Corp. and SB = Capital Investment Corp. This was fully drawn on August 27, 2008. The funds are used for capital expenditure and general corporate purposes. The loan is unsecured, unsubordinated and guaranteed by certain assets of the Companys subsidiaries. The interest rate on the loan is 3-month PDST-F plus 2.15% per annum with final maturity of August 27, 2013. Term Loan Facility with BPI. On September 30, 2008, the Parent Company successfully signed a = P2 billion loan facility with BPI Asset Management and Trust Group as Investment Manager for ALFM Peso Bond Fund, Inc., BPI Asset Management and Trust Group as Trustee for various Trust Accounts, The Philippine American Life and General Insurance Company and The Insular Life Assurance Company, Ltd., as Fixed Loan Lenders and Allied Banking Corporation and Allied Savings Bank as Variable Loan Lenders. This was jointly arranged by BPI Capital Corp and SB Capital Investment Corp. The funds are used for capital expenditures and general corporate purposes. The loan facility is unsecured and unsubordinated and guaranteed by certain Companys subsidiaries. On October 30, 2008, the Parent Company availed P1 billion from the Fixed Loan Lenders with = fixed loan interest rate of 7-year PDST-F plus 1.5% per annum and final maturity of October 30, 2015. On September 30, 2008, the Parent Company signed the Combined Facility Agreement with Security Bank Corporation, lender of the facility agreement executed on August 15, 2008, BPI Asset Management and Trust Group as Investment Manager for ALFM Peso Bond Fund, Inc., BPI Asset Management and Trust Group as Trustee for various Trust Accounts, The Philippine American Life and General Insurance Company and The Insular Life Assurance Company, Ltd., as Fixed Loan Lenders and Allied Banking Corporation and Allied Savings Bank as Variable Loan Lenders, all lenders of the facility agreement executed on September 30, 2008, together with BPI Capital Corp and SB Capital Investment Corp acting as joint arrangers of both facilities. The agreement shall combine both loan facilities in all material respects to be administered by BPI Asset Management and Trust Group acting as facility agent. On January 5, 2009, the Parent Company availed P400 million from the Variable Loan Lenders = with a variable loan interest rate of 3-month PDSTF plus 2.15% with a final maturity on January 5, 2014. The Combined Facility Agreement contain provisions regarding the maintenance of certain financial ratios and limiting, among others, the incurrence of additional debt, the payment of dividends, making investments, the issuing or selling of the Parent Companys capital stock or some of its subsidiaries, the selling or exchange of assets, creation of liens and effecting mergers. The Parent Company is in compliance with the provisions of the Combined Facility Agreement until it was paid on November 9, 2010.

*SGVMC214977*

- 62 Schedule of Maturities and Repayments. Repayments of long-term debt based on nominal values are scheduled as follows: Loan Agreement = P100,000 100,000 100,000 100,000 9,500,000 = P9,900,000 Syndicated Loans = P

2012 2013 2014 2015 20162017

854,207

= P854,207

Total = P100,000 100,000 954,207 100,000 9,500,000 = P10,754,207

Details of unamortized debt issue cost, presented as a deduction from the Companys long-term debt, as of December 31 are as follows: Debt discount Transaction costs 2011 P138,339 = 94,157 P232,496 = 2010 = P181,252 109,436 = P290,688

Debt issue costs are amortized over the term of the loans using the effective interest method as follows: Loan Agreement = P12,302 12,835 13,435 14,072 28,009 = P80,653 Syndicated Loans = P4,252 5,037 4,215 = P13,504 Debt Discount = P47,010 51,221 40,108 = P138,339 Total = P63,564 69,093 57,758 14,072 28,009 = P232,496

2012 2013 2014 2015 20162017

Amortization of debt issue costs are as follows (see Note 27): 2011 Debt discount (charged to interest expense) Transaction costs P42,913 = 15,279 P58,192 = 2010 = P39,386 98,398 = P137,784 2009 = P35,963 30,170 = P66,133

The 2010 amortization includes unamortized transaction costs of P63 million as of prepayment = date of the debt facilities, namely, the SCA facility, the BDO facility, the P800 million Syndicated = Loan facility and the Combined Facility Agreement. These should have been amortized until the final maturity of the respective debt facilities had it not been prepaid in November 2010. Sky Cable Under the Debt Restructuring Agreement (DRA) dated July 2, 2004, the restructured loans, which bear interest equal to the 90-day MART1 rate or the 91-day treasury bill rate in the absence of MART1, plus 1%, is payable in seven years inclusive of a two-year grace period, in 20 unequal consecutive quarterly amortizations commencing on September 30, 2006.

*SGVMC214977*

- 63 On February 21, 2008, ABS-CBN and the remaining third party creditors of Sky Cable approved the 2nd amendment to the Facility Agreement. The amendment includes the rescheduling of the principal amortizations to commence in December 2011 with final maturity in September 2016. The agreement provided for certain requirements and restrictions with respect to, among others, the maintenance of certain financial ratios, capital expenditures and business acquisition outside the business plan, incurrence of additional debt, declaration of cash dividends, amendments of its Articles of Incorporation or By-laws, reorganization, undertaking a quasi reorganization, reducing its capital or change its fiscal year. In 2009, Sky Cable was unable to comply with the debt service coverage ratio, which is one of the financial ratios required by its creditors in the agreement. However, in December 2009, Sky Cable was able to secure a waiver of this ratio from the majority of its creditors as required by the agreement. The terms of the collateral trust indenture covering a portion of Sky Vision and Sky Cables loans provide that Sky Cable shall at all times maintain the required collateral value, which consists of various property and equipment sufficient to cover at least 100% of the total outstanding amount of the loan (see Note 10). The loans were fully paid on October 26, 2010. Fixed Rate Corporate Notes Facility Agreement. On October 26, 2010, Sky Cable availed a = P1 billion syndicated loan from BDO, Union Bank of the Philippines and Robinsons Bank. The loan is intended to refinance the loan under the DRA. The loan is unsecured and unsubordinated with interest at 5-year PDST-F plus 1% per annum. The loan is amortizing with a final maturity of October 26, 2017. It has an interest rate step up feature in case the loan is extended for another 2 years. The agreement also requires a certain restrictions with respects to the maintenance of financial ratios. As of December 31, 2011, Sky Cable is in compliance with the provisions of this facility. The schedule of debt repayment based on the Facility Agreement is as follows: Year 2012 2013 2014 2015 2016 and onwards Amount = P10,000 10,000 10,000 10,000 950,000 = P990,000

Unamortized debt issue cost, presented as a deduction from the Companys long-term debt amounted to P8 million and P10 million as of December 31, 2011 and 2010, respectively. = = Debt issue costs are amortized over the term of the loan using the effective interest method as follows: Year 2012 2013 2014 2015 2016 and onwards Amount = P1,303 1,352 1,419 1,490 2,915 = P8,479

*SGVMC214977*

- 64 In addition, Sky Cable has obligation under finance lease amounting to P15 million (see Note 30). = PCC On April 7, 2009, PCC acquired a term loan from BDO, in which half of the loan bears a MART1 rate plus 2.5% and the other half bears fixed rate of 8.5%. Both are payable in installments commencing on April 16, 2010. Effective January 1, 2011, both loans bears an interest based on higher of 3-month PDST-F plus 1% spread or Banko Sentral ng Pilipinas overnight rate less 15 basis points. The loan is supported by deed of pledge of Sky Cables shares of stocks in PCC and Continuing Suretyship Agreement executed by Sky Vision. The schedule of payment of the loan is as follows: Year 2012 2013 2014 Amount = P120,000 200,000 178,500 = P498,500

ABS-CBN International On August 19, 2008, ABS-CBN International availed of a loan from Citibank, North America amounting to US$1 million (P50 million). The loan has a term of 20 years and can be prepaid = starting on the 15th year. The investment property acquired for which the loan was availed was pledged as collateral. The investment property is a residential home located in 1073 Rockport Avenue, Redwood City, California (see Note 11). The schedule of debt repayment is as follows: Year 2012 2013 2014 2015 20162028 Amount = P1,517 1,607 1,701 1,802 35,141 = P41,768

Sapientis The short-term loans, which are peso-denominated, amounting to P132 million were obtained = from PCCI and other financial institutions for investment purposes. The loans bear an annual interest rate of 6.25% in 2010. On May 25, 2011, the P132 million short-term loan was repaid. =

*SGVMC214977*

- 65 -

19. Obligations for Program Rights This account represents liabilities to foreign and local film suppliers for program rights purchased by the Company. The liabilities are noninterest-bearing and are payable in equal monthly, quarterly or semiannually installments over a period of one to two years. The amounts presented in the consolidated statements of financial position represent the face amounts of the obligations, net of unamortized discounts, which represent the difference between the face amounts and the fair values of the obligations upon initial recognition. Unamortized discounts amounted to = P2 million and P5 million as of December 31, 2011 and 2010, respectively. =

20. Other Noncurrent Liabilities Customers deposits Installment payable Deferred credits Asset retirement obligation (see Note 4) Due to a related party (see Notes 4 and 22) Others 2011 P207,849 = 67,198 43,058 1,215 148,810 P468,130 = 2010 = P261,109 30,812

92,400 1,267 = P385,588

Customers deposits relate to Sky Cables subscription agreements with customers. Customers deposits are initially recognized at fair value. The discount is recognized as deferred credits and amortized over the estimated remaining term of the deposit as other income. Customers deposits are refunded to the customers upon termination of service. Installment payable represents payables to suppliers for the importation and purchase of set-top boxes and decoders which are deferred over 36-month payment term. In 2010, ABS-CBN International reversed the asset retirement obligation associated with the leased land which was acquired by ABS-CBN International during the year. Asset retirement obligation in 2011 pertains to MTI as a result of the business combination (see Note 4). 21. Equity Capital Stock Details of authorized and issued capital stock as of December 31, 2011, 2010 and 2009 are as follows: Number of Shares Authorized Common shares - P1 par value = Issued Common shares 1,500,000,000 779,583,312 Amount = P1,500,000 = P779,583

*SGVMC214977*

- 66 Below are the Parent Companys track record of the registration of securities: Date of SEC Order Rendered Effective or Permit to Sell Event Registered and Listed Shares (Original Shares) March 31, 1992 Initial Public Offering (Primary) Secondary * ESOP* June 16, 1993 40% stock dividends August 18, 1994 50% stock dividends July 25, 1995 100% stock dividends July 2, 1996 50% stock dividends Authorized Capital Stock = P200,000 200,000 200,000 200,000 200,000 500,000 1,500,000 1,500,000 Issue Price = P1.00 15.00 15.00 15.00 1.00 1.00 1.00 1.00

Issued Shares 111,327,200 12,428,378 18,510,517 1,403,500 49,502,074 86,620,368 259,861,104 259,861,104

