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MNR founder believes teaming up with cinema giant is the best move
Woranuj Maneerungsee
``Though I'm satisfied with 700 million baht in annual sales, I always worry that it might no longer be like that one day,'' says Mr Samart. |
Selling a business that one has built from the ground up is never an easy decision, and Supakorn Chuasiriphattana admits her husband's proposal puzzled her at first.
Samart Chuasiriphattana had developed Media Network Retail Co (MNR) into a big home entertainment chain, but decided that the future lay with Major Cineplex Group, the country's biggest cinema operator, through a deal with Major affiliate M Pictures Entertainment (MPIC).
"It frightened me when he told me that we might sell our business," said Mrs Supakorn, who is also MNR's assistant managing director. "After he explained why he wanted to do that, I respected his thoughts as I always do."
Under the deal announced on June 30, MPIC now holds a 100% stake in MNR, and in exchange MNR received 70 million shares or a 13% holding in SET-listed MPIC.
Established in 2004, MNR operates 150 Media Network shops, mostly in superstores, and generated 700 million baht in sales last year.
Mrs Supakorn is confident that the 300-million-baht deal, the most important decision made by her husband, will not let her down. She has seen how he built the company from the ashes of the 1997 financial crisis as proof that he has the right instincts.
After a long day of meetings with Vicha Poolvoraluck, the chairman of the Major Group, Mr Samart, 37, is still energetic. Sipping coffee at Starbucks, he's ready for a conversation.
He's been asked repeatedly whether "being taken over" made him lose his sense of ownership, but he says the deal is important for the future in many aspects. It will not only strengthen and enlarge the company, but also bring job security to his 500 staff.
"Though I'm satisfied with 700 million baht in annual sales, I always worry that it might no longer be like that one day. What would happen to the staff? Every morning when I get up, I have 500 staff on my shoulders," he says.
Mr Samart, who started a small music cassette business as a teenager, was too busy to finish his bachelor's degree in business management at Ramkhamhaeng University. He's been working ever since, and his long experience in business has taught him that being number one is not always a realistic goal.
"In my business, if I want to remain number one by expanding more and more outlets, I wonder, it the end, is that a real achievement?" he asks.
"The more shops you have, the more money you have to spend on copyrights to beat others to get new movies. You need hundreds of millions of baht to succeed."
The deal with Major fulfils another dream he had, of being listed on the stock market by way of the MPIC connection. He had considered listing MNR on the Market for Alternative Investment but concluded that the shares might not appeal to investors.
The fact is, selling home entertainment is a risky business. Seven out of every 10 DVDs and VCDs sold in Thailand are fakes. Then there's the unstoppable trend toward digital downloads and away from physical products. Without vision and strategic planning, companies such as MNR could be vulnerable.
SET-listed CVD Entertainment is among those that have thrown in the towel, changing to event organising instead. Pongsaap Plc, another major player, recently repositioned itself from being a seller of music and movie products to become what it calls an "edutainment hub".
But Mr Samart thinks the whole industry has the potential to grow stronger with leaders such as Major Group pointing the way. Major's goal is to create an integrated business that includes both cinema and home entertainment. For example, it recently acquired Pacific Marketing & Entertainment Group, an importer of movies from Hollywood studios.
Running its own DVD and VCD retail business would help Major resolve the problem of timing when it comes to the release of big-screen movies on discs. Some retailers release discs earlier than 90 days after a big-screen film closes locally, in violation of business regulations. Doing so hurts the big-screen business.
Mr Samart says that with three pillars - M Pictures, Pacific Marketing & Entertainment and MNR - under Major, combined revenues could easily grow to two billion baht from 1.5 billion.
From now on, his motivation as part of a bigger media company is professionalism, not ownership.
"The body was willing, but the spirit was weak sometimes," he says of his days as a business owner.
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