Change is in the air: A more diverse and competitive market offers plenty of opportunities

These are exciting times for Thailand’s media sector, as a long-awaited switch to digital TV and expansion of the numbers of TV channels is taking place, bringing with it greater openness and competition within the nation’s leading media platform. Meanwhile, Thailand continues to develop its production side, with demand for content likely to surge as the new channels come on air, drawing on the country’s strong tradition in film and IT. As is the case globally, the online segment is growing exponentially as well. At the same time, the TV expansion poses challenges for the existing players, while also potentially stretching advertising expenditure (adex) at a time when the growth of the economy is beginning to slow.

ADEX

In terms of adex and audience, TV has long dominated the Thai media landscape. Indeed, figures from Nielsen show that while total adex for the whole country for 2013 stood at BT115bn ($3.8bn), some BT69.25bn ($2.3bn) of that was accounted for by TV. TV advertising was up 0.95% from 2012 when total ad expenditure was BT113.9bn ($3.7bn). The nearest rival in terms of expenditure was newspapers, with BT15.25bn ($498.7m) in 2013, an increase of 0.49% on 2012.

Regulation 

The broadcasting segment of the country’s media is regulated by the National Broadcasting and Telecommunications Commission (NBTC), the converged telecoms and broadcast regulator. The new NBTC controls the whole spectrum of frequencies, both in TV and in mobile telecoms, while it is also implementing the digital roll-out and long-term sector policies, such as the spectrum, broadcasting and telecommunications master plans.

Key to these is the privatisation of the spectrum, with it being largely moved out of the hands of state bodies and into the private sector. This, it is widely hoped, will lead to a more competitive and more diverse broadcasting environment. It will also likely result in a large increase in the number of channels, all seeking to maximise their adex (see analysis).

TV Channels

Up to now, that TV adex has been divided among a relatively small number of channels and media enterprises. For many years, Thais had just six free-to-air (FTA) analogue channels to watch, four owned and operated by state bodies and the other two privately operated. Yet satellite and cable TV have become much more widely available in recent times – penetration rates for these stood at around 44% in 2010, according to Nielsen and TrueVisions data, rising to 64% in 2012. Despite this though, the FTA channels remain the most watched and influential medium by far, soaking up some BT62.24bn ($2.04bn) of adex during the whole of 2011, according to Nielsen data, compared to cable and satellite ( cabsat) TV’s BT7.5bn ($245.3m). These figures rose to BT68.11bn ($2.2bn) and BT9.65bn ($315.6m), respectively in 2012, showing FTA’s continued dominance, but also how fast cabsat is catching up – FTA adex rose 9.4% between 2011 and 2012, while cabsat adex increased by 28.8%.

The two private FTA channels are Channel 3 (C3) and Channel 7 (C7). Their ownership structures still show strong links to the state, though. The former is run by Bangkok Entertainment Company (BEC) World, listed since 1996, under a build-transfer-operate concession, the latest extension of its licence running to 2020. This licence was granted to BEC by the station’s frequency owner, the Mass Communications Organisation of Thailand (MCOT).

MCOT had previously been the main state enterprise in broadcasting, but was itself publicly listed in August 2004. Yet, as of July 2013, the Ministry of Finance (MoF) still controlled 65.8% of the company stock, with the government savings bank holding a further 11.48%. There is some expectation, however, that this quasi-government status may be ended as the TV market further liberalises.

The C7, meanwhile, is run by the Ratanarak Group under a contract with the Royal Thai Army (RTA). The RTA continues to own C7, while Ratanarak’s Bangkok Broadcasting and TV Company (BBTV) operates it. In October 2013 the RTA agreed to relinquish its concession with BBTV by 2018 in return for a second digital TV licence, issued by the NBTC without an auction requirement.