*Included in the 111,327,200 shares existing at the time of the IPO

The Parent Companys total number of stockholders is 6,062 and 6,282 as of December 31, 2011 and 2010, respectively. Retained Earnings Unappropriated retained earnings available for dividend distribution is adjusted to exclude the Parent Companys accumulated equity in net earnings of subsidiaries and associates amounting to = P2,090 million and P2,071 million as of December 31, 2011 and 2010, respectively. = Appropriated retained earnings is set aside for capital expenditures particularly for the purchase of Companys property and equipment needed for business operations. On March 4, 2011, the BOD approved the declaration of cash dividend of P2.10 per share or an = aggregate amount of P1,637 million to all stockholders of record as of March 25, 2011 payable on = April 19, 2011. On March 11, 2010, the BOD approved the declaration of cash dividend of = P1.11 per share or an aggregate amount of P865 million to all stockholders of record as of March = 31, 2010 payable on April 29, 2010. On March 25, 2009, the BOD approved the declaration of cash dividend of P0.90 per share or an aggregate amount of P687 million to all stockholders of = = record as of May 5, 2009 payable on or before May 29, 2009. PDRs Convertible to Common Shares
2011 Number of Shares Balance at beginning of year Acquisitions during the year Issuances during the year Balance at end of year 37,954,209 224,000 38,178,209 2010 Number of Shares 21,793,742 23,560,467 (7,400,000) 37,954,209 2009 Number of Shares 15,776,742 6,069,600 (52,600) 21,793,742

Amount P1,154,064 = 10,082 P1,164,146 =

Amount = P553,724 996,240 (395,900) = P1,154,064

Amount = P376,324 178,523 (1,123) = P553,724

(Amounts in Thousands, Except Number of Shares)

This account represents ABS-CBN PDRs held by the Parent Company which are convertible into ABS-CBN shares. These PDRs were listed in the PSE on October 7, 1999. Each PDR grants the

*SGVMC214977*

- 67 holders, upon payment of the exercise price and subject to certain other conditions, the delivery of one ABS-CBN share or the sale of and delivery of the proceeds of such sale of one ABS-CBN share. The ABS-CBN shares are still subject to ownership restrictions on shares of corporations engaged in mass media and ABS-CBN may reject the transfer of shares to persons other than Philippine nationals. The PDRs may be exercised at any time from October 7, 1999 until the expiry date as defined in the terms of the offering. Any cash dividends or other cash distributions in respect of the underlying ABS-CBN shares shall be applied by ABS-CBN Holdings Corporation, issuer of PDRs, towards payment of operating expenses and any amounts remaining shall be distributed pro-rata among outstanding PDR holders. In 2011, the Parent Company acquired 224,000 PDRs and common shares for P10 million. In = 2010, the Parent Company acquired 23,560,467 PDRs and common shares for P996 million. = In 2010, the Parent Company issued P396 million of these PDRs, which are convertible into = 7,400,000 ABS-CBN shares, as contribution to the retirement fund (see Note 29). In 2009, the Parent Company issued P1 million of these PDRs, which are convertible into 52,600 ABS-CBN = shares, to some of its officers as payment for their bonuses (see Note 22). The PDRs issued were based on quoted prices at the time of issuance.

22. Related Party Transactions Parties are considered to be related if one party has the ability, directly or indirectly, to control the other party or exercise significant influence over the other party in making financial and operating decisions. Parties are also considered to be related if they are subject to common control. Transactions with Related Parties In addition to the related party transactions discussed in Notes 4 and 18, significant transactions of the Company with its associates and related parties follow:
2011 Associate Blocktime fees paid by the Parent Company and Studio 23 to Amcara Affiliates: Expenses paid by the Parent Company and subsidiaries to Manila Electric Company (Meralco), Bayantel and other related parties Airtime revenue from Bayantel and Meralco Management and other service fees Expenses and charges paid for by the Parent Company which are reimbursed by the concerned related parties Termination cost charges of Bayantel, a subsidiary of Lopez, Inc., to ABS-CBN Global P31,322 = 2010 = P30,595 2009 = P24,737

674,645 65,174 37,830

592,667 57,548 42,077

523,156 65,437 17,549

30,023 10,440

40,426 57,213

19,061 187,277

*SGVMC214977*

- 68 The related receivables from related parties, presented under Trade and other receivables account and payables to related parties, presented under Trade and other payables account and Due to a related party under Other noncurrent liabilities account in the consolidated statements of financial position, are as follows: 2011 Due from: Bayantel ABS-CBN Foundation, Inc. Lopez Holdings Knowledge Channel Foundation, Inc. Goldlink Securities and Investigation Services Rockwell Land Corporation Sky Foundation, Inc. Corporate Information Solutions, Inc. Star Cinema First Philippine Holdings, Inc. Sky Guide, Inc. ABS-CBN Holdings Corporation ABS-CBN Bayan Foundation, Inc. Others* P113,342 = 17,796 10,686 7,008 5,713 2,882 2,230 2,209 2,092 1,990 1,897 1,766 1,065 652 P171,328 = 2011 Due to: Sky Vision Amcara Bayantel (see Note 4) Others* Total Current portion Noncurrent portion
*Various entities within the Lopez group

2010 = P 5,405 5,234 2,209 3,521 1,986 2,217 2,209 1,850 306 1,848 3,111 771 652 = P31,319 2010 = P237,596 72,129 162,706 347,677 820,108 727,708 = P92,400

P157,617 = 70,490 111,238 339,345 339,345 P =

a. License Fees Charged by CPI to Sky Cable CPI has an existing cable lease agreement (Agreement) with Sky Cable for the airing of the cable channels (see Note 12) to the franchise areas of Sky Cable and its cable affiliates. The initial Agreement with Sky Cable is for a period of five years effective January 1, 2001, renewable on a yearly basis upon mutual consent of both parties. Said Agreement was renewed for one year in 2009, 2010 and for two years in 2011. Under the terms of the Agreement, CPI receives license fees from Sky Cable and its cable affiliates computed based on agreed percentage of subscription revenue of Sky Cable and its cable affiliates. As the owner of the said cable channels, CPI develops and produces its own shows and acquires program rights from various foreign and local suppliers. b. Management Fees Charged to Sky Cable The Parent Company renders management services to Sky Cable through designated employees.

*SGVMC214977*

- 69 c. Blocktime Fees Paid by the Parent Company and Studio 23 to Amcara The Parent Company and Studio 23 own the program rights being aired in UHF Channel 23 of Amcara. The Parent Company and Studio 23 has an existing blocktime agreement with Amcara for its provincial operations. d. Other transactions with related parties include cash advances for working capital requirements. Terms and Conditions of Transactions with Related Parties The sales to and purchases from related parties are made at normal market prices. Outstanding balances as of year-end are unsecured, interest-free and settlement occurs in cash, and are collectible/payable on demand. For the years ended December 31, 2011, 2010 and 2009, the Company has not made any provision for doubtful accounts relating to amounts owed by related parties. This assessment is undertaken each financial year by examining the financial position of the related party and the market in which the related party operates. Compensation of Key Management Personnel of the Company
2011 Compensation (see Notes 24, 25 and 26) Pension benefits (see Note 29) Vacation leaves and sick leaves Termination benefits P1,094,590 = 113,259 25,494 1,102 P1,234,445 = 2010 = P866,636 53,564 24,619 6,794 = P951,613 2009 = P743,941 40,100 56,195 40,031 = P880,267

23. Net Revenues 2010 (As restated see Note 2) = P21,739,339 10,072,764 478,897 32,291,000
3,154,571 1,276,753 = P27,859,676

Airtime (see Note 22) Sale of services (see Notes 22 and 30) Sale of goods Less: Agency commissions Incentives and co-producers share

2011 P17,577,677 = 10,164,613 457,658 28,199,948

2,465,452 687,920 P25,046,576 =

2009 (As restated see Note 2) = P14,462,958 10,044,520 521,128 25,028,606 2,000,229 818,916 = P22,209,461

Industry rules allow ABS-CBN to sell up to 18 minutes of commercial spots per hour of television programming. These spots are sold mainly through advertising agencies which act as the buying agents of advertisers, and to a lesser extent, directly to advertisers. Substantially, all gross airtime revenue, including airtime sold directly to advertisers, is subject to a standard 15% agency commission.

*SGVMC214977*

- 70 Incentives include early payment and early placement discount as well as commissions paid to the Companys account executives and cable operators. The Company has co-produced shows which are programs produced by ABS-CBN together with independent producers. Under this arrangement, ABS-CBN provides the technical facilities and airtime, and handles the marketing of the shows. The co-producer shoulders all other costs of production. The revenue earned on these shows is shared between ABS-CBN and the co-producer.

24. Production Costs

2011 Personnel expenses and talent fees (see Notes 22 and 29) Facilities related expenses (see Notes 22 and 30) Depreciation and amortization (see Note 10) Amortization of program rights (see Note 12) License and royalty Travel and transportation Set and set requirements Catering and food expenses Stationery and office supplies Advertising and promotions Other program expenses (see Notes 12 and 22) P4,369,772 = 2,163,531 1,099,187 675,531 279,333 279,285 241,799 146,887 52,903 45,600 481,138 P9,834,966 = 2010 = P3,512,650 1,682,964 920,544 476,975 111,508 236,568 215,298 109,522 53,130 45,349 500,769 = P7,865,277 2009 = P2,900,238 1,169,605 790,714 550,793 94,785 178,908 172,007 113,227 31,097 35,287 250,126 = P6,286,787

Other program expenses consist of production expenses including, but not limited to, set requirements, prizes, transportation, advertising and other expenses related to the promotional activities of various projects during the year.

