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Published on January 16, 2008

TITV is in the process of converting from a commercial channel into Thailand's first public TV channel, to be known as Thai Public Broadcasting Service (TPBS).

A public TV channel is prohibited from showing advertisements.

Citibank said in a report that this had effectively ended speculation that TITV - once owned by former prime minister Thaksin Shinawatra's family business interests - would be able to revert to being a commercial station under the People Power Party-led government.

Citibank said that consequently, TITV's ad revenue, which accounted for 15.5 per cent or Bt8.3 billion of all TV advertising income, would now be switched to other channels.

"Assuming 70 per cent of ad spending stays with TV stations, dividing that equally between the four existing commercial channels would result in MCOT and BEC gaining around Bt550m and Bt1 billion, or a 16-per-cent and 11-per-cent increase respectively in potential TV ad revenue," Citibank said.

The bank said Major Cineplex Group should also gain, as not all TITV ad revenue would go to TV stations. Some would migrate to other media, such as cinemas, given that the TV advertising slots are already nearly fully utilised.

A small shift in advertising from TV could result in a significant growth in cinema ad revenues, as its ad market is more than 10 times larger than for cinema chains.

Citibank recommended MCOT as its top buy and placed a "buy" rating on MCOT, BEC and Major Cineplex with target prices of Bt40, Bt33 and Bt23.6, respectively.

Tisco Securities said in a recent report that BEC was the direct beneficiary from the TITV switch.

"We see BEC as the direct beneficiary of this change, as its target audience is close to that of TITV. However, we do not expect any major changes in January due to seasonal factors and the official mourning period for His Majesty the King's sister," Tisco said.

The securities house also maintained its "buy" rating for BEC and MCOT, with target prices of Bt32 and Bt38 respectively.

Tisco said BEC's momentum was still building and higher advertising rates this year should further boost earnings, along with ad spending diverted from TITV.

For MCOT, Tisco sees a gradual improvement continuing, with overhanging issues lifted following the passage of the new Broadcasting Act.

Risk factors include falling viewer ratings and lower ad revenue due to strong competition, a delayed economic recovery, reduced ad spending by government agencies and establishment of the National Broadcasting and Telecommunications Commission, Tisco said.

Siam City Securities agreed that BEC and MCOT would be the main beneficiaries from the TITV change. The securities firm recommends "buy" for BEC with fair value at Bt28 per share, while it recommends only speculative buy for MCOT with fair value at Bt34 as its price has been rising recently.

A BEC executive said earlier that the company expected double-digit revenue growth this year, due mainly to a shift of advertising from TITV.

Siriporn Chanjindamanee

The Nation