MCOT–Thai PBS merger plan faces financial reform test

Thailand’s proposed merger of MCOT Plc and the Thai Public Broadcasting Service (Thai PBS) is facing a key test not only over legal and organisational issues, but whether combining two state-backed media organisations with different financial challenges can create a sustainable future.

The State Enterprise Policy Committee (SEPO) has approved a restructuring plan for MCOT aimed at reviving its business performance, improving revenue generation and strengthening profitability. One of the proposed approaches is merging MCOT with Thai PBS.

However, the proposal is not yet final and must be submitted to the Cabinet for consideration and approval. The Ministry of Finance is preparing to present the matter to the Cabinet within the following week, or the week after if additional time is required.

A review of the financial performance of both organisations over nearly two decades highlights different structural challenges. MCOT has been affected by declining commercial revenue following digital disruption, while Thai PBS has faced increasing operating expenses, particularly personnel costs and programme production budgets.

MCOT’s business model hit by digital disruption

MCOT’s transformation into a listed public company in 2004 came during a strong period for traditional television broadcasting before digital television and online media reshaped the industry.

In the final quarter of 2004, MCOT recorded total revenue of 840.6 million baht and net profit of 158.5 million baht.

The following year, revenue increased to 3.47 billion baht, with net profit reaching 1.1 billion baht and a net profit margin of 31.7%.

MCOT continued generating profits for almost a decade, reaching a peak in 2013 with total revenue of 5.98 billion baht and net profit of 1.52 billion baht.

The company’s financial position changed after it won licences for two digital television channels in late 2013, with a combined value of 4 billion baht.

The impact became clearer in 2014, when revenue declined 26% to 4.45 billion baht amid digital disruption and political uncertainty. Net profit fell more than 69% to 481 million baht, while MCOT began carrying annual licence amortisation costs of 183 million baht.

Revenue continued falling in 2015 to 3.84 billion baht, while television advertising revenue dropped 31% to 1.67 billion baht. Net profit declined to only 44 million baht.

MCOT entered a loss-making period in 2016, recording a net loss of 757.79 million baht. Losses reached a record 2.54 billion baht in 2017 after revenue declined to 2.73 billion baht, alongside asset and licence impairment charges.

The company later returned the MCOT Family digital channel in 2019 as part of efforts to reduce losses.

In 2020, the Covid-19 crisis led MCOT to record additional asset impairment of more than 1.15 billion baht and set aside 432 million baht for an early retirement programme, resulting in a net loss of 2.02 billion baht.

Although MCOT reported profits in some later years, some gains were linked to accounting adjustments rather than core operations. In 2023, for example, reported profit of 587.36 million baht was supported by a 1.07 billion baht increase in the fair value of land. Excluding that adjustment, core operations remained in deficit.

By 2025, MCOT’s revenue had declined further to 1.12 billion baht, with a net loss of 308.34 million baht.

Thai PBS faces rising costs under fixed funding model

Thai PBS operates under a different financial structure from MCOT, receiving funding through a dedicated excise tax mechanism known as the “sin tax”.

The model allows Thai PBS to operate without relying on commercial advertising, but the law limits annual funding to no more than 2 billion baht.

Thai PBS initially maintained financial surpluses after its establishment in 2008. In its first year, it recorded revenue of 1.19 billion baht and expenses of 1.10 billion baht, resulting in a surplus of 87.45 million baht.

The organisation continued reporting positive financial results for several years, including a surplus of 847.65 million baht in 2010.

However, rising expenses gradually placed pressure on its finances, particularly personnel costs and programme production budgets.

In 2011, programme acquisition and production expenses stood at 641.85 million baht, while personnel compensation was 414.25 million baht.

By 2022, personnel expenses had increased to 736.99 million baht, while programme production costs reached 1.16 billion baht.

Together, the two categories totalled about 1.9 billion baht, almost equal to Thai PBS’s annual funding ceiling.

The increase created a widening gap between revenue and expenses, as funding remained restricted by the legal limit.

Between 2011 and 2022, personnel costs increased by nearly 78%, while programme production expenses rose by around 82%.

Thai PBS recorded its first deficit in 2021 at 155.25 million baht. The deficit widened to 251.86 million baht in 2022, followed by losses of 275.60 million baht in 2023 and 177.90 million baht in 2024.

Merger must address structural challenges

The financial positions of MCOT and Thai PBS show that the two organisations face different problems.

MCOT’s challenge is primarily revenue-related, as traditional broadcasting income has declined sharply due to changes in consumer behaviour and competition from digital platforms.

However, MCOT continues to hold valuable assets, particularly land holdings that have supported its balance sheet through accounting gains.

Thai PBS, meanwhile, has a more stable funding source but faces pressure from expanding operating costs, particularly personnel and programme production expenses.

The key challenge for the proposed merger is whether combining the two organisations can create economies of scale through shared infrastructure, reduced duplication, joint production resources and more efficient operations.

A successful restructuring would require addressing cost structures, workforce arrangements, technology systems and the differences between a commercially driven media organisation and a public broadcasting institution.

Without significant reform, the merger could risk creating a larger organisation carrying the existing financial burdens of both entities.

The final direction will depend on the Cabinet’s consideration of the proposal and whether the restructuring plan can establish a sustainable model for Thailand’s state-backed media organisations.

Source: Thansettakij