25. Cost of Sales and Services Cost of services consists of the following:
2010 2011 Facilities related expenses (see Notes 22 and 30) Personnel expenses (see Notes 22 and 29) Programming costs Depreciation and amortization (see Note 10) Amortization of program rights (see Note 12) (Forward) P1,575,775 = 1,074,712 931,396 888,726 314,580 2009

(As restated see Note 2)

= P1,401,778 1,205,914 909,128 985,367 368,450

(As restated see Note 2)

= P1,407,976 1,183,868 940,549 856,109 476,754

*SGVMC214977*

- 71 2010 2011 P304,843 = 147,730 139,894 128,356 118,711 118,344 95,339 85,919 82,726 45,139 44,129 32,351 26,325 22,612 19,386 228,506 P6,425,499 = 2009

(As restated see Note 2)

= P245,403 130,648 231,148 116,078 143,527 124,601 124,379 104,324 69,336 34,217 65,399 79,183 24,143 20,157 21,556 386,450 = P6,791,186

(As restated see Note 2)

= P274,712 154,706 373,331 75,370 84,431 191,571 150,394 139,276 93,805 29,126 58,640 18,602 32,324 18,368 28,516 171,851 = P6,760,279

Advertising and promotions Transportation and travel Interconnection costs (see Note 22) Transaction costs Bandwidth costs License fees and royalties Inventory costs Freight and delivery Installation costs Stationery and office supplies Commission and incentives Research and survey Set requirements Catering and food expenses Taxes and licenses Others (see Notes 15 and 22)

Cost of sales consists of the following:

Printing and reproduction Personnel expenses (see Notes 22 and 29) Inventory costs Facilities related expenses (see Notes 22 and 30) Freight and delivery Advertising and promotions Handling and processing costs Others (see Notes 10 and 22) 2011 P100,804 = 69,836 42,041 16,534 14,884 11,163 9,919 9,345 P274,526 = 2010 = P109,123 71,907 50,432 4,900 14,909 12,744 11,986 2,395 = P278,396 2009 = P112,039 63,571 41,855 3,055 23,148 20,552 6,722 16,185 = P287,127

26. General and Administrative Expenses

2011 Personnel expenses (see Notes 22 and 29) Contracted services Depreciation and amortization (see Notes 10 and 11) Facilities related expenses (see Notes 22 and 30) Taxes and licenses Provision for doubtful accounts (see Note 7) Research and survey Donations and contributions (Forward) P3,627,287 = 790,455 600,755 515,014 393,623 254,947 215,001 149,810 2010 = P4,471,114 782,349 668,924 535,825 351,128 420,236 246,683 153,462 2009 = P3,033,114 777,955 610,468 528,778 227,576 292,472 171,745 62,196

*SGVMC214977*

- 72 2011 P130,659 = 68,600 12,897 332,408 P7,091,456 = 2010 = P136,537 117,322 26,712 281,753 = P8,192,045 2009 = P137,365 93,104 52,134 237,693 = P6,224,600

Advertising and promotions Entertainment, amusement and recreation Amortization of other intangible assets (see Note 12) Others (see Note 22)

Others consist mainly of transportation and travel expenses, research and survey costs and stationery and office supplies. 27. Other Income and Expenses Finance Costs
Interest expense (see Note 18) Amortization of debt issue costs (see Note 18) Bank service charges 2011 P698,461 = 16,969 11,441 P726,871 = 2010 = P915,812 99,945 27,092 = P1,042,849 2009 = P852,712 31,075 29,124 = P912,911

The following are the sources of the Companys interest expense (see Note 18):
Long-term debt Bank loans Obligations under finance lease 2011 P667,022 = 13,839 17,600 P698,461 = 2010 = P822,195 33,113 60,504 = P915,812 2009 = P798,395 31,665 22,652 = P852,712

Other Income (Charges)

2011 Gain on sale of investments (see Note 4) Gain on settlement of a liability (see Note 4) Rental income (see Note 30) Royalty income Impairment loss (see Note 13) Mark-to-market loss on derivative instruments - net (see Note 32) Other income - net (see Note 22) P1,146,716 = 2010 = P 2009 = P

143,616 138,327 57,404

481,747 P1,967,810 =

142,853 40,113 (53,868) 200,789 = P329,887

118,561 37,313
(1,233) 369,963 = P524,604

Other income mainly consists of income from gate receipts, studio tours, management fees and other miscellaneous revenue and expense.

*SGVMC214977*

- 73 -

28. Income Tax and Registration with the Philippine Economic Zone Authority (PEZA) The provision for (benefit from) income tax follows:
Current Deferred 2011 P415,119 = (127,690) P287,429 = 2010 = P1,495,805 (388,095) = P1,107,710 2009 = P825,536 (141,481) = P684,055

The components of consolidated net deferred tax assets and liabilities of the Company are as follows:
2011 Deferred tax assets - net: Accrued pension obligation and other employee benefits Capitalized interest, duties and taxes (net of accumulated depreciation) Customers deposits MCIT Accrued expenses NOLCO Gain on acquisition and exchange of debt (net of accretion) Allowance for doubtful accounts Net unrealized foreign exchange loss Unearned revenue Allowance for inventory obsolescence Allowance for impairment loss on property and equipment Others P361,985 = (239,761) 181,976 168,835 166,569 135,992 (126,294) 99,611 11,043 2,663 1,089 (74,535) P689,173 = 2010 = P374,196 (248,308) 150,652 43,727 368,463 (139,168) 168,651 1,636 45,805 30,544 114,933 50,260 = P961,391

Deferred tax liabilities: Excess of the fair value over the book value of net assets of Sky Cable Unrealized foreign exchange gain Others

P405,583 = 31,622 850 P438,055 =

= P438,585 4,096 = P442,681

*SGVMC214977*

- 74 The details of the unrecognized deductible temporary differences, NOLCO and MCIT of certain subsidiaries follow:
Allowance for doubtful accounts Allowance for decline in value of inventories NOLCO Unearned revenue Accrued retirement expense and others Accretion of interest expense MCIT Allowance for impairment loss on property and equipment 2011 P1,570,583 = 955,935 686,797 42,259 40,251 23,984 13,916 P3,333,725 = 2010 = P1,140,589 60,776 226,584 28,979 99,939 3,946 18,499 = P1,579,312

Management believes that it is not probable that taxable income will be available against which the temporary differences, NOLCO and MCIT will be utilized. In 2011, MCIT and NOLCO amounting to P19 million and P68 million expired and were written = = off, respectively. MCIT and NOLCO amounting to P4 million and P63 million were claimed as = = deduction against RCIT due and taxable income. MCIT of the subsidiaries amounting to P183 million can be claimed as tax credit against future = RCIT as follows: Year Paid 2009 2010 2011 Expiry Dates December 31, 2012 December 31, 2013 December 31, 2014 Amount = P17,821 5,811 159,119 = P182,751

NOLCO of the subsidiaries amounting to P823 million can be claimed as deductions from future = taxable income as follows: Year Incurred 2009 2010 2011 Expiry Dates December 31, 2012 December 31, 2013 December 31, 2014 Amount = P47,699 110,573 981,832 = P1,140,104

As of December 31, 2011 and 2010, deferred tax liability on undistributed earnings of ABS-CBN Global, holding company of the Parent Companys foreign subsidiaries, amounting to = P762 million and P505 million, respectively, has not been recognized since the Parent Company is = able to control the reversal of the temporary difference. The undistributed earnings are earmarked for expansion in the Companys foreign operations.

*SGVMC214977*

- 75 The reconciliation of statutory tax rate to effective tax rates applied to income before income tax is as follows:
Statutory tax rates Additions to (reduction in) income taxes resulting from the tax effects of: Gains subject to capital gains tax Interest income subjected to final tax Nondeductible interest expense Others, mainly income subject to different tax rates and change in tax rates - net Effective tax rates 2011 30% (8) (6) 2 (8) 10% 2010 30% (2) 1 (4) 25% 2009 30% (4) 2 28%

Registration with the Philippine Economic Zone Authority (PEZA) On July 14, 2009, the PEZA approved the application of Big Dipper for registration as an Ecozone Information Technology (IT) Enterprise to provide digital film archiving, digital central library, content licensing and transmission at the 3rd Floor, Eugenio Lopez, Jr. Communications Center, Eugenio Lopez Drive, Quezon City. Total income tax holiday incentives availed by Big Dipper amounted to P204 million and = P268 million in 2011 and 2010, respectively. =

29. Pension Plan The Companys pension plans are composed of funded (Parent Company and Sky Cable) and unfunded (other subsidiaries), noncontributory and actuarially computed pension plans, except for ABS-CBN International (contributory) covering substantially all of its employees. The benefits are based on years of service and compensation during the last year of employment. The following tables summarize the components of consolidated net benefit expense recognized in the consolidated statements of income and accrued pension obligation recognized in the consolidated statements of financial position: Net Pension Expense
Current service cost Interest cost Expected return on plan assets Net actuarial loss (gain) Past service cost Net pension expense 2011 P278,386 = 246,504 (63,978) 48,675 (876) P508,711 = 2010 = P183,927 168,084 (29,488) 23,236 5,766 = P351,525 2009 = P74,660 113,899 (16,753) (35,887) = P135,919

*SGVMC214977*

- 76 Accrued Pension Obligation Present value of obligation Fair value of plan assets Unfunded obligation Unrecognized amortizations past service cost Unrecognized net actuarial loss Accrued pension obligation 2011 P4,317,365 = (1,295,899) 3,021,466 6,696 (2,138,854) P889,308 = 2010 = P2,764,389 (1,295,788) 1,468,601 8,832 (852,027) = P625,406

Consolidated changes in the present value of the defined benefit obligation are as follows: Defined benefit obligation at beginning of year Current service cost Interest cost Actuarial loss on obligation Benefits paid Past service cost Defined benefit obligation at end of year 2011 P2,764,389 = 278,386 246,504 1,151,949 (125,123) 1,260 P4,317,365 = 2010 = P1,762,280 183,927 168,084 657,039 (3,875) (3,066) = P2,764,389

Changes in the fair value of plan assets of the Parent Company and Sky Cable are as follows: Fair value of plan assets at beginning of year Expected return on plan assets Actual contribution Actuarial (losses) gains Fair value of plan assets at end of year Actual return on plan assets
\

2011 P1,295,788 = 63,978 78,894 (142,761) P1,295,899 = (P78,783) =

2010 = P610,528 29,488 527,815 127,957 = P1,295,788 = P157,445

The Parent Company and Sky Cable expect to contribute nil and P71 million, respectively, to the = retirement fund in 2012. The major categories of plan assets as a percentage of the fair value of total plan assets are as follows:
2011
(Percentage)

2010 33.5 12.0 49.0 5.5 100.0

Investment in fixed/floating rate treasury note Investment in government securities and bonds Investment in stocks Others

34.4 10.1 50.0 5.5 100.0

The overall expected rate of return on assets is determined based on the market prices prevailing on that date, applicable to the period over which the obligation is to be settled.

