MEDIA
Given the firm grip of the government on most television and radio stations and the absence of the National Broadcasting Commission, the local industry will continue to be dominated by politics and interest groups

by BAMRUNG AMNATCHAROENRIT

Politics for the public

MCOT excutives share a toast to mark the agency's first day of trade on the SET in mid-November.

Channel 5's changes in its programming in 2004 drew a kot of complaints from executives in the television industry.

Thailand's broadcasting industry has become dynamic and highly competitive, but exploitation by vested interests, government agencies and politicians remains a problem that appears unlikely to be addressed soon.Little change is expected in the near term, given the general election scheduled for earlier 2005 and the few months of policy drift that inevitably follow as a new government settles in.As a result, the industry can expect further delays in the establishment of the National Broadcasting Commission (NBC), already four years behind schedule because of political infighting and claims that earlier nominees represented entrenched interests.The NBC will be a powerful regulatory agency in charge of creating fairness and transparency in media liberalisation.

Given the pervasive state control of most television and radio operations, and the murky relationships between certain investor groups and state agencies, the NBC will face a difficult task.A case in point was the attempt in 2004 to list RTA Entertainment Plc, which handles airtime for television Channel 5, on the stock market. RTA, majority-controlled by the Royal Thai Army and a group of businessmen including GMM Grammy chairman Paiboon Damrongchaitham, was pushing to list before the formation of the NBC, despite strong opposition from the public.Analysts and opposition critics said the 30-year concession RTA had signed with army-run Channel 5 was rigged in favour of the RTA investors. They said the deal broke the Frequency Act and was effectively aimed at transferring a state asset for private benefit before the NBC could begin its work of reallocating frequencies (including Channel 5) under a liberalisation plan.

The cabinet eventually heeded the growing chorus of discontent, scrapped the RTA listing plan and called an investigation into the affairs of the military-run station. Ministers said the station should be operated for public benefit, not commercially.Critics also questioned the hasty listing of MCOT Plc, the Channel 9 television operator and one of the larger initial public offerings of the past year.

They cast doubt on the necessity of listing the company, while reiterating concerns about the danger that the incumbent government would use television stations as communication tools for the next general election.Currently, the Finance Ministry holds a 77% stake in MCOT.The NBC will not be the answer to all of the questions facing the broadcasting industry, but supporters say its establishment alone would be good sign that authorities are committed to creating sustainable growth for the broadcasting industry by promoting fair competition between small and big producers. The result, they say, would be a bigger role for the media in the country's development.But the longer the arrival of the NBC is delayed, the more difficult small players will find it to survive.

``The postponement of the NBC's establishment will have a bigger impact on radio than on television. The radio industry is in confusion and the businesses face difficulty operating,'' said Suraphong Triamchanchai, the group chief executive officer of Traffic Corner Holdings Plc, a listed entertainment company.The current policy vacuum, he said, has created an opportunity for those with connections to exploit and cash in on state media, especially radio.For example, a number of so-called ``community'' radio stations in the provinces, especially in Chiang Mai, operate commercially without making concession payments.In fact, under the media liberalisation plan, the NBC is to supervise frequency allocation for community radio operations to producers to promote local service.

However, the stations emerging ahead of the NBC's establishment exist only to enrich their operators. The lack of any government enforcement to clamp down on the operations has given rise to speculation that the outlets are controlled by politicians and their backers for the purpose of promoting their election campaigns.However, the most difficult challenge facing radio producers is the current regulation that limits concession contracts to one year, making it impossible to make long-term business plans.``The long delay in forming the NBC is not the real problem.

The most important thing I want is to have clear criteria for winning concessions from state agencies, who owns the frequencies, for both [licence] renewal and selection,'' he said.Despite the difficulties, Mr Suraphong believes the Thaksin administration has been far better than its predecessor, having brought dynamic momentum to the broadcasting industry, spurred by the business leadership style of Prime Minister Thaksin Shinawatra. For that reason, he believes the overall outlook for the broadcasting industry in 2005 remains bright.Chatchai Thiamtong, vice-president for finance of BEC World Plc, the operator of television Channel 3, said some uncertainties, such as oil price volatility, could undermine confidence in the government and affect the business climate in general.

However, he expects consumer confidence to strengthen after the election once the political outlook becomes clearer, with 2005 shaping up as a good one for the broadcasting industry.He points to the fact that the economy is still expected to grow by between 5.5% and 6%, signalling continuous investment from the private sector and higher employment.As a result, consumer spending will be on the rise, and the broadcasting industry will gain as more money is poured into media advertising.``Advertising spending is an investment. In fact, companies, especially abroad, continue spending money on advertising to build their brands in the long term, even at times of economic uncertainty. However, only a few such companies exist in Thailand,'' Mr Chatchai said.

Heading fora blockbuster year

`Citizen Dog' has been a pleasant surprise in an otherwise down year for Thai movies.

PEOPLE in the entertainment community have strong confidence that the industry in 2005 will grow significantly, even as the pace of overall economic expansion slows.They said the outlook for the industry remained optimistic, aside from uncertainties such as oil prices, violence in the South and the impact of bird flu, which could affect confidence and spending.Kongkiat Opaswongkarn, chief executive officer of Asia Plus Securities, said listed entertainment companies on the Stock Exchange of Thailand would enjoy healthy net profit growth in 2005.