The RTA also own Channel 5 (C5), among the directly state-owned broadcasters, while MCOT operates Modernine TV (previously Channel 9, C9), whose major shareholder is also the MoF. The other two state-owned FTA networks are the National Broadcasting Services of Thailand (NBT, also known as Channel 11, C11) and the Thai Public Broadcasting Service (TPBS), both operated by Television of Thailand and owned by the Government Public Relations Department. TPBS now occupies the frequency band that was previously home to iTV, Shin Corporation’s privately run channel, closed down in 2008, and stresses its editorial independence from the government, taking the BBC as its model. It is funded by special taxes on tobacco and alcohol.

Top Programmes 

In terms of popularity, C7 and C3 regularly top the list. Nielsen figures for the week of September 23-29, 2013 are typical. The highest viewing figures were recorded by C7, whose top 10 programmes by viewership all topped the nearest rival, C3’s leading programme, the drama serial “Ton Ruk Rim Rau”, which had an audience of 7.53m. C7’s top five were all episodes of the same drama serial, “Khun Mae Chapoh Nah Khun Yah”, which hit 10.37m for its Wednesday evening slot. The top programme from the state broadcasters, in terms of viewing figures, was C5’s mini-series “Sin 5 Khon Kla Tah Atham”, which was watched by 2.98m viewers. C9’s top programme was “Killer Karaoke Thailand”, with 2.42m viewers, while TPBS’s largest audience was 1.23m for the documentary “Thong Loke Kwang”, and NBT’s top audience was 650,000 for the Thai boxing programme “Muay Dee Withee Thai”. Comparing these figures with those of the same week the previous year (September 24-30, 2012), the ranking is much the same, with C7 on top and its lowest top 10 ranking (9.89m) still ahead of C3’s leader, at 5.4m. The other channels were some way behind in the same order.

Cable Catching Up

Meanwhile, cabsat TV is making great strides across Thailand, an expansion that is being assisted by the move from analogue to digital TV, as outlined in the state’s 2012-16 digital master plan (see analysis). The other factor assisting the growth of cabsat is the closed nature of FTA. Frequencies have long been assigned to the existing six channels, with no space left for new entrants. This has obliged would-be broadcasters to move into the cabsat space, a scenario that is set to change with the digital master plan. For now though, penetration rates for cabsat are lower than for the analogue FTA channels, although the difference is narrowing. Nielsen and TrueVisions figures showed that the 44% cabsat penetration rate for 2010 broke down into 6.2m households with satellite and 3.19m with cable. This rose to 7.99m for satellite and fell to 3.05m for cable in 2011 (a 50% penetration rate overall), while in 2012, the numbers went up to 11.56m for satellite and 3.14m for cable.

These households can receive a multitude of channels. As of April 2013, according to a report on Thailand by Asian cabsat researchers CASBAA, there were 468 licensed cabsat TV channels operating, with a total of 724 licences approved or pending for cabsat broadcasting, meaning some 256 channels were potentially about to launch. This did not include foreign channels available in Thailand. Some 399 cable network operators had been licensed at that point as well as three pay-satellite TV operators.

In cable, the vast number of players – many of them reaching relatively small local audiences – has led to a process of aggregating channels with a few larger groups signing up the smaller broadcasters.

Leading the larger groups now is TrueVisions, a subsidiary of True Corporation, under a joint operating agreement with MCOT. TrueVisions pays an annual fee of 6.5% of its revenues to MCOT, with the former receiving a satellite broadcasting contract, due to end in September 2014, and a cable contract, due to expire in December 2018, from MCOT.

In 2012 TrueVisions launched a “cable partners pack” in collaboration with some 150 local cable operators, which sees around 30 of TrueVisions’ channels provided by these firms. The company is implementing a convergence strategy, with 2013 seeing it start high-definition and standard-definition programming on its TrueVisions Anywhere service, which allows customers to access programming via tablets and smartphones, as well as TV.