*SGVMC214977*

- 77 The principal assumptions used as of January 1, 2011, 2010 and 2009 in determining pension benefit obligations for the Companys plans are shown below:
2011 Discount rate Expected rate of return on plan assets Future salary rate increases 8.9 5.0 5.0 2010
(Percentage)

2009 11.0 7.0 5.0

9.8 5.0 7.2

The discount rate prevailing as of December 31, 2011 is 10.5%. Amounts for the current and previous four years are as follows:
Defined benefit obligation Fair value of plan assets Deficit Experience adjustments on defined benefit obligation Experience adjustments on plan assets 2011 (P4,317,365) = 1,295,899 (3,021,466) 25,103 (142,761) 2010 (P2,764,389) = 1,295,788 (1,468,601) (78,496) 127,957 2009 (P1,762,280) = 610,528 (1,151,752) 491,849 67,370 2008 (P569,414) = 356,425 (212,989) (223,203) (15,706) 2007 (P860,113) = 264,458 (595,655) (10) 1,392

On March 11, 2010, the BOD approved the re-establishment of the retirement committee who will actively manage the pension fund. On July 27, 2010, the retirement committee of the retirement fund, approved the following: a. Acquisition of ABS-CBN securities to fully fund the retirement fund deficiency; b. Allow the acquisition of Lopez shares and shares of other listed companies; c. Migrate to an investment management account arrangement in lieu of a Trusteed arrangement with BDO; and d. Appoint an investment officer of the retirement plan. In 2010, the Company contributed 7,400,000 ABS-CBN PDRs to the retirement fund. The contribution was made in open market at a price of P53.50 each. As of December 31, 2011 and = 2010, the value of each PDR is at P29.70 and P45.50, respectively (see Note 21). = = In 2010, the retirement fund acquired 32.2 million shares of Lopez Holdings for P129 million. As = of December 31, 2011 and 2010, the value of each share is at P5.10 and P5.31 or a total of = = = P164 million and P171 million, respectively. =

*SGVMC214977*

- 78 -

30. Commitments Deal Memorandum with DirecTV On June 1, 2005, the Parent Company and ABS-CBN International entered in to a 25-year Deal Memorandum (Memorandum) with DirecTV in which the Parent Company granted DirecTV the exclusive right via satellite, internet protocol technology and satellite master antenna television system or similar system, to display, exhibit, perform and distribute certain programs of the Parent Company that are listed in the Memorandum. ABS-CBN International may engage in any marketing plan mutually agreed by both parties. All costs under any mutually agreed marketing plans shall be shared equally between DirecTV and ABS-CBN International. As provided in the Memorandum, all rights, title and interest in and to the content, discrete programs or channels not granted to DirecTV are expressly reserved by the Parent Company. All programming decisions with respect to the programs shall be in the Parent Companys commercially reasonable discretion, including the substitution or withdrawal of any scheduled programs, provided that the Parent Company agrees that the programs will consist substantially the same content and genre provided for in the Memorandum. The Memorandum also provides that subscription revenues, computed as the current and stand alone retail price per month for a subscription to The Filipino Channel multiplied by the average number of subscribers, shall be divided equally between DirecTV and ABS-CBN International. ABS-CBN Internationals share in the subscription revenue earned from subscribers that have migrated to DirecTV amounted to P671 million, P765 million and P830 million in 2011, 2010 and = = = 2009, respectively. Operating Lease As Lessee. The Parent Company and subsidiaries lease office facilities, space and satellite equipment. Future minimum rental payable under non-cancelable operating leases are as follows: Within one year After one year but not more than five years 2011 P410,769 = 1,158,596 P1,569,365 = 2010 = P328,149 1,192,874 = P1,521,023

As Lessor. The Parent Company has entered into commercial property leases on its building, consisting of the Parent Companys surplus office buildings. These non-cancelable leases have remaining non-cancelable lease terms of 3 to 5 years. All leases include a clause to enable upward revision of the rental charge on a predetermined rate. Future minimum rental receivable under non-cancelable operating leases are as follows: Within one year After one year but not more than five years 2011 P241,855 = 247,347 P489,202 = 2010 = P116,771 240,934 = P357,705

*SGVMC214977*

- 79 Obligations under Finance Lease The Company has finance leases over various items of equipment. Future minimum lease payments under finance leases and hire purchase contracts together with the present value of the net minimum lease payments are as follows: Within one year After one year but not more than five years Total minimum lease payments Less amounts representing finance charges Present value of minimum lease payments Less current portion 2011 P48,270 = 25,270 73,540 5,160 68,380 43,886 P24,494 = 2010 = P81,662 37,327 118,989 10,778 108,211 73,933 = P34,278

Purchase Commitments Sky Cable has commitments with various program suppliers for a period of 1 to 5 years. Channel license fees are based on fixed and variable rates. Estimated fees for the next four years are as follows: Year 2012 2013 2014-2015 Amount* = P455,064 268,912 28,186

*Includes variable fees based on the number of active subscribers as of December 31, 2011.

The estimated fees include channel license fees contracted by Sky Cable for its subsidiaries, amounting to P131.4 million, for which Sky Cable will be reimbursed. =

31. Financial Risk Management Objectives and Policies The Companys principal financial instruments comprise cash and cash equivalents, AFS investments and interest-bearing loans and borrowings. The main purpose of these financial instruments is to raise funds for the Companys operations. The Company has various other financial assets and liabilities such as trade receivables and trade payables, which arise directly from its operations. It is, and has been throughout the year under review, the Companys policy that no trading in financial instruments shall be undertaken. The main risks arising from the Companys financial instruments are cash flow interest rate risk, foreign currency risk, credit risk and liquidity risk. The BOD reviews and agrees on the policies for managing each of these risks and they are summarized below. Cash Flow Interest Rate Risk The Companys exposure to the risk for changes in market interest rates relates primarily to the Companys debt obligations with floating interest rates.

*SGVMC214977*

- 80 To manage this mix in a cost-efficient manner, it is the Companys policy to enter into interest rate swaps whenever the need arises. Before the prepayment of all outstanding loan obligations under Tranche A of the SCA facility and after taking into account the effect of interest rate swaps, approximately 43% of the Companys borrowings are at a fixed rate of interest. Without the existence of any swaps, the Companys loan with fixed rate of interest is at about 56% and 57% of the total loans at the end of 2011 and 2010, respectively. As of December 31, 2011 and 2010, there are no freestanding derivative contracts. The following table sets out the carrying amount, by maturity, of the Companys consolidated financial instruments that are exposed to interest rate risk:
Two to Within One to Two One Year Years Three Years 2011 Interest-bearings loans and borrowings: Fixed rate Floating rate 2010 Interest-bearings loans and borrowings: Fixed rate Floating rate Three to Four Years Four to Five Years More than Five Years Transaction Costs and Discount

Total

P122,681 = 553,209

P162,833 = 167,041

P1,006,453 = 137,185

P63,165 = 51,801

P63,345 = 51,907

P5,640,000 = 4,733,236

(P200,723) = (40,252)

P6,857,754 = 5,654,127

= P45,030 642,395

= P104,530 134,860

= P144,530 131,530

= P987,987 125,550

= P44,530 36,332

= P4,230,350 3,315,493

(P254,221) = (46,183)

= P5,302,736 4,339,977

Interest on financial instruments classified as floating rate is repriced at intervals of three months. Interest on financial instruments classified as fixed rate is fixed until the maturity of the instrument. The other financial instruments of the Company that are not included in the above tables are noninterest-bearing and are therefore not subject to interest rate risk. As of December 31, 2011, benchmark interest rates, 3-month PDST-F, increased by 34 basis points since the end of 2010. Looking at past trends, however, this has not always been the case with several periods showing some downward adjustments due to several market pressures. Based on these experiences, the Company provides the following table to demonstrate the sensitivity of the Companys income before income tax (through the impact on floating rate borrowings) to a reasonably possible change in interest rates, with all other variables held constant. There is no impact on the Companys equity other than those already affecting the net income. Effect on Income Before Income Tax 2010 2011 Parent Company: Increase by 2% Decrease by 2% PCC: Increase by 1% Decrease by 1% (P101,010) = 101,010 (P4,985) = 4,985 (P69,757) = 69,757 (P2,498) = 2,498

*SGVMC214977*

- 81 Foreign Currency Risk The Companys primary exposure to the risk in changes in foreign currency relates to the Companys long-term debt obligation. It is the Companys policy to enter into cross currency swaps whenever the need arises to manage foreign currency risk and eliminate the variability of cash flows due to changes in the fair value of the foreign-currency denominated debt with maturity of more than one year. Before the prepayment of all outstanding dollar loan obligations under Tranche A of the SCA facility, approximately 26% of the Companys borrowings are denominated in currencies other than the functional currency of the operating unit. These were all covered by cross currency swaps which have all been terminated as a result of the prepayment of the underlying loan obligation. As of December 31, 2011 and 2010, there are no freestanding derivative contracts and all the Companys long-term loan obligations are generally in Philippine currency. Other than the debt obligations, the Company has transactional currency exposures. Such exposure arises when the transaction is denominated in currencies other than the functional currency of the operating unit or the counterparty.

*SGVMC214977*

- 82 The following tables show the Companys significant foreign currency-denominated financial assets and liabilities and their Philippine peso equivalents as of December 31, 2011 and 2010:
2011 Original Currency United Arab Emirates Swiss Norway Dirham Kroner Franc (AED) (CHF) (NOK) 11,840 44,848 56,688 150,673 150,673 (93,985) 119 629 748 179 179 569 757 1,496 2,253 2,253

USD Financial assets: Cash and cash equivalents Trade and other receivables Financial liabilities: Trade and other payables Obligations for program rights Net foreign currency-denominated financial assets (liabilities) 18,428 283,815 302,243 363,320 7,151 370,471 (68,228)

EUR 23,871 9,345 33,216 8,104 (19) 8,085 25,131

JPY 6,386 41,424 47,810 39,687 39,687 8,123

CAD 1,219 2,510 3,729 4,219 4,219 (490)

GBP 24,059 44,309 68,368 65,672 65,672 2,696

AUD 11 5,232 5,243 36 36 5,207

Denmark Kroner (DKK) 287 23 310 310

Sweden Kroner (SEK) 138 241 379 170 170 209

Saudi Arabia Riyal (SAR) 34,313 138,523 172,836 795 795 172,041

Taiwan Dollar (TWD) 841 841 317 317 524

Israeli New Shekel Peso (ILS) Equivalent 4,401,396 308 18,538,078 308 22,939,474 22,848,208 312,416 23,160,624 308 (221,150)

USD Financial assets: Cash and cash equivalents Trade and other receivables Financial liabilities: Trade and other payables Obligations for program rights Net foreign currency-denominated financial assets (liabilities) 39,898 212,838 252,736 272,185 6,770 278,955 (26,219)

EUR 3,636 95,452 99,088 87,653 19 87,672 11,416

JPY 25,831 691,989 717,820 263,947 263,947 453,873

CAD 982 2,122 3,104 5,444 5,444 (2,340)

GBP 120 3,749 3,869 4,835 4,835 (966)

2010 Original Currency United Arab Emirates Dirham Swiss Franc AUD (AED) (CHF) 189 2,787 2,976 98 98 2,878 7,023 4,200 11,223 20,267 20,267 (9,044) 11 116 127 81 81 46

Norway Kroner (NOK) 72 72 51 51 21

Denmark Kroner (DKK) 47 51 98 98

Sweden Kroner (SEK) 75 131 206 134 134 72

Saudi Arabia Riyal (SAR) 3,170 123,260 126,430 16,463 16,463 109,967

Taiwan Dollar (TWD)

Peso Equivalent

2,156,361 4,792 17,280,900 4,792 19,437,261 223 18,184,671 297,909 223 18,482,580 4,569 954,681

*SGVMC214977*

- 83 In translating the foreign currency-denominated monetary assets and liabilities into Philippine peso amounts, the Company used the following exchange rates:
Currency USD EUR JPY CAD GBP AUD AED CHF NOK DKK SEK SAR TWD ILS 2011 43.84 56.79 0.56 42.96 67.55 44.42 11.93 46.60 7.29 7.65 6.36 11.68 1.45 11.51 2010 43.84 58.17 0.54 43.78 67.53 44.53 11.95 46.39 7.43 7.79 6.45 11.70 1.50 12.29