He projected total profits for the sector of 7.4 billion baht, a 25% increase from 2004 and a record overall.But as competition intensifies, more mergers and operational alliances would be seen, he said.Major Cineplex Group Plc and EGV Entertainment, the country's two largest cinema chains, set the tone with a merger in mid-2004. The aim was not only to dominate the market _ their combined share now exceeds 70% _ but also to save on operating costs.Dr Kongkiat said consolidation among entertainment and media companies would come in various forms such as partnerships, joint ventures or joint operations.``It's the nature of the business.

If any business has no outstanding point, the company will find it difficult to stay in a competitive market,'' he said.Vicha Poolvaraluck, the president and CEO of Major Cineplex, forecast robust growth for the cinema industry in 2005.``I have no worries about economic uncertainty, existing troubles or the next election,'' he said. ``I believe Major's current strong operating structure makes it capable of overcoming trouble. What the company cares most about next year is how to make moviegoers happier with the service at the chain.''Major, which saw its sales and net profit rise by an estimated 30% in 2004, should be able to comfortably achieve 15% growth in 2005, he said.

While inflation and rising interest rates would affect operating costs, Mr Vicha said Major had no plan to raise ticket prices. In fact, the company will continue to expand in the coming year, with a plan for 42 new cinemas, 126 bowling alleys and 74 karaoke rooms.Also, the company is considering a new budget unit called E-Cinema, with tickets priced below 100 baht and sold on a first-come, first-served basis. In 2004, the total movie market was projected to grow by 15% to 4.5 billion baht. For the whole year, 350 movies reached the big screen, 294 of them foreign and 56 Thai.The Thai film industry saw some setbacks, with producers overly optimistic about demand following the banner year they enjoyed in 2003.

The fact is, too many Thai films were released in 2004, said Jina Osothsilp, managing director of GMM Tai Hub Co, a leading local film producer.``Moviegoers cannot support every Thai film because too many are being released. Therefore, moviegoers will watch movies more selectively in 2005,'' she said.As a result, producers will focus more on quality, especially more attractive content. She expects the number of films in 2005 would start to decline.

Paiboon Damrongchaitham, the chairman of GMM Grammy Plc, the parent company of GMM Tai Hub, said the company planned to produce 10 films in 2005.Mr Paiboon said Grammy would continue to outperform the market, with a projection of a 30% rise in net profit, driven by growing sales of music as its core business, and media businesses.Nadda Buranasiri, managing director of Universal Music Thailand Co, and director of Phonorights (Thailand) Co, a royalty fee collector for international music companies, said 2005 would be a challenging year for recording companies, following flat growth in 2004 with sales of four billion baht. He said Universal expected to face further challenges from piracy, driven by the rapid uptake of technology such as home CD burning and MP3 downloading.

Advertisingholding its own

Chaipranin: Moderate growth seen for 2005

AFTER THREE YEARS of above-average growth fuelled by a rapidly recovering economy, the momentum in Thailand's advertising industry is expected to slow in 2005, with more modest expansion of 10%, according to Chaipranin Visuthiphol, president of the Advertising Association of Thailand.The industry in 2004 was on pace for total billings exceeding 80 billion baht, based on 10-month growth of 19% to 69.27 billion baht. In 2003, billings grew 16.75% year-on-year to 71 billion baht, which followed 15.4% growth in the previous year, according to Nielsen Media Research Thailand.

Mr Chaipranin, who is also the managing director of TBWA/Thailand Co, said the strong economy and rising domestic consumption had spurred media spending industry across the board, but that recent performance would be hard to match.``The higher value of the total industry in 2004 will result in lower growth in 2005,'' he said.Rapid growth has also resulted in a new headache for the advertising and media industry: a shortage of qualified senior staff.

The large numbers of new graduates entering the communications field each year can help fill positions at the bottom tier but not at the top.The trouble started after the industry recovered from the crisis that began in 1997, a year of sharp retrenchments in order to cut operating costs. Many staff who were let go decided to form their own ventures and not re-enter the advertising field. Other senior staff were approached by corporations making big salary offers.Overall, though, the industry sees few obstacles to respectable growth in the coming year, aside perhaps from wider unrest in the country's troubled southern provinces.``The bird flu, rising oil prices and the [southern] conflict] in 2004 are no longer expected to panic people in 2005.

These situations have taught people to prepare themselves to face future troubles, '' said Mr Chaipranin.Heading into the new year, industry executives were optimistic that a rapid decline in oil prices from their record highs would put companies back in a spending mood.Mr Chaipranin believes the major advertising spenders in 2005 will be the same sectors that led the table in 2004: consumer products, automobiles and telecommunications.

However, housing developers may cut back on their advertising budgets as their margins are being squeezed by rising construction costs, while some segments of the market are becoming overbuilt.Although the outlook for the advertising industry in 2005 is optimistic, companies will continue to budget carefully, especially in the first half of the year.

One reason is that business leaders will be digesting the outcome of the general election and looking for fresh economic policy signals.Overall, Mr Chaipranin said he was happy with Prime Minister Thaksin Shinawatra's first four-year term _ he is widely expected to win another one _ and the moves the government had made to stimulate the economy and spending, thus benefiting the advertising industry.However, he has observed some gaps between policy and implementation.

For example, the government has been keen to promote local alcoholic beverage brands under the One Tambon One Product scheme, but at the same time it has cut back the hours for liquor advertising. Elsewhere, it is promoting Bangkok as a fashion capital while warning young women about wearing overly revealing garments.

``Government policy and implementation are going in contrasting ways,'' said Mr Chaipranin. ``The new government should reconsider the details so that everyone is proceeding in the same way to reach the goal.''If the Thai Rak Thai party is returned to power, he said, it would be a boon for the country as there would be policy continuity and political stability, attracting more foreign investment to the country.