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Entertainment giant adjusts media model
WORANUJ MANEERUNGSEE
GMM Grammy Plc, the country's largest entertainment company, is preparing to merge the listed subsidiary GMM Media Plc (GMMM) into the parent as part of its business restructuring.
The parent company, which holds nearly 80% of GMMM, will seek approval from shareholders at an extraordinary meeting at the end of next month to delist GMMM from the Stock Exchange of Thailand, said Sumeth Damrongchaitham, the chief operating officer of Grammy.
The merger would not involve any job losses, he said.
GMMM shares posted their biggest single-day gain trading after announcing the plan to allow its shareholders to swap the parent's stocks at a 1:1 ratio.
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| Announcing the restructuring, from left: Sumeth Damrongchaitham, chief operating officer, CEO Boosaba Daorueng, and chairman Paiboon Damrongchaitham. — KITJA APICHONROJAREK |
GMMM climbed 14% to 12.70 baht during intra-day trade, the biggest jump since the company was listed in 2002, before closing at 12.60 baht, up 1.50 baht, in trade worth 6.38 million baht. The stock has gained 26% since the year to date compared to the 18% decline of the benchmark SET index.
Grammy chief executive Busaba Daorueng said the move would allow Grammy to tap the current trend toward greater media convergence.
''The merger will allow both GMM Grammy and GMM Media to share their strengths and to be more flexible in any business decision and future investment,'' she said. ''It will also help Grammy to enlarge its market coverage and strengthen its number one position both in media and content production.''
After the merger, Grammy will be operated under co-CEOs Ms Busaba and Saithip Montrikul Na Ayudhaya, the current CEO of GMM Media.
The merger also reflects a new business environment including regulation and technology.
Mr Sumeth said GMMM was listed on the stock market in 2002 in order to raise a lot of capital from the public to invest in free-to-air TV. Unfortunately, the group never had a chance to invest in free TV because the National Broadcasting Commission (NBC), the regulator, was never set up.
''Though the NBC is expected to be set up soon, Grammy did not really want to invest in free TV anymore,'' he said.
''Since media technology has become cheaper and diversified, Grammy is able to invest into new alternative media such as cable and satellite TV and Internet radio with its own capital. So it's not effective for GMMM to be listed on the stock market any more.''
Grammy now holds a 79.75% stake in GMM Media. With the restructuring, the company will make a tender offer to buy the remaining 20.25% from minor shareholders through a 1:1 share swap.
Grammy would issue 40 million new shares to accommodate the exchange of GMMM shares.
Mr Sumeth said the swap would not affect small shareholders because they still would hold shares in the parent company, which would hold 100% of GMMM.
GMM Grammy said its second-quarter revenue was 2.02 billion baht, up 15% from the same period last year, with net profit rising 52% year-on-year to 207.1 million baht.
Grammy chairman Paiboon Damrongchaitham said the merger would allow the group to manage its media content more effectively.
''The Thai media industry is moving completely into the digital era and such media transformation has created a great opportunity for Grammy to utilise its music and other entertainment content through digital media, such as mobile phones and PCs, in order to reach a larger number of viewers at all times,'' he said.
Mr Paiboon added that broadcast media such as cable and satellite TV would also become more of a focus for GMM Grammy.
It wants to expand media content into other markets within the Asia region. Grammy is dealing with a US media giant for a partnership to expand to potential markets such as China.
GRAMMY shares closed yesterday at 13.50 baht, up 50 satang, in trade worth 4.37 million baht.
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