TrueVisions also sold a nine-channel package to one of its chief competitors, Cable Thai Holding (CTH), which is currently undergoing a major expansion. CTH is also a relative newcomer to the scene, set up in 2009 as a joint investment between Wichai Thongtang, its chairman and a leading shareholder in Prasit Patana, and Vachara Vacharaphol, the CEO of Trend VG3, a subsidiary of the owners of the Thai Rath newspaper, each of whom has a 25% stake in the company. Local cable TV operators own a further 30%, with the remaining 20% open for purchase, with news breaking in April 2013 that Rupert Murdoch was interested in taking this stake.

The channel won the broadcast rights for the English Premier League football from 2013 to 2016 for a record fee in Asia – around $330m – and is investing heavily in a nationwide optical fibre network of its own. It is also busy pulling together local cable TV operators to sign deals and take its channels. Some 170 of these operators had signed memoranda of understanding with CTH by early 2013 to become partners, with 150 others still deciding. CTH is aiming to bring them into the fold too, turning them from cable operators into CTH dealers, with CTH pursuing a business model in which it becomes a single content platform, network and brand, nationwide.

A third major player here is GMM Grammy, via its satellite platform GMM Z, which launched pay satellite TV services in February 2013. GMM Grammy came into broadcasting from media production, where it has long had a major stake in Thailand’s film, music, publishing, concert, and artist management and production industries. In March 2013 it brought some 300 local cable TV operators together to join its content network, a service it provides in exchange for 20% of the pay-TV revenue of the local operators. GMM Z has some ambitious targets, with the company aiming for 450,000-600,000 subscribers by the end of 2013, and 1m by the end of 2014. Currently, it offers eight encrypted channels and around 200 FTA channels on C-band and 80 channels on Ku-band via its own set-top boxes.

Another company with a similar media production background that has recently entered the cabsat market is RS. With broadcasting rights for the Spanish La Liga football, with which is aims to spearhead its drive for customers, it entered the fray in mid-2013, and aims for 400,000 customers by the end of the 2013-14 season.

There are also some regional giants in the cabsat market. Eastern Thailand is the home ground for CCN, which brought together 18 local cable operators in its region in 2013. It seems highly likely that further regional groupings will emerge in the future, as the sector becomes more competitive, as such groups will have a stronger bargaining position when dealing with the larger, national outfits in negotiations over content provision.

IPTV & Mobile

There is also an increasing number of internet protocol television (IPTV) and mobile services. As of mid-year 2013, Thailand boasted several IPTV operators – TOT, VRM, Voizplus and Cubic Associates, along with Triple T Internet and Advanced Datanetwork. TOT, which was the original Thai state-owned telecoms company until corporatisation in 2002, estimates that while IPTV take-up remains small at present, in the next two years all of its 1.4m broadband subscribers will sign up for it.

On the mobile front, all of Thailand’s leading mobile telecoms operators are currently offering bundled data and TV packages. TrueMove naturally carries TrueVisions’ packages, while Advanced Info Service and Total Access Communication (DTAC) also both offer TV content for smartphones, with some 100 channels available as of mid-2013. AID and DTAC have agreements with content providers such as Grammy for this purpose, along with film studios Kantana and the Nation Multimedia Group (NMG), known for its English-language newspaper, but which also produces content for TV.

Indeed, some TV channels also sell airtime to third-party broadcasters. One example of this is C5 selling airtime to Post Publishing, the owners of the newspaper The Bangkok Post, which uses these slots to broadcast Thai-language news and commentary.

New Channels

This landscape changed substantially in late 2013, however, when auctions were held for new digital TV licences, which will lead to a whole host of new channels entering the market. Some 48 new digital TV licences were involved, the first 24 being reserved for the private sector, the next 12 for public broadcasters and the final 12 for community channels. Having been postponed several times, with capacity concerns often cited, the auction for the 24 private-sector channels was held in December 2013, with the NBTC expected to award the rest of the digital TV licences later in 2014. It is expected that the TV sector will undergo considerable change after all the licences have been awarded in 2014.