The following tables demonstrate the sensitivity of the Companys income before income tax to a reasonably possible change in foreign exchange rates, with all other variables held constant. There is no impact on the Companys equity other than those already affecting the net income.
2011 Increase (Decrease) in P to Foreign = Effect on Currency Income Before Exchange Rate Income Tax 2.2% (P65,499) = (4.2%) 125,540 11.6% 165,764 (1.0%) (14,850) 2.8% 127 (7.9%) (360) 5.5% (1,147) (2.4%) 494 5.9% 10,732 (0.5%) (95) 5.7% 13,256 (4.3%) (9,971) 0.6% (6,661) (3.6%) 40,249 13.0% 3,457 (1.5%) (394) 13.8% 2,265 (1.3%) (213) 17.7% 419 (1.9%) (46) 14.7% 196 (1.8%) (24) 5.3% 106,160 (3.7%) (74,501) 10.7% 81 (3.1%) (23) 10.4% 367 (4.4%) (156) 2010 Increase (Decrease) in P to Foreign = Currency Exchange Rate 2.6% (4.2%) 4.9% (0.3%) 2.4% (5.0%) 0.5% (4.1%) 3.7% (2.3%) 2.2% (5.7%) 6.7% (7.9%) 1.3% (3.0%) 7.7% (5.7%) 9.2% (3.7%) 8.6% (6.9%) 6.8% (6.0%) 3.1% (6.8%)

USD EUR JPY CAD GBP AUD AED CHF NOK DKK SEK SAR TWD ILS

Effect on Income Before Income Tax (P30,414) = 48,243 32,308 (1,941) 5,923 (12,232) (526) 4,153 (2,383) 1,481 2,789 (7,285) (7,247) 8,580 28 (64) 12 (9) 70 (28) 40 (32) 87,710 (77,241) 215 (466)

*SGVMC214977*

- 84 The change in currency rate is based on the Companys best estimate of expected change considering historical trends and experiences. Positive change in currency rate reflects a weaker peso against foreign currency. The Company computes for the percentages of changes in exchange rates for the foreign currency-denominated accounts by comparing the year-end closing rates or existing foreign currency exchange rates with the forward foreign currency exchange rates three months before and after financial reporting date. The Company assumes the trend for the six months period to be its exposure on foreign currency fluctuations. Credit Risk The Company is exposed to credit risk from operational and certain of its financing activities. On the Companys credit risk arising from operating activities, the Company only extends credit with recognized and accredited third parties. The Company implements a pay before broadcast policy to new customers. In addition, receivable balances are monitored on an ongoing basis. Such determination takes into consideration the age of the receivable and the current solvency of the individual accounts. With regard to the Companys financing activities, as a general rule, the Company transacts these activities with counterparties that have a long credit history in the market and outstanding relationship with the Company. The policy of the Company is to have the BOD accredit these banks and/or financial institutions before any of these financing activities take place. With respect to credit risk arising from the financial assets of the Company, exposure to credit risk arises from default of the counterparty. There is no requirement for collateral over trade receivables since the Company trades only with recognized and accredited counterparties. The maximum exposure to credit risk is partly represented by the carrying amounts of the financial assets that are reported in the consolidated statements of financial position. Credit Risk Exposures. The table below shows the gross maximum exposure to on- and offbalance sheet credit risk exposures of the Company, without considering the effects of collateral, credit enhancements and other credit risk mitigation techniques as of December 31: 2011 Loans and receivables: Cash and cash equivalents (excluding cash on hand) Trade and other receivables - net (excluding advances to suppliers) Deposits AFS investments P8,572,754 = 7,024,286 102,327 264,892 P15,964,259 = 2010 = P5,758,807 5,961,991 111,476 265,066 = P12,097,340

*SGVMC214977*

- 85 Credit Quality per Class of Financial Asset. The credit quality of financial assets is being managed by the Company using internal credit ratings. The following tables below shows the credit quality by class of financial assets based on the Companys credit rating system as of December 31, 2011 and 2010:
2011 Neither Past Due nor Impaired Past Due but High Moderate Low not Impaired Loans and receivables: Cash and cash equivalents: Cash in banks Cash equivalents Trade receivables: Airtime Subscriptions Others Nontrade receivables Due from related parties Deposits AFS investments

Impaired

Total

P3,468,806 = 5,103,948 2,037,388 246,373 317,140 270,608 66,889 264,892 P11,776,044 =

P = 618,902 38,969 33,677 891 35,438 P727,877 =

P = 11,638 58,436 32,330 1,856 P104,260 =

P = 1,591,995 372,177 635,137 167,485 171,328 P2,938,122 =

P = 789,538 52,293 163,865 81,189 P1,086,885 =

P3,468,806 = 5,103,948 5,049,461 768,248 1,182,149 522,029 171,328 102,327 264,892 P16,633,188 =

Neither Past Due nor Impaired Moderate High Loans and receivables: Cash and cash equivalents: Cash in banks Cash equivalents Trade receivables: Airtime Subscriptions Others Nontrade receivables Due from related parties Deposits AFS investments

2010 Past Due but Low not Impaired

Impaired

Total

= P2,806,937 2,951,870 1,291,703 98,685 185,068 87,941 111,476 265,066 = P7,798,746

= P 390,089 37,974 29,305 3,642 = P461,010

= P 7,275 65,524 32,228 2,943 = P107,970

= P 1,863,945 624,483 689,901 266,893 31,319 = P3,476,541

= P 683,670 55,661 77,528 64,064 = P880,923

= P2,806,937 2,951,870 4,236,682 882,327 1,014,030 425,483 31,319 111,476 265,066 = P12,725,190

The credit quality of the financial assets was determined as follows: High Credit Quality This includes deposits or placements to counterparties with good credit rating or bank standing. For receivables, this covers, as of financial reporting date, accounts of good paying customers, with good credit standing and with no history of account treatment for a defined period. This also includes claims from Elite subscribers, advance payers, airtime and channel lease with advance payment arrangements, related parties with offsetting arrangement and existing employees.

*SGVMC214977*

- 86 Moderate Credit Quality For receivables, this covers accounts of standard paying customers, those whose payments are within the credit term, and new customers for which sufficient credit history has not been established. This also includes claims from Superior subscribers, airtime and channel lease and related parties without offsetting arrangement. Low Credit Quality For receivables, this covers accounts of slow paying customers and those whose payments are received upon demand at financial reporting date. This also includes claims from Special subscribers. Trade Receivables These represent amounts collectible from advertising agencies, advertisers or trade customers arising from the sale of airtime, subscription, services and/or goods in the ordinary course of business. Airtime. This account refers to revenue generated from the sale of time or time block within the on-air broadcast hours on television and radio. Subscriptions. This account refers to revenue generated from regular subscribers fees for either: (1) access to programs aired through DTH and cable television systems, or (2) direct sale of publications to subscribers. Others. This account refers to other revenue generated from the sale of goods and services. Nontrade Receivables These represent claims, arising from sources other than the sale of airtime, subscriptions, services and goods in the ordinary course of business, that are reasonably expected to be realized in cash. The following tables below show the aging analysis of past due but not impaired receivables per class that the Company held as of December 31, 2011 and 2010. A financial asset is past due when a counterparty has failed to make a payment when contractually due.
2011 Neither Past Past Due but not Impaired Due nor 30 Days Impaired Less than 30 and Over Trade receivables: Airtime Subscriptions Others Nontrade receivables Due from related parties P2,667,928 = 343,778 383,147 273,355 P3,668,208 = P1,121,334 = 119,306 117,760 23,382 P1,381,782 = P470,661 = 252,871 517,377 144,103 171,328 P1,556,340 =

Impaired P789,538 = 52,293 163,865 81,189 P1,086,885 =

Allowance (P525,443) = (58,528) (23,821) (61,137) (P668,929) =

Total P4,524,018 = 709,720 1,158,328 460,892 171,328 P7,024,286 =

*SGVMC214977*

- 87 2010 Past Due but not Impaired Neither Past Due nor 30 Days Impaired Less than 30 and Over Trade receivables: Airtime Subscriptions Others Nontrade receivables Due from related parties = P1,689,067 202,183 246,601 94,526 = P2,232,377 = P792,428 152,664 100,417 119,400 = P1,164,909 = P1,071,517 471,819 589,484 147,493 31,319 = P2,311,632

Impaired = P683,670 55,661 77,528 64,064 = P880,923

Allowance (P491,246) = (54,719) (22,271) (59,614) (P627,850) =

Total = P3,745,436 827,608 991,759 365,869 31,319 = P5,961,991

Based on the cash flow projection, past due receivables are expected to be collected within 2011. Liquidity Risk The Company seeks to manage its funds through cash planning on a weekly basis. This undertaking specifically considers the maturity of both the financial investments and financial assets and projected operational disbursements. As part of its liquidity risk management, the Company regularly evaluates its projected and actual cash flows. As a general rule, cash balance should be equal to P2 billion at any given time to compensate for 2 months of operational = exigencies amidst occasional fluctuation of cash inflows. It is the Companys objective to maintain a balance between continuity of funding and flexibility through the use of bank credit and investment facilities. As such, the Company continuously assesses conditions in the financial markets for opportunities to pursue fund raising activities. In 2010, the Company closed a P10,000 million fund raising activities with final maturity of up to = 2017. The Company did not carry out any fund or capital raising activity in 2011. Currently, the debt maturity profile of the Company ranges from 2.5 to 6 years. Also, the Company places funds in the money market only when there are surpluses from the Companys requirements. Placements are strictly made based on cash planning assumptions and as much as possible, covers only a short period of time. The tables below summarize the maturity profile of the Companys financial assets and liabilities based on contractual undiscounted payments.
Within One Year Cash and cash equivalents Trade receivables: Airtime Subscription Others Nontrade receivables Due from related parties P8,635,053 = 4,524,018 709,720 1,158,328 460,892 171,328 P15,659,339 = One to Two Years P = P = Two to Three Years P = P = 2011 Three to Four Years P = P = More than Four Years P = P =

Total P8,635,053 = 4,524,018 709,720 1,158,328 460,892 171,328 P15,659,339 =

Trade and other payables* Obligations for program rights Interest-bearing loans and borrowings Convertible note Customers deposits

P7,138,757 = 606,597

P = 97,808

P =

P =

P =

P7,138,757 = 704,405 14,892,697 250,000 207,849 P23,193,708 =

985,073 828,629 1,745,534 800,243 10,533,218 250,000 207,849 P8,730,427 = P926,437 = P1,953,383 = P800,243 P10,783,218 = = *Excluding deferred revenue, accrued taxes and other payables to government agencies.

