GMM Grammy
Head and heart: primary appeals of GMM 25 and ONE channels BUY
GMM Grammy Plc
Investment thesis
We accompanied fund managers on a visit to GMM Grammy company at its offices on 17 Dec 2015, and were greeted by GMM One Digital TV chief executive Takonkiet Viravan and GMM Channel Digital TV chief executive Saithip Montrikul Na Ayudhaya. In our view, their strategies to create catchy content and develop its super-prime soap operas (SPSO), series, and sitcoms, which are the most preferred attractions for Thai audiences, should lead to a bright long-term outlook for its digital TV business, because its content in hand can be used to attract larger audiences and maintain its strong position in the competition for digital TV market share in the super-prime-time slot. Our BUY rating stands.
ONE channel boasts alluring line-up of shows all week
ONE channel’s target group is the mass market in Bangkok and urban areas. Following success in SPSO and prime time series, ONE expanded SPSO airtime over weekends, coupled with top-rated sitcoms and continued with series following these as well as creative variety programs and reality shows. We believe the entertainment value of such line-ups will lead viewers to stay tuned and watch the channel all day, every day. We view that in FY15, ONE channel succeeded in creating a perception of a vehicle with strong content and infrastructure in terms of people and production. Another of its strengths is to create reality and seasonal content such as The Star and Song Kram Nang Ngam casting project, which has been able to generate high ratings and has also been useful for gathering acting talent for its other shows.
The company targets ratings for YE15 of 0.3 and YE16 of 0.9. It also targets an average advertising rate of Bt130k/minute of SPSO in FY16, against 100k/minute in FY15 and has its sights set on revenue of Bt1bn and Bt1.7bn in FY15 and FY16, respectively. The content cost is expected to be Bt1.5bn in FY16, against Bt1bn in FY15.
GMM 25—Entertaining dramas and fun premiere at 8pm
GMM25 Channel has aired SPSO and series that clearly focus on the newer generations. Therefore, media agencies can directly reach their targets via advertising through the station. We believe that the greatest strength of GMM 25 is its differentiated content, from Club Friday the Series to the SPSO, I Wanna Be Sup’tar, which is popular in Thailand and now in China, where it has garnered around 190 million viewers.
Its strategy for selling more product tie-ins (70% of total) than ad minutes is wise as it currently has a low cost per rating point (CPRP). Moreover, the channel’s focus is also online and on-ground business, which will be attractive to advertisers and media buyers. Such a strategy is to fill the gap in the market. It also aims to generate revenue of Bt400m and Bt800m in FY15 and FY16, respectively. Management guided that the firm had already sold Bt200-300m in advertising spots and product tie-ins for FY16. The content cost is expected to be Bt500-600m in FY16, flattish YoY.
