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‘Winning strategy’ did not work out in the end for CTH

Aug 01. 2016
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By WATCHIRANONT THONGTEP
THE NAT

ALTHOUGH CTH blames the fragile economy for forcing it out of business, the truth is that the story of the country’s second-biggest pay-TV operator’s rise and fall offers another bitter lesson about a winner’s curse.
Back in late 2012, Cable Thai Holdings, led by veteran Thai investor Wichai Thongtaeng, hit the headlines as a “dark horse” in the race to bag the broadcasting rights to the English Premier League for three seasons from 2013-14 in Thailand, Laos and Cambodia, leaving market leader TrueVisions confused over customer retention and revamping its marketing strategy. 
CTH reportedly had to invest heavily, to the tune of Bt10 billion, to secure the top-tier soccer matches for three years.
It set a lofty goal of acquiring more than 7 million subscribers by offering affordable packages to lure mainly mass consumers. 
However, its subscriber base now is 3 million, far behind its original target. 
In terms of financial performance over the last two years, the 10 companies operating under CTH’s umbrella piled up debt of more than Bt24 billion and generated a loss of more than Bt6.6 billion, according to the Business Development Department of the Commerce Ministry. 
Those companies are CTH Thonburi, CTH Internet, CTH Cable TV, CTH LCO, CTH Content, CTH Member, CTH Hardware, CTH G-Marketing, CTH International and CTH Plc.
Besides the massive investment, CTH encountered a rash of internal problems between its management and other shareholders such as local cable-TV operators. 
From the beginning, management wanted to install a single billing system in return for those cable-TV operators’ support for a new advanced fibre-optic cable infrastructure, but they opposed this attempt. 
This issue prevented CTH, led by its first chief executive officer Krissana Ngampatipong, from expanding its subscriber base via the local cable-TV operators as planned in the first year.
It then decided to expand its distribution via satellite along with the cable platform. 
To make its service more attractive to a wider audience besides these soccer games, the company also invested more in securing entertainment programmes from international media powerhouses such as Fox International Channels and Hong Kong-based Celestial Tiger. 
It seemed to be a huge challenge to monetise this entertainment and sports content, given the operating costs and investment in new equipment. This resulted in more than Bt24.12 billion in combined debt last year. 
Meanwhile, the cable and satellite TV industry was hit hard by the change in the national broadcasting policy in 2014. 
 
New media landscape
The National Broadcasting and Telecommunications Com-mission was steering the national backbone from satellite-based to terrestrial-based free TV broadcasting through the auction of 24 commercial digital TV licences. 
Under this licence-based regime, cable and satellite TV operators were classified as pay-TV operators with commercials limited to six minutes per hour, while national terrestrial free-TV channels were allowed to air up to 12 minutes of commercials per hour. 
After this change, local audiences started migrating to free TV channels, which also became the new rivals for pay-TV operators like TrueVisions and CTH. 
Although CTH changed its leadership to Chirdsak Kukia-tinun as executive chairman in its second year and shifted its focus to sharing its acquired content with other satellite-TV platforms such as GMM Z, Sunbox and PSI Holdings, Internet protocol TV service providers and some free TV channels, this strategy did not improve the company’s revenue. 
To manage the costs of satellite transponders, the company decided to discontinue its pay-TV service in PSI Holdings, Sunbox and GMM Z before the latest disclosure to pull the plug on its operations effective on Monday. 
 

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