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The September 2006 coup has been blamed for many problems, but television operators are celebrating the passage by the military-backed government of the long-awaited Broadcasting Act late last year. The law came into force in March 2008 with the aim of reforming the country's broadcasting industry. It liberalises the industry by legalising more than 300 cable TV operators. Pay-TV operators are also allowed to earn incomes from advertising for the first time.
This will change the TV industry landscape in the long run because channel choices will expand from six to hundreds. Unlimited content will be available not only through TV outlets, but also digital media from the internet to mobile phones. Advertisers will have plenty of choices as well, instead of free-to-air TV controlling their airtime fees.
The Thailand Cable TV Association (TCA), with about 300 members nationwide, is the most enthusiastic supporter of the new law. It estimates the industry's value will double in two years from an estimated 10 billion baht currently. They hope to cash in on some of the 53 billion baht spent on free-to-air TV commercials.
There are roughly 3.3 million pay-TV subscribers in Thailand now. The single largest operator is TrueVisions, making up 19% of the total market. The TCA members claim 74%, and the rest belongs to Samart and Thaicom, offering satellite TV services.
The current 3.3 million pay-TV subscribers represent 17% of the market.
In theory, cable operators should have to wait until the interim Broadcasting Committee is set up, which grants them the licences. But in practice, they are already benefiting from six minutes of hourly advertising airtime, though their average advertising time for a whole day cannot exceed five minutes per hour.
The association and content providers also for the first time have hired AGB Nielsen Media Research to measure pay-TV programme audience shares. The first report from Nielsen is expected by the third or fourth quarter this year. That should help put pay-TV on advertisers' radar screens.
TV industry liberalisation has prompted many to look at the satellite TV business, even daily consumer product makers such as Saha Group and Osotspa Group. The pair mainly use satellite TV to advertise their products, avoiding the high advertising costs of free TV.
Pay-TV advertising charges average 10,000 baht a minute, but free-to-air TV operators, such as BEC World's Channel 3, charge as much as 450,000 baht.
Certainly, the biggest entertainment firms, Grammy Group and RS, will not miss this opportunity, but they are taking a wait-and-see approach now. Media of Medias and Saha Mongkol Film have launched their own channels. Each operates more than one channel thanks to digital technology.
The proliferation of satellite TV should not concern free-TV providers in the short term, but it could in the long term.
Phatra Securities in May predicted that if pay-TV penetration increases at 20% per year, the subscription rate will reach 34% by 2012. With 30% growth, penetration would reach 62% by 2012. Once pay-TV reaches critical mass, it will bring down barriers to entry and the lofty ad rates that free TV now commands.
On the flip side, liberalisation will also provide opportunities for free-TV operators such as BEC World and MCOT as they too can enter the pay-TV market.
''However, we doubt if the extra revenue will be enough to offset the loss in revenue,'' the Phatra review said.
BEC, the operator of Channel 3, enjoys an advertising rate premium because of the lack of competitors on which to advertise. Its return on equity is high compared to other broadcasters in the world.
MCOT's Modern Nine Channel, focusing on knowledge-based content, could lose some market share to pay-TV.
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