In-house production key for new Thai digital TVs: Fitch
NEW DIGITAL television channels with strong content in Thailand are likely to continue to gain advertising market share at the expense of the incumbents, particularly Channel 5 and Channel 9, according to Fitch Ratings.
However, the two largest channels by advertising market share, Channel 7 and Channel 3, should maintain their leading positions given their strong programme content and large viewer base.
New channels with limited in-house production capabilities are likely to face more challenges attracting mass viewers, who prefer locally produced programmes. Their financial profiles could come under pressure and their ability to maintain enough liquidity to absorb losses over the medium term will be a key requirement for survival.
Of the new digital TV operators, Workpoint Entertainment, RS, and GMM Grammy have in-house production facilities, and this should be able to strengthen their market positions in the challenging environment. Fitch expects the financial profiles of these top-rated new operators to continue to improve in the medium term as their revenues ramp up.
Fitch expects the audience ratings for Workpoint’s eponymous channel, RS’s Channel 8, and GMM’s ONE channel to continue to improve over the next two years, supported by the expansion of the viewer base for digital TV and the planned increase in the number of programmes in prime time.
The audience ratings for Channel 8 and ONE are likely to continue to rise as the operators increase their drama programming, supported by their strong rosters of film stars and other artists.
Workpoint is likely to concentrate on variety shows, which have a strong following. It plans to move its popular variety show “Ching Roi Ching Ran”, its only programme remaining on Channel 3, owned by BEC World, to its own channel next month.
The strategy of the new digital-TV operators is gradually to add new programmes as advertising revenue grows, in order to minimise the mismatch of content-production costs and advertising income.
Fitch expects Channel 5 and Channel 9 to continue losing market share in the medium term as the new channels expand. Channel 5, which is owned by Royal Thai Army Radio and Television, has weaker in-house production capacity and needs to decrease its airtime rental rate by 25-35 per cent this year.
Key risk factor
Channel 9, owned by MCOT, has already increased the proportion of its in-house produced programmes this year. The reliance on bought-in content has become a key risk factor since quality producers – including Workpoint, RS and GMM – are now mostly producing programmes for their own channels rather than selling them to competing stations.
Among the new digital-TV operators, Fitch expects those with weaker abilities to produce or acquire popular programmes at competitive rates to survive as their advertising revenue may not rise fast enough in the medium term to cover the high fixed costs of licence fees and content production.