*SGVMC214977*

- 88 2010 Three to Four Years = P = P

Within One Year Cash and cash equivalents Trade receivables: Airtime Subscription Others Nontrade receivables Due from related parties = P5,821,334 3,745,436 827,608 991,759 365,869 31,319 = P11,783,325

One to Two Years = P = P

Two to Three Years = P = P

More than Four Years = P = P

Total = P5,821,334 3,745,436 827,608 991,759 365,869 31,319 = P11,783,325

Trade and other payables* Obligations for program rights Interest-bearing loans and borrowings Due to a related party Customers deposits

= P7,421,278 607,370

= P 20,069

= P 35,793

= P 8,870

= P 31,741 9,674,075 = P9,705,816

= P7,421,278 703,843 12,540,231 92,400 261,109 = P21,018,861

592,970 704,666 646,123 922,397 92,400 261,109 = P8,951,045 = P705,439 = P1,001,568 = P654,993 *Excluding deferred revenue, accrued taxes and other payables to government agencies.

Capital Management The Companys capital structure pertains to the mix of long-term sources of funds. When the Company expands, it needs capital, and that capital can come from debt or equity. The primary objective of the Companys capital management is to ensure that it maintains healthy capital ratios and strong credit ratings while viably supporting its business to maximize shareholder value. The Companys approach focuses on efficiently allocating internally generated cash for operational requirements and investments to grow the existing business as well as to deliver on its commitment of a regular dividend payout at a maximum of 50% of the previous years net income. Shortages if any and acquisitions or investments in new business are funded by the incurrence of additional debt largely capped by existing loan covenants on financial ratios. As evidenced by the quarterly financial certificates that the Company issued to its lenders, all financial ratios are within the required limits all throughout 2011 and 2010 as follows:
2011 Financial Ratios Loan Agreement Debt to equity Debt to earnings before income tax, depreciation and amortization Debt service coverage ratio SCA Facility, BDO Facility, Syndicated Loan Facility, Combined Facility Agreements Debt to earnings before income tax, depreciation and amortization Earnings before income tax to financing cost Debt service coverage ratio Required Less than or equal to 2.50 Less than or equal to 2.25 Greater than or equal to 1.10 1st Quarter 1.32 1.68 15.87 2nd Quarter 1.20 1.83 7.51 3rd Quarter 1.15 1.98 7.70 4th Quarter 1.20 2.02 11.04

Less than or equal to 2.25 Greater than or equal to 3.00 Greater than or equal to 1.10

1.61 5.00

1.86 4.00

1.93 3.88

2.07 4.48

*SGVMC214977*

- 89 2010 Financial Ratios Loan Agreement Debt to equity Debt to earnings before income tax, depreciation and amortization Debt service coverage ratio SCA Facility, BDO Facility, Syndicated Loan Facility, Combined Facility Agreements Debt to earnings before income tax, depreciation and amortization Earnings before income tax to financing cost Debt service coverage ratio Required Less than or equal to 2.50 Less than or equal to 2.25 Greater than or equal to 1.10 1st Quarter 2nd Quarter 3rd Quarter 1.18 1.03 9.26 4th Quarter 1.18 1.11 17.39

Less than or equal to 2.25 Greater than or equal to 3.00 Greater than or equal to 1.10

1.13 5.74 7.25

1.04 7.20 7.18

1.04 7.47

1.05 5.88

The following table shows the financial ratios that Sky Cable is required to maintain in accordance with the DRA: Financial ratios Total liabilities to equity Debt service coverage ratio Required Maintain at all times not exceeding 2:1 Maintain at least 1.5 times 2011 0.64 2.55 2010 0.85 2.49

32. Financial Assets and Liabilities The following tables set forth the carrying amounts and estimated fair values of consolidated financial assets and liabilities recognized as of December 31, 2011 and 2010. There are no material unrecognized financial assets and liabilities as of December 31, 2011 and 2010.
2011 Carrying Amount Financial Assets Loans and receivables: Cash and cash equivalents Trade and other receivables net (excluding advances to suppliers) Deposits (included under Other noncurrent assets account in the consolidated statements of financial position) AFS investments P8,635,053 = 7,024,286 2010 Carrying Amount = P5,821,334 5,961,991

Fair Value P8,635,053 = 7,024,286

Fair Value = P5,821,334 5,961,991

102,327 264,892 P16,026,558 =

94,307 264,892 P16,018,538 =

111,476 265,066 = P12,159,867

110,211 265,066 = P12,158,602

*SGVMC214977*

- 90 2011 Carrying Amount Financial Liabilities Other financial liabilities at amortized cost: Trade and other payables* Interest-bearing loans and borrowings Obligations for program rights Due to a related party (included as part of Other noncurrent liabilities) Convertible note Customers deposits (included as part of Other noncurrent liabilities) 2010 Carrying Amount

Fair Value

Fair Value

P7,138,757 = 12,511,881 704,405 211,389 207,849 P20,774,281 =

P7,138,757 = 12,569,879 700,688 239,211 256,400 P20,904,935 =

= P7,421,278 9,642,713 703,843 92,400 261,109 = P18,121,343

= P7,421,278 9,825,357 714,670 83,518 224,656 = P18,269,479

*Excluding deferred revenue, accrued taxes and other payables to government agencies.

Fair Value of Financial Instruments The following methods and assumptions were used to estimate the fair value of each class of financial instrument for which it is practicable to estimate such value: Cash and Cash Equivalents, Trade and Other Receivables and Trade and Other Payables. Due to the short-term nature of transactions, the fair values of these instruments approximate the carrying amounts as of financial reporting date. AFS Investments. The fair values of publicly-traded instruments were determined by reference to market bid quotes as of financial reporting date. Investments in unquoted equity securities for which no reliable basis for fair value measurement is available are carried at cost, net of any impairment. Deposits. Fair value of these instruments is computed by discounting future cash flows using the risk-free interest rates for similar type of instruments adjusted for credit risk. Interest-bearing Loans and Borrowings. Fair value was computed based on the following: Fair Value Assumptions Estimated fair value is based on the discounted value of future cash flows using the applicable risk-free rates for similar types of loans adjusted for credit risk. The interest rates used to discount the future cash flows have ranged from 1.0% to 5.4%. The face value approximates fair value because of recent and frequent repricing (i.e., 3 months) based on market conditions.

Term loans

Other variable rate loans

Obligations for Program Rights. Estimated fair value is based on the discounted value of future cash flows using the applicable risk-free rates for similar types of loans adjusted for credit risk.

*SGVMC214977*

- 91 Due to a Related Party. The fair value of the Companys payable to Bayantel was calculated by discounting future cash flows using the applicable risk-free rates for similar types of loans adjusted for credit risk. Convertible Note. Fair value was computed based on the discounted value of future cash flows using the PDST-R2 rate plus 1% credit spread as of December 31, 2011. Customers Deposits. The fair values were calculated by discounting the expected future cash flows at prevailing PDST-F rate plus applicable credit spread ranging from 2.1% to 6.5% in 2011 and 1.3% to 8.5% in 2010. Derivative Instruments Embedded Derivatives. Sky Cable bifurcated embedded derivatives from its various nonfinancial contracts. These are denominated in USD which is not the functional currency of Sky Cable or its counterparty. The total notional amount as of December 31, 2008 amounted to $0.7 million. The fair value of the embedded derivative assets as of December 31, 2008 amounted to P 16 million. = The net movements in fair value changes of the Companys derivative instruments as of December 31, 2009 are as follows: Balance at beginning of year Net changes in fair value of derivatives Not designated as accounting hedges Less fair value of settled instruments Balance at end of year = P16,223 (1,233) 14,990 (14,990) = P

Fair Value Hierarchy The Company uses the following hierarchy for determining and disclosing the fair value of financial instruments by valuation technique: Level 1: Quoted (unadjusted) prices in active markets for identical assets or liabilities. Level 2: Other techniques for which all inputs which have a significant effect on the recorded fair value are observable, either directly or indirectly. Level 3: Techniques which use inputs which have a significant effect on the recorded fair value that are not based on observable market data. As of December 31, 2011 and 2010, the Companys AFS financial assets amounting P126 million = and P117 million (see Note 13), respectively, are measured at fair value under Level 1 of the fair = value hierarchy. There are no other financial assets and liabilities recognized at fair value. Also, as of December 31, 2011 and 2010, there were no transfers between levels in the fair value hierarchy. As of December 31, 2011 and 2010, the Company has no financial instruments carried at fair value which is based on Levels 2 and 3.

*SGVMC214977*

- 92 -

33. EPS Computations Basic EPS amounts are calculated by dividing the net income for the period attributable to common shareholders by the weighted average number of common shares outstanding during the period. The following table presents information necessary to calculate EPS:
2011 (a) Net income attributable to equity holders of the Parent Company (b) Weighted average of shares outstanding: At beginning of year Acquisitions of PDRs (see Note 21) Issuances of PDRs (see Note 21) At end of year Basic/diluted EPS (a/b) P2,420,072 = 2010 = P3,178,631 2009 = P1,702,397

754,759,247 (224,000) 754,535,247 P3.207 =

765,239,530 (13,563,616) 3,083,333 754,759,247 = P4.211

767,390,563 (2,181,716) 30,683 765,239,530

= P2.225

The Company has no dilutive potential common shares outstanding, therefore basic EPS is the same as diluted EPS.

34. Note to Consolidated Statements of Cash Flows

2011 Noncash investing and financing activities: Acquisitions of program rights on account Acquisitions of property and equipment under finance lease Acquisition of noncontrolling interests 2010 2009

P391,203 = 20,273

= P345,886 45,336

= P410,877 37,031 277,200

35. Other Matters a. In 1972, the Parent Company discontinued its operations when the government took possession of its property and equipment. In the succeeding years, the property and equipment were used without compensation to the Parent Company by Radio Philippines Network, Inc. (RPN) from 1972 to 1979, and Maharlika Broadcasting System (MBS) from 1980 to 1986. A substantial portion of these property and equipment was also used from 1986 to 1992 without compensation to the Parent Company by Peoples Television 4, another government entity. In 1986, the Parent Company resumed commercial operations and was granted temporary permits by the government to operate several television and radio stations.

