PSE Circular for Brokers No. 2436-99

September 28, 1999 PSE CIRCULAR FOR BROKERS NO. 2436-99 Star Cinema sees 15% more revenues, local movies prospering with 50% tax cut Star Cinema Productions, Inc., a 45%-owned affiliate of ABS-CBN Broadcasting Corp., believes the local movie industry will experience unprecedented growth with the proposed reduction of the amusement tax from 30% to 15% of gross ticket sales. Star Cinema chief finance officer Beverly Fernandez expects the tax cut to be approved by Congress next year. "That means 15% more revenues for Star Cinema. Producers can definitely use the tax break to invest in new equipment, better technology and more films. We also welcome the revival of the FRB (Film Ratings Board) which gives incentives to high quality movies. Star Cinema is known for its quality movies and this is the reason we have not joined the bold bandwagon that has overtaken the industry this entire year," Fernandez says. Since it began operations in 1993, Star Cinema has consistently produced family-oriented feature films, making over 100 movies over the last five years. Fernandez says Star Cinema is likely to release a total of 22 movies this year and around the same number in 2000. "Our objective is to increase our share of the total market. Foreign films still grab some 52% of the movie-going public while local outfits share the remaining 48%. We may even go into experimental films next year, and try for FRB incentives. But by experimental, we don't mean all out bold ventures, maybe we will tackle more daring subjects," she stressed. Through its internal development concept and project development process, Star Cinema plans in advance all of the projects it will pursue during the year. It often casts talents under the management of ABS-CBN Talent Center. In line with the Company's strategy of exploiting synergies among its business lines, it also uses talents popularized in ABS-CBN's television programs or uses television programs themselves as basis for movies. LexLib Offerings for release in the last quarter of 1999-include Esperanza, the Movie, Anak, Pera o Bayong, based on a game segment in Channel 2's noontime toprater, Magandang Tanghali, Bayan, and a Robin Padilla-Jolina Magdangal starrer action flick. In May 1999, Star Cinema produced Isusumbong Kita sa Tatay Ko, the highest grossing movie in the Philippines.