BEC upbeat as operating costs fall after licences returned

BEC upbeat as operating costs fall after licences returned

Ariya Banomyong, president BEC World Plc
Ariya Banomyong, president BEC World Plc

SET-listed BEC World Plc (BEC), the operator of Channel 3, expects to turn a corner by early next year as operating costs dip after returning two digital channel licences this year, says its newly appointed head.

Operating costs are expected to improve, bringing positive results by early 2020, said Ariya Banomyong, president of BEC.

"We expect compensation from the National Broadcasting and Telecommunications Commission (NBTC) to be lower than 1 billion baht, but this will give the company more cash flow for investments," he said.

BEC is one of seven digital TV channels that submitted letters of intent to the NBTC to return their licences and exit the business. BEC will return the licences for Channel 3 Family 13 and Channel 3 SD 28, leaving only Channel 3 HD 33.

NBTC secretary-general Takorn Tantasith said recently that the government's assistance of 38 billion baht included 13.6 billion from waived licence payments from exiting operators under Section 44, 18.7 billion for the remaining nine years for all 22 digital TV licences that the government will subsidise, and the remainder to compensate the seven exiting channels for their remaining licence terms that they must forfeit.

BEC plunged to a net loss of 330 million baht last year and was still mired in a loss of 128 million baht for the January-to-March quarter, dragged by digital disruption, intensified competition in the industry, the financial burden of paying for the three licences and high operating costs.

"We decided to return the licences to focus on and strengthen Channel 33 amid intense competition in digital TV," Mr Ariya said. "For the short term, the business plan is to roll out six pillars of growth. For the long term, the business is to transform the business successfully from digital disruption."

He declined to reveal the number of employees that are to be laid off, as the channel is currently in the process of selecting TV programmes to move from the two shuttered channels to Channel 33.

The 49-year-old firm has loyal employees with a 1,700 headcount, Mr Ariya said, but it has a legacy challenged by structural and cultural changes.

He said BEC plans to transform from a digital TV operator to a content and entertainment platform leader within four years.

BEC is hoping that the NBTC and social media firms such as Google, Facebook and Line will use the "combined reach rating" to gather online and offline viewers into a single rating.

"If we can transform the TV business successfully, it will be a new phenomenon, not just in Thailand but globally," Mr Ariya said.

The newly appointed president said it was this challenge that made him decide to leave Line Thailand and take the top job at BEC.

The six pillars starting in the third quarter include TV Plus, which uses its existing strong assets in artists and entertainment content to offline users to combine with online channels. Its traditional viewers are over 35, while its online viewers are below 34. Thais mostly consume TV production content but change behaviour to watch different channels.

"We're in discussion to work with the NBTC, which has set aside 431 million baht to help digital TV operators set up a new type of rating, combined reach, for both online and offline viewers," Mr Ariya said.

The second pillar is to increase content distribution channels, mainly online platforms gathering 6 billion views a year from YouTube, Mello and Line, as well as global licence distribution.

The third and fourth pillars will use intellectual property and artist management in a new business model.

The fifth pillar is to add new types of content. Major content and revenue from dramas account for over 90%, followed by news.

The sixth pillar is to use the latest technologies to enrich its content and entertainment platform.

Mr Ariya said the over-the-top platforms can be partners of TV content because they have ad revenue.

The TV industry has been hit not just by digital disruption, but advertising spending fell in the past few years as the economy slowed.

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