Potential bidders for digital TV licences still see the starting prices of high-definition (HD) channels as high, and the network rental cost is far from settled.
Starting prices for digital TV licences were announced on Tuesday by the National Broadcasting and Telecommunications Commission (NBTC), spanning a wide range of 140 million to 1.51 billion baht.
The price for HD channels is 1.51 billion baht, down by almost half from an earlier 3-billion-baht estimate, while the price for standard-definition (SD) channels dropped to 380 million baht from the previous 500 million.
The starting price for news channels fell by 56% to 220 million baht, but for children's channels the amount rose by 40% to 140 million baht.
Jessada Promjart, the chief financial officer of MCOT Plc, which runs Modernine TV, said the starting price for an HD channel is still excessive, even for a 15-year period.
He noted that while an HD-quality signal is four times better than SD quality, the difference does not ensure that ad income will be four times higher.
"The production cost for HD programmes is 20-25% higher than for SD, so we can't project a break-even for digital HD channels," he said.
Nonetheless, MCOT is pressing ahead into the digital era. It has set a bidding budget of 6.5 billion baht to come from cash flow and bank loans.
MCOT plans to air three digital channels: an HD channel, an SD or news channel and a children's channel.
Paiboon Damrongchaitham, the chairman of GMM Grammy Plc, the country's biggest entertainment firm, said the price of an HD channel is onerous, as broadcasters will have to pay additional costs for network rent, production expenses and licence fees.
Moreover, public channels will share ad revenue from commercial channels.
"The starting price for an HD channel should not be more than 1 billion baht per licence," said Mr Paiboon.
Arak Ratboriharn, the chief executive of Solution Corner (1988), the owner of Spring News satellite TV, said the starting price for a news channel is acceptable, as it will allow interested bidders.
But the company is still waiting for the final cost of network rental, a key factor in digital TV operations.
Mr Arak said the initial network rental cost of 40-60 million baht a year is a bit high, and broadcasters will have to pay an additional 4% for a licence fee.
"It will be tough during the first three years of digital broadcast, as ad revenue is uncertain and digital signal coverage is not complete," he said.
A source at Trend VG3, a subsidiary of Thai Rath newspaper, said its board will consider the prices before deciding whether to go for both news and SD variety channels as planned or choose one over the other.
In the source's view, the pricing is acceptable, but questions remain over payment for the 15-year licence.
If the NBTC uses a gradual payment method, it will benefit new operators.
Thai Rath plans to invest 400 million baht in its digital TV business.
About the author
- Writer: Saengwit Kewaleewongsatorn
Position: Business Reporter