On The Radio 

The other key element in the broadcast media segment – although lagging some way behind in terms of adex – is radio. The Nielsen figures for the month of December 2013 show total radio adex at BT549m ($18m), down 1.26% on December 2012. During the first 11 months of 2013 radio adex fell slightly year-on-year (y-o-y) from BT5.8bn ($189.7m) to BT5.77bn ($188.7m).

No up to date figures are available for the number of radio stations currently broadcasting in Thailand. Figures from early 2011 provided by Thanachart Securities suggest MCOT alone had control of 62 radio stations at that point, with most sector estimates putting the total at around 200-300 stations of all types on air in 2013.

In the past, frequency allocation was controlled in the same way as for TV, meaning that state institutions, such as the RTA, the government ministries and MCOT, held all the licences. They sometimes, in turn, sub-license private media outfits and community organisations to broadcast on their frequencies.

The move to digital will also likely see a surge in the number of channels, although with declining adex for the segment, there may be some future pressure for further consolidation.

Print Battles On

According to Nielsen, newspapers received BT1.38bn ($45.1m) in adex in the month of December 2013, down 0.93% on December 2012. However, for the whole of 2013 newspaper adex grew 0.49% to BT15.25bn ($498.7m). These figures made newspapers easily the second-largest recipient of adex overall. With the addition of magazine adex, the figures for print are robust, too. Magazines garnered BT407m ($13.1m) in December 2013, down 18.27% on December 2012.

In the Thai language, the newspaper with the widest circulation is the broadsheet Thai Rath. Founded in 1962, it claims a circulation of around 1m and a readership of about 25m, or some 40% of the country’s population. The paper is owned by Vacharaphol Company, with the Vacharaphol family also having interests in CTH and running new media company Trend VG3. Other major Thai-language titles include Thai Post, owned by the Thai Journal Group, Daily News, Matichon, Khao Sod and Kom Chad Luek.

There are two main English newspapers, the long-established Bangkok Post and The Nation. The former broadsheet, first published in 1946, is owned by the Post Publishing Public Company, which is listed on the Bangkok stock exchange. The company also owns the Thai-language business paper, Post Today, the English-language educational paper, Student Weekly, and the recently released Thai-language free paper, M2F. In addition, it has a TV and radio presence via Thai-language programmes broadcast on C5 and FM101.0. M2F is something of a recent innovation in the Thai print media world, being a tabloid, free paper, distributed by teams working solely in Bangkok’s business districts, largely to commuters.

The Nation, meanwhile, is owned by NMG, which also owns the leading business paper, the Thai-language Krungthep Turakij. NMG prints a number of other titles as well, such as BizWeek, and also publishes educational books.

NMG and Post Publishing are two of the largest print media groups, with Matichon, GMM Grammy and Manager Group also owning titles or shares in titles – for example, GMM Grammy has a stake in Post Publishing. Politics plays a major part in some titles’ outlook and orientation. The founder of Manager Group – whose flagship title is the Thai-language business paper Phoojadkarn Daily – for example, became leader of the People’s Alliance for Democracy, while The Nation has generally been a staunch supporter of the Democrat Party.

Newspaper circulation figures are often treated somewhat sceptically by editors, analysts and the public alike in Thailand, with conflicting methodologies and a lack of nationwide coverage often hampering accuracy.

The Bangkok Post, the only paper in the country that is independently audited, claims a daily readership of 450,000. Post Publishing said that publication sales declined around 7.1% in 2012 y-o-y, yet advertising sales went up 10.9% y-o-y. The group’s Thai-language Post Today also saw sales fall around 7%, while ad sales rose 12.5%. M2F, meanwhile, distributes 400,000 copies and is read by around 2m people, according to the group. Magazine sales were also good – revenue from these were up 9.1% in 2012, making Post International Media Company, the group’s magazine arm, the largest magazine group in Thailand by revenue.

