The television and cinema businesses will continue to expand, thanks in part to advertising spending that will be looking for new outlets when TITV becomes a non-commercial channel. Meanwhile the music industry and entertainment-rental business continue to remain at risk from piracy.

Following the first-quarter financial statements reported to the Stock Exchange of Thailand, most companies in the entertainment sector posted a drop in net profits, with Pongsaap, Live Incorporation and Siam Inter Multimedia among the companies recording losses.

Pongsaap's net loss increased 39 per cent compared to the same period last year, at Bt127.75 million. Live Incorporation reported a Bt51-million net loss, compared to a Bt77.3-million net loss in the same period in 2006. Siam Inter Multimedia posted a net loss of Bt5.8 million, compared to Bt3.4-million net profit in the same period a year earlier.

GMM Grammy was the most profitable company in the sector, posting a Bt41.28 million net profit.

Nation Multimedia Group rebounded from losses to post a positive balance sheet with a Bt10.68-million net profit, up from a Bt4.48-million net loss last year. GMM Media reported a net profit of Bt19.89 million, up from Bt5.17 million in net profit last year. Matching Studio recorded a net profit of Bt11.21 million, a 122-per-cent rise on the previous year.

United Securities research said GMM Grammy performed better because it offered more concerts and had improved the management of its artists. Also, the style of its TV programming had been adjusted to meet consumer demand.

The Kasikorn Research Centre predicted the entertainment sector would expand 6 per cent from last year, to Bt87.9 billion. Entertainment businesses include television and radio broadcasters, cinema, pay cable TV and CD/VCD/DVD rental shops.

The researchers said the prospects for television broadcasting looked positive. In 2006, advertising through television grew 6.91 per cent to about Bt53 billion, accounting for 60 per cent of advertising spending. The research centre predicted the advertising budget for television would grow 6-7 per cent to about Bt57 billion.

The outlook for the cinema business is also positive, due to the increased number of movies in the past couple of years. In 2006, 42 Thai movies were shown in cinemas, up from 39 in 2005. The research centre forecast 50 movies would be shown in 2007, generating Bt1.5 billion. However, piracy remains the biggest risk factor for this sector.

The video/VCD/DVD rental business has also suffered from piracy, resulting in a drop in revenue. But the research centre expected the sector would expand by around 10 per cent, or Bt1.2 billion, compared to the same period last year.

The music industry also faces a piracy problem, and revenue from this sector is expected to decrease or experience flat growth. It is expected to be worth around Bt6.3 billion, close to last year's figure.

Analysts from Kim Eng Securities said that in April the advertising industry contracted for the first time in 20 months, dropping 1.2 per cent to Bt7.4 billion year-on-year. However, the securities house said that BEC World and MCOT would benefit from the TITV case.

"Earlier, Unilever spent only 11 and 20 per cent of its total advertising budget with Modern 9 TV and Channel 3 respectively, compared to 31 and 30 per cent it spent with Channel 7 and TITV," the research centre said.

Research from KGI Securities said that the establishment of the National Broadcasting Commission was a positive development for the entertainment sector, as its  future is made clearer when it has legal support.

The firm also forecast that the advertising index would improve in the second half. It recommended stocks in television and broadcasting firms.

Siriporn Chanjindamanee

The Nation