*SGVMC214977*

- 93 The Parent Company, together with Chronicle Broadcasting System, filed a civil case on January 14, 1988 against Ferdinand E. Marcos and his family, RPN, MBS, et. al, before the Sandiganbayan to press collection of the unpaid rentals for the use of its facilities from September 1972 to February 1986 totaling P305 million plus legal interest compounded = quarterly and exemplary damages of P100 million. = The BOD resolved on June 27, 1991 to declare as scrip dividends, in favor of all stockholders of record as of that date, whatever amount that may be recovered from the foregoing pending claims and the rentals subsequently settled in 1995. The scrip dividends were declared on March 29, 2000. In 2003, additional scrip dividends of P13 million were recognized for the = said stockholders. On April 28, 1995, the Parent Company and the government entered into a compromise settlement of rental claims from 1986 to 1992. The compromise agreement includes payment to the Parent Company of P30 million (net of the governments counterclaim against the = Parent Company of P68 million) by way of TCCs or other forms of noncash settlement as full = and final settlement of the rentals from 1986 to 1992. The TCCs were issued in 1998. b. The Company has contingent liabilities with respect to claims and lawsuits filed by third parties. The events that transpired last February 4, 2006, which resulted in the death of 71 people and injury to about 200 others led the Company to shoulder the burial expenses of the dead and medical expenses of the injured, which did not result in any direct or contingent financial obligation that is material to the Company. The Company has settled all of the funeral and medical expenses of the victims of the tragedy. Given the income flows and net asset base of the Company, said expenses do not constitute a material financial obligation of the Company, as the Company remains in sound financial position to meet its obligations. As of March 2, 2012, the claims in connection with the events of February 4, 2006 are still pending and remain contingent liabilities. While the funeral and medical expenses have all been shouldered by the Company, there still exist claims for compensation for the deaths and injuries, the amount of which have not been declared and cannot be determined with certainty at this time. Management is nevertheless of the opinion that should there be any adverse judgment based on these claims, this will not materially affect the Companys financial position and performance. c. In relation to the consolidation of Sky Cable and Home Cable in 2004, a competitor television broadcasting company (complainant) filed a case before the NTC for unlawful merger and unlawful cross-ownership and common control and operations of telecommunications companies and cable companies with a prayer for cease and desist order. As of March 2, 2012, the hearing of this case is ongoing before the NTC. It is the opinion of Sky Visions legal counsels that the case filed by the complainant is without legal basis and would not have a material impact to the consolidated financial statements.

*SGVMC214977*

ABS-CBN CORPORATION AND SUBSIDIARIES INDEX TO THE CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY SCHEDULES
DECEMBER 31, 2011

I.

Supplementary Schedules required by Annex 68-E Schedule A. Schedule B. Schedule C. Schedule D. Schedule E. Schedule F. Schedule G. Schedule H. Financial Assets Amounts Receivable from Directors, Officers, Employees, Related Parties and Principal Stockholders (Other than Related Parties) Amounts Receivable/Payable from/to Related Parties which are Eliminated during the Consolidation of Financial Statements Intangible Assets - Other Assets Long-Term Debt Indebtedness to Related Parties (Long-Term Loans from Related Companies) Guarantees of Securities of Other Issuers Capital Stock

II. III. IV. V.

Reconciliation of Retained Earnings Available for Dividend Declaration Schedule of Effective Standards and Interpretations Map of the Relationships of the Companies within the Group Financial Ratios

ABS-CBN CORPORATION and SUBSIDIARIES Schedule A. Financial Assets December 31, 2011 Value Based on Market Quotations at end of reporting period

Name of Issuing Entity and Description of Each Issue Loans and Receivables : (Amounts in Thousands) Cash and Cash Equivalents Cash on hand and in banks Cash equivalents Subtotal

Number of Shares or Principal Amount of Bonds and Notes

Amount Shown in the Balance Sheet

Income received & accrued

3,531,105 5,103,948 8,635,053

3,531,105 5,103,948 8,635,053

86,410 90,651 177,061

Trade and other receivables (excluding advances to suppliers) Airtime Subscriptions Others Advances to employees and talents Due from related parties (see Note 22) Others Allowance for doubtful accounts Subtotal Deposits AFS investments Total -

5,049,461 768,248 1,182,149 261,834 171,328 260,195 (668,929) 7,024,286 Not Applicable Not Applicable 15,659,339

5,049,461 768,248 1,182,149 261,834 171,328 260,195 (668,929) 7,024,286

15,659,339

177,061

ABS-CBN CORPORATION and SUBSIDIARIES Schedule B. Amounts Receivable from Directors, Officers, Employees, Related Parties and Principal Stockholders (Other than Affiliates) December 31, 2011 Deductions Balance at beginning of period Amounts collected Amounts written off Balance at end of period

Name and Designation of debtor

Additions

Current

Not current

NONE
Note: Receivables from officers and employees are within the ordinary course of business.

ABS-CBN CORPORATION and SUBSIDIARIES Schedule C.1 Amounts Receivable from Related Parties which are eliminated during Consolidation of Financial Statements December 31, 2011 DEDUCTIONS Name and Designation of debtor ABS-CBN CORPORATION ABS-CBN CONSUMER PRODUCTS ABS-CBN FILM PRODUCTIONS, INC. ABS-CBN HUNGARY KFT. ABS-CBN GLOBAL PHILS ABS-CBN INTL JAPAN, K.K. ABS-CBN INTEGRATED AND STRATEGIC ABS-CBN INTERACTIVE, INC. ABS-CBN AUSTRALIA PTY LTD ABS-CBN INTL UK ABS-CBN INTERNATIONAL - ME ABS-CBN INTL EUROPE LTD - ITALY ABS-CBN CANADA,ULC ABS-CBN MULTIMEDIA, INC. ABS-CBN PUBLISHING, INC. ABS-CBN GLOBAL CARGO CORPORATION ABS-CBN SSC PTE. LTD-SG ABS-CBN SHARED SERVICE CENTER PTE., (ROHQ) ABS-CBN NEWS CHANNEL INC. AMCARA BROADCASTING CORPORATION CENTRAL CATV, INC. (SKY CABLE INC.) CENTER FOR COMMUNICATION ARTS, INC CREATIVE PROGRAMS, INC. E-MONEY PLUS, INC. LOPEZ, INC. PROSTAR, INC. ROADRUNNER NETWORK INC. SAPIENTIS HOLDINGS CORPORATION STAR RECORDINGS, INC. STAR SONGS INC STUDIO 23, INC. Others Balance at beginning of period 1,334,964,238.06 15,258.88 386,406,091.63 57,593,887.78 779,181.00 66,945,058.31 391,962.38 2,024,822.79 3,030,578.39 178,300.17 47,781,576.16 341,798.27 3,592,231.79 125,074,022.44 5,888,202.28 98,405,479.07 8,846,138.54 72,815,322.50 1,144,871.52 5,164,707.81 1,131.00 22,611,252.23 83,487.40 1,542,337.40 173,867.16 2,245,795,804.94 Additions 1,348,480,506.36 67,384,119.87 366,621.00 64,598,355.98 2,315,616.56 35,146,844.82 101,689,075.72 1,943,655.14 5,007,739.93 91,682,961.40 15,482,041.28 4,859,010.26 10,339,648.52 21,443,043.52 52,401,991.24 11,927,519.47 24,248,150.80 75,314,122.49 324,195.55 166342.112 15,489,577.70 538,041,512.33 16,908,912.17 25,226,194.66 14,590,900.21 95,468,469.31 2,640,847,128.41 Amounts Collected (74,126,623.72) (3,094,797.56) (35,146,844.82) (1,961,447.34) (2,024,822.79) (6,637,630.32) (39,648,471.77) (53,266,027.77) (87,238,438.99) (233,910.84) (37,573,833.72) (324,195.55) (148,846.22) (16,283,014.72) (14,429,767.74) (372,138,673.89) Amounts Written Off Current 2,683,444,744.42 15,258.88 379,663,587.78 366,621.00 122,192,243.76 168,634,134.03 374,170.18 1,400,688.00 178,300.17 139,464,537.56 341,798.27 19,074,273.07 4,859,010.26 10,339,648.52 106,868,594.18 5,024,165.75 11,927,519.47 35,415,190.88 8,612,227.70 110,555,611.26 1,311,213.63 5,015,861.59 15,490,708.70 538,041,512.33 23,237,149.68 25,309,682.06 1,703,469.87 95,642,336.47 4,514,504,259.47 Non Current Balance at end of Period 2,683,444,744.42 15,258.88 379,663,587.78 366,621.00 122,192,243.76 168,634,134.03 374,170.18 1,400,688.00 178,300.17 139,464,537.56 341,798.27 19,074,273.07 4,859,010.26 10,339,648.52 106,868,594.18 5,024,165.75 11,927,519.47 35,415,190.88 8,612,227.70 110,555,611.26 1,311,213.63 5,015,861.59 15,490,708.70 538,041,512.33 23,237,149.68 25,309,682.06 1,703,469.87 95,642,336.47 4,514,504,259.47 -

ABS-CBN CORPORATION and SUBSIDIARIES Schedule C.2 Amounts Payable from Related Parties which are eliminated during Consolidation of Financial Statements December 31, 2011 DEDUCTIONS Name and Designation of creditor ABS-CBN CORPORATION ABS-CBN CONSUMER PRODUCTS ABS-CBN FILM PRODUCTIONS, INC. ABS-CBN HUNGARY KFT. ABS-CBN GLOBAL PHILS ABS-CBN INTL JAPAN, K.K. ABS-CBN INTEGRATED AND STRATEGIC ABS-CBN INTERACTIVE, INC. ABS-CBN AUSTRALIA PTY LTD ABS-CBN INTERNATIONAL - LLC ABS-CBN INTL UK ABS-CBN INTERNATIONAL - ME ABS-CBN INTL EUROPE LTD - ITALY ABS-CBN PUBLISHING, INC. ABS-CBN Culinary INC. ABS-CBN GLOBAL CARGO CORPORATION ABS-CBN SHARED SERVICE CENTER PTE., (ROHQ) ABS-CBN NEWS CHANNEL INC. AMCARA BROADCASTING CORPORATION BENPRES HOLDINGS BENPRES PUBLISHING, INC. (FORMER GUIDE MAGAZINE) CENTRAL CATV, INC. (SKY CABLE INC.) CENTER FOR COMMUNICATION ARTS, INC CREATIVE CREATURES (CCI) CREATIVE PROGRAMS, INC. E-MONEY PLUS, INC. LOPEZ, INC. MANILA ELECTRIC COMPANY ROADRUNNER NETWORK INC. Balance at beginning of period (241,401,374.80) (117,251.15) (6,254.51) (115,733,093.52) (3,119,485.59) (708,046.82) (172,489,503.92) (27,031,928.17) (0.01) (7,542,128.11) (9,742,296.30) (4,544,182.93) (607,809.13) (321,437,417.81) (72,128,992.32) (136,391,874.37) (49,000.00) (80,500.00) (178,899,468.54) (81,134,921.90) (2,164,150.75) (322,132.20) (7,398,305.24) Additions (787,402,299.97) (563,450.25) (81,745,780.11) (4,239,096.46) (3,096,440.04) (247,195.35) (18,955,672.88) (0.84) (24,838,272.51) (10,288,879.80) (8,330,576.61) (465,742.43) (137,489,309.58) (1,071,199.81) Amounts Paid 5,456.65 6,254.51 115,733,093.52 2,000.00 101,709,708.88 8,087,928.42 4,544,182.93 602,352.49 135,627,203.88 49,000.00 80,500.00 72,740,489.93 200,074.80 7,337,196.58 Amounts Written Off Current (1,028,803,674.78) (111,794.50) (3,117,485.59) (1,271,497.07) (70,779,795.04) (108,777,708.28) (0.01) (4,239,096.46) (3,096,440.04) (247,195.35) (26,497,800.99) (1,654,367.88) (0.84) (5,456.64) (346,275,690.32) (82,417,872.12) (8,330,576.61) (465,742.43) (764,670.49) (316,388,778.12) (8,394,431.97) (1,964,075.95) (1,393,332.01) (61,108.66) Non-Current Balance at end of Period (1,028,803,674.78) (111,794.50) (3,117,485.59) (1,271,497.07) (70,779,795.04) (108,777,708.28) (0.01) (4,239,096.46) (3,096,440.04) (247,195.35) (26,497,800.99) (1,654,367.88) (0.84) (5,456.64) (346,275,690.32) (82,417,872.12) (8,330,576.61) (465,742.43) (764,670.49) (316,388,778.12) (8,394,431.97) (1,964,075.95) (1,393,332.01) (61,108.66)