Other Platforms

One other media platform that continues to be significant is cinema, which saw monthly adex of BT672m ($22m) in December 2013, down 19.23% on December 2012. During the first 11 months of 2013 cinema adex declined 3.21% from BT7bn ($228.9m) to BT6.8bn ($222.4m).

Thai-language cinema has a long tradition, with the country’s national film industry contributing some BT68.3bn ($2.2bn) to the economy in 2011, according to the Motion Picture Association Asia-Pacific.

In 2012 there were 61 official Thai film releases, an increase from 52 in 2011. Half of the 61 came from the five major studios – Sahamongkol Film, GMM Tai Hub, Phranakorn Film, Five Star Production and M-Thirtynine. Only one of the 61 broke the BT100m ($3.27m) marker at the box office, however, in what was widely considered a lower-quality year. According to the Thailand Film Office, which promotes the industry and comes under the Department of Tourism, until November 2013 a total of 717 foreign productions were also undertaken in Thailand in 2013, bringing in BT2.17bn ($71m). Japan and India shot the bulk of these productions. The local production industry is therefore a strong one, with Thai content also likely to be in increasing demand after digitisation (see analysis).

Going Online

Online media has a rapidly growing presence, although it is starting from a relatively low base. In 2013 adex for the internet increased significantly, up some 53% on the previous year to BT877m ($28.7m). Figures from the National Statistical Office for 2012 show that some 16.6m people accessed the internet in Thailand in that year, or 26.5% of the population. This was up from 18.2% of the population in 2008. Mobile phone penetration rates are even higher, at 70.2% in 2012, although the majority of these are likely non-smartphone.

Nonetheless, economic growth is likely to generate a continuing shift in internet platforms away from computers to phones and tablets. Regional differences are also important. Internet usage among Thais over the age of six was 51.5% in Bangkok in 2012, for example, but just 29.1% in the north-east. Internet penetration is low compared to peers, largely due to the relatively high cost, poor coverage for fixed telephone lines and issues relating to content, with Thai-language sites limited in number and scope and English-language skills not as widespread as in some other South-east Asian countries. Figures from comScore, an online measuring service, show Google dominating the search engines, with 99% of traffic. The most popular local site is sanook.com, a portal, with pantip.com the most popular forum.

Outdoor & In-Store

The Nielsen data also shows that outdoor advertising remains strong, although with a declining share. During the first 11 months of the year outdoor media fell by 9.33% from BT4.19bn ($137m) in 2012 to BT3.8bn ($124.3m).

In-store adex also declined in December 2013 32.58% to BT120m ($3.9m) from BT178m ($5.8m) in December 2012. During the first 11 months of the year in-store media saw a 5.91% drop from BT2.55bn ($83.4m) to BT2.4bn ($78.5m).

One sub-segment of outdoor that showed an increase, however, was transit, which was up 18.85% during the first 11 months of 2013 from BT2.69bn ($88m) to BT3.2bn ($104.6m). For the year, transit adex increased 18.65% to BT3.51bn ($114.8m). Major players in the out-of-home market include BTS Group Holdings, the mass-transit system operators for Bangkok, which claim a daily market reach via their trains and stations of 7.6m people, as well as Plan B Media, JCD ecaux (Thailand) and Master Ad.

Outlook

With the expansion of TV via digital licensing, alongside longer-term trends in economic development and online penetration, the future is likely to be a bright one for the Thai media sector. With increasing demand, those who are able to provide an integrated chain from production through to broadcast are likely to do well. The one stumbling block is slowing economic growth, which hits adex (see analysis) and limits the sector’s revenue growth potential. There is also likely to be some consolidation as the number of channels expands, while those outfits with deeper pockets are likely to survive longer in an increasingly competitive environment. However, the media is changing too and becoming more diversified and less state controlled, meaning there are plenty of opportunities for foreign investors.