The takeover deal in which MAI-listed TV Direct Plc (TVD) was to buy 90.1% of digital TV's Spring News Channel 19 for 1.08 billion baht appears to be collapsing after the announced plan to auction 700-megahertz spectrum licences.
Money from the auction will used in part to subsidise the operating costs of digital TV operators under a long-term survival plan, according to the National Broadcasting and Telecommunications Commission (NBTC).
TVD and Spring News Corporation, the parent company of Channel 19, have postponed the official signing of the deal, originally scheduled for last December.
The boards of each of the two parties will hold a special meeting for a final resolution on Feb 26, but both strongly believe a conclusion is unlikely.
Spring News is refusing to sell Channel 19 for 1.08 billion baht as it awaits additional assistance from the telecom regulator. Chutchai Tawandharong, chief operating officer of Spring News, said the deal is more than likely to be suspended because both parties acknowledge the uncertainty of the planned 700MHz auction.
More importantly, the anticipated assistance for digital TV operators is still up in the air.
"Both of us are listed companies on the stock exchange, so we cannot make decisions based on ambiguous conditions," Mr Chutchai said.
He reiterated that the board of Spring News approved the sale of Channel 19 at 1.08 billion baht. After the deal is done, however, the NBTC could give assistance to the channel, risking a legal backlash by shareholders.
Mr Chutchai said Spring News is considering terminating the existing MoU signed with TVD last year on a co-production deal to revamp news and TV shopping programmes.
Termination of the agreement would be put into effect in the next six months after one party informed the other of its intention.
TVD joined with digital channel Spring News in April 2018 on a four-year contract. Under the agreement, TVD was a co-producer for the channel.
Under the new structure of daily TV programming, each of four new blocks of news, content, TV shopping and home shopping takes six hours.
"If the MoU is terminated, Spring News Channel 19 will broadcast its original schedule as it existed before the agreement," Mr Chutchai said.
News programming on Spring News has declined from 8-10 hours per day to just six hours after the companies entered into the MoU.
But the ratio of the current programming schedule under Spring News still meets NBTC requirements because 50% of total airtime consists of news and documentary programmes.
Songpol Shanmatkit, chief executive of TVD, said he has no idea what will be happen after TVD's board meeting on Feb 26. He noted that the NBTC's auction announcement came a few days before the two companies' planned signing ceremony date in December.
Mr Songpol said TVD, a leading home shopping operator, is reinforcing massive awareness of its home shopping and TV shopping business through programmes on Channel 19 as it seeks to drive total sales revenue to 4.5 billion baht in 2019, up 16% from last year.
Sales revenue via Spring News Channel is set to account for 10% of total sales of the company in 2019 and rise to 15% in 2020 under TVD's plan.