ABS-CBN CORPORATION and SUBSIDIARIES Schedule D. Intangible Assets - Other Assets December 31, 2011

Description (Amounts in Thousands) Program Rights Story, Music and Publication Rights Movie In- Process Video Rights and Record Master Customer Relationships Trademark Cable Channels- CPI Production and Distribution Business-ME Total

Beginning balance

Additions at cost

Charged to Cost and Expenses

Deductions Charged to other accounts (Disposal)

Other changes additions (deductions)

Ending balance

2,375,958 7,369 97,621 9,250 471,391 459,968 89,359 3,510,916

1,077,572 1,372 214,452 31,670 1,325,066

(990,111) (2,711) (240,613) (5,852) (9,835) (3,061) (1,252,183)

(466,095) (466,095)

133,148 915,568 6,160 1,054,876

2,463,419 6,030 71,460 35,068 128,609 915,568 459,968 92,458 4,172,580

Note: Charge to other accounts and other changes represent effect of business combination

ABS-CBN CORPORATION and SUBSIDIARIES Schedule E. Long-Term Debt December 31, 2011 Amount shown under caption "Current portion of long-term debt" Amount shown under caption "Longin related balance sheet term debt" in related balance sheet 400,000 209,215 12,193 41,693 663,101 10,150,400 1,686,709 11,671 11,848,780

Title of Issue and type of obligation (Amounts in Thousands) Bank Loans Term Loans : Loan Agreement Term Loans : Syndicated loans Term Loans : Obligations under finance lease Total

Amount of authorized indenture 400,000 10,359,615 1,698,902 53,364 12,511,881

ABS-CBN CORPORATION and SUBSIDIARIES Schedule F. Indebtedness to Related Parties December 31, 2011

Name of Related Parties

Balance at beginning of period

Balance at end of period

NOT APPLICABLE

ABS-CBN CORPORATION and SUBSIDIARIES Schedule G. Guarantees of Securities of Other Issuers December 31, 2011 Total amount guaranteed and outstanding

Name of issuing entity of securities guaranteed by Title of issue of each class the company for which this statement is filed of securities guaranteed

Amount owned by person for which statement is filed

Nature of guarantee

NONE

ABS-CBN CORPORATION and SUBSIDIARIES Schedule H. Capital Stock December 31, 2011

Title of Issue Common Shares -1 Par value

Number of shares authorized 1,500,000,000

Number of shares issued and outstanding as shown under related balance sheet caption 779,583,312

Number of shares reserved Number of shares for options, warrants, held by related conversion and other rights parties 447,012,602

Directors, officers and employees 1,585,034

Others 330,985,676 -

ABS-CBN CORPORATION AND SUBSIDIARIES SCHEDULE OF EFFECTIVE STANDARDS AND INTERPRETATIONS

DECEMBER 31, 2011

PFRSs PFRS 1, First-time Adoption of Philippine Financial Reporting Standards PFRS 2, Share-based Payment PFRS 3, Business Combinations PFRS 4, Insurance Contracts PFRS 5, Non-current Assets Held for Sale and Discontinued Operations PFRS 6, Exploration for and Evaluation of Mineral Resources PFRS 7, Financial Instruments: Disclosures PFRS 8, Operating Segments PAS 1, Presentation of Financial Statements PAS 2, Inventories PAS 7, Statement of Cash Flows PAS 8, Accounting Policies, Changes in Accounting Estimates and Errors PAS 10, Events after the Reporting Period PAS 11, Construction Contracts PAS 12, Income Taxes PAS 16, Property, Plant and Equipment PAS 17, Leases PAS 18, Revenue PAS 19, Employee Benefits PAS 20, Accounting for Government Grants and Disclosure of Government Assistance PAS 21, The Effects of Changes in Foreign Exchange Rates PAS 23, Borrowing Costs PAS 24, Related Party Disclosures PAS 26, Accounting and Reporting by Retirement Benefit Plans PAS 27, Consolidated and Separate Financial Statements PAS 28, Investments in Associates PAS 29, Financial Reporting in Hyperinflationary Economies PAS 31, Interests in Joint Ventures PAS 32, Financial Instruments: Presentation

Adopted/Not adopted/ Not applicable Adopted Not applicable Adopted Not applicable Not applicable Not applicable Adopted Adopted Adopted Adopted Adopted Adopted Adopted Not applicable Adopted Adopted Adopted Adopted Adopted Not applicable Adopted Adopted Adopted Not applicable Adopted Adopted Not applicable Adopted Adopted

-2PFRSs PAS 33, Earnings per Share PAS 34, Interim Financial Reporting PAS 36, Impairment of Assets PAS 37, Provisions, Contingent Liabilities and Contingent Assets PAS 38, Intangible Assets PAS 39, Financial Instruments: Recognition and Measurement PAS 40, Investment Property PAS 41, Agriculture Adopted/Not adopted/ Not applicable Adopted Not applicable Adopted Adopted Adopted Adopted Adopted Not applicable

Philippine Interpretation IFRIC4, Determining whether an Arrangement Adopted contains a Lease Philippine Interpretation IFRIC9, Reassessment of Embedded Derivatives Philippine Interpretation SIC27, Evaluating the Substance of Transactions Involving the Legal Form of a Lease Philippine Interpretation SIC31, Revenue - Barter Transactions Involving Advertising Services Philippine Interpretation SIC32, Intangible Assets - Web Site Costs
Adopted Adopted Adopted Adopted

PIC Q&A No. 2008-01 (Revised): PAS 19.78 Rate used in discounting Adopted post-employment benefit obligations PIC Q&A No. 2010-02: PAS 1R.16 Basis of preparation of financial statements
Adopted

ABS-CBN CORPORATION AND SUBSIDIARIES MAP OF THE RELATIONSHIPS OF THE COMPANIES WITHIN THE GROUP DECEMBER 31, 2011

LOPEZ, INC.

52.84

LOPEZ HOLDINGS CORPORATION

57.24 60.3%

Economic rights only

ABS-CBN CORPORAT

100% 100%

ABS-CBN Corporation
Broadcasting Cable and Satellite Others

ABS-CBN Corporation Parent Company Studio 23, Inc. 100% Amcara Broadcasting Network, Incorporated 40%

Sarimanok News Network, Inc. 100% Creative Programs, Inc. 100% Sky Vision Corporation 18.8% ABS-CBN Global Ltd. 100%
ABS-CBN Global Manila Branch ABS-CBN Global Taiwan Branch
ABS-CBN Europe Ltd. 100%

Roadrunner Network, Inc 100% ABS-CBN Interactive, Inc. 100%

ABS-CBN Multimedia, Inc. 100%

ABS-CBN Film Productions, Inc. 100% ABS-CBN Publishing, Inc. 100% Culinary Publications, Inc. 100% Star Recording, Inc. 100% Star Songs, Inc. 100% TV Food Chefs, Inc. 100%
ABS-CBN Integrated and Strategic Property Inc. 100% 100% The Big Dipper Digital Content & Design, Inc. 100%

ABS-CBN Italy Branch ABS-CBN Spain Branch

ABS-CBN Japan, Inc. 100%

ABS-CBN Europe Remittance, Inc. 100%

ABS-CBN Middle East-FZ LLC 100% ABS-CBN Middle East LLC E-Money Plus, Inc. 100%

ABS-CBN Global Hungary Kft. 100%

ABS-CBN Global Hungary Kft. Luxembourg Branch

ABS-CBN International, Inc. 100% ABS-CBN Telecom North America, Inc. 100% ABS-CBN Canada, ULC 100%
ABS-CBN Australia Pty. Ltd. 100%
ABS-CBN Global Remittance, Inc. 100%

ABS-CBN Shared Service Center, PTE. Ltd. 100% ABS-CBN Shared Service Center PTE. Ltd. - Manila ROHQ ABS-CBN Global Cargo Corporation 100% Professional Services for Television & Radio, Inc. 100%
ABS CBN Center for Communication Arts, Inc. 100%

Sapientis Holdings Corporation 100% Columbus Technologies, Inc. 70%

Multi-Media Telephony, Inc. 95%

ABS-CBN Global Netherlands B.V. 100% ABS-CBN Canada Remittance, Inc. 100%

Sky Cable Corporation 56.7%

Sky Cable
Sunvision Cable, Inc. 100% 100% 54.5%

Cavite Cable Corporation 100%

HM Cable Networks, Inc. 100%

Sun Cable Holdings, Inc. (SCHI)

100%

Telemondial Holdings, Inc. (THI)

45.5%

Pilipino Cable Corporation (PCC)

Isla Cable TV, Inc. 100%

100%
Satellite Cable TV, Inc. 100% Sun Cable Systems, Inc Bright Moon Cable Networks, Inc. 100% HM CATV, Inc. 100%

100%

45%

Bisaya Cable Television Network, Inc.

Moonsat Cable Television, Inc.

55%

Cepsil Consultancy and Management Corporation 100%

Hotel Interactive Systems, Inc. 100% Tarlac Cable Television Network, Inc. 100%

91.25%

91.52%

100%

First Ilocandia CATV, Inc.

Pacific CAT V, Inc.

Davao Cableworld Television, Inc.

70% JMY Advantage Corporation 95%

100%

Suburban Cable Network, Inc. 92.5%

Discovery Cable, Inc. 70%

30%

Cebu Cable Television, Inc.

Mactan CATV Network, Inc.

Home-Lipa Cable, Inc. 60%

ABS-CBN CORPORATION and SUBSIDIARIES Financial Ratios December 31, 2011

RATIOS

Formula

In Php ('000s)

2011

2010

Current Ratio

Current Assets Current Liabilities

18,490,832 10,518,948

1.76

1.36

Net Debt-to-equity ratio

Interest-bearing loans and borrowings less Cash and Cash equivalent Total Stockholders' Equity Total Assets Total Stockholders' Equity EBIT Interest Expense

3,876,827 20,335,658 44,808,076 20,335,658 3,240,342 698,461

0.19

0.22

Asset-to-equity ratio

2.20

2.20

Interest rate coverage ratio

4.64

5.67

Profitability ratios Gross Profit Margin

Gross Profit Net Revenue Net Income Net Revenue

8,511,585 25,046,576 2,507,163 25,046,576

34%

46%

Net Income Margin

10%

12%