iTV Plc's share price tumbled 9.74 per cent yesterday to its lowest level ever, following an order from the Office of Attorney General (OAG) that the broadcaster immediately pay unpaid fees and penalties amounting to Bt75.96 billion, despite the company's pending appeal to the Supreme Administrative Court against the payments.

Analysts have recommended that investors avoid the stock, given uncertainty over the outcome of the concession case.  ITV sahres opened lower, at Bt3.02, shortly after the order from the OAG. It fell further to the day's trough of Bt2.78 before rebounding weakly to close at Bt2.80, a 9.09-per-cent drop.

The payments relate to a decision by the Central Administrative Court that overturned an arbitration decision reducing iTV's concession payments. They represent the cost of making up the shortfall in iTV's concession payments, plus government penalties.

Thanachart Securities has once more lowered its target price for the stock, from Bt3 to Bt2.40.

"iTV has filed an appeal with the Supreme Administrative Court and it can undertake operations under the current concession until the verdict is finalised," the broker said. "Such uncertainty will stall its business plan. We believe the chance that the Supreme Administrative Court will overturn the Central Adminis-trative Court's ruling is slim."

On May 9, the Central Administrative Court overturned a 2004 arbitration decision that significantly reduced the concession fees payable by iTV to the government and allowed the broadcaster to dramatically reduce the news content in its programming. In its ruling, the court said the arbitration committee had exceeded its authority in changing details of the contract between iTV and the government.

However, iTV has not yet settled the compensation amount due to different calculation methods.

Originally, iTV's concession provided for an annual fee of 44 per cent of revenue or Bt1 billion, whichever was greater. At present, following the arbitration decision, it pays only 6.5 per cent of revenue or a minimum of Bt230 million.

The broker forecast that iTV would swing into a net loss between 2007 and 2008 on the anticipation of concession payments according to the original conditions.

Thanachart said iTV's business outlook was additionally grim because its audience ratio dropped from 19 per cent in the third quarter of last year to 16 per cent in the first quarter of 2006.

"News programmes appear to be the only outstanding point of iTV, while soap opera programmes do not boost income much. We expect that its operational costs will increase and we estimate its net profit will be cut by 36 per cent," the broker said.

United Securities said the possibility that iTV will lose the appeal was relatively high. The company will show a loss over the next two years if this is the case, because of its need to make the annual Bt1-billion concession payments. Besides, its present programme content ratio of 50 per cent each for news and entertainment must return to the original ratio of 70-per-cent news.

The broker predicted that iTV would plunge into a net loss of Bt1.58 billion, if it pays Bt2.3 billion in unpaid concession fees from 2004 to the present, plus interest.

"I don't think iTV will end up paying as much as the Bt76 billion being requested by the government because the company won't be able to stay afloat with such a massive burden. But, given the uncertainty, the stock is not a good bet," said Prasit Sujiravorakul, an analyst at Capital Nomura Securities.

Siriporn Chanjindamanee

The Nation