RS expects flat sales and further losses

RS will likely suffer a second straight year of losses as sales of music CDs and products continue to fade.

The media company expects revenues to remain at last year's level of Bt2.5 billion, instead of rising to the target of Bt3 billion, Pornpan Techarungchaikul, chief operating officer, said yesterday.

Last year RS swallowed a net loss of Bt121.67 million.

The poor performance is due primarily to falling revenues from the music business, especially physical products like VCDs and DVDs, despite the growth of digital content sales, she said.

The company also failed to generate expected income from bagging the rights to the Euro 2008 soccer tournament.

Music makes up 35 per cent of total revenue, showbiz 25 per cent and media - including television programming and radio stations - the rest.

Revenue from the music business is expected to decline by 10 per cent to Bt800 million this year.

The company recently cut its music group from more than 10 units to two, which focus on tapping the mass and teen segments, before opening four subsidiaries yesterday to produce easy listening, indie rock, reggae and new-generation songs.

"The mass segment is accounting for 60 per cent of total revenue in the music business, followed by teens at 35 to 40 per cent. Yet, we decided to open four subsidiaries under the strategy of music segment fulfilment," she said.

The company believes that the new four genres will contribute 15 per cent to the music business in their first year, while the mass segment will drop to 45 per cent from 60 per cent of its business.

The showbiz unit is facing a revenue decline of 5-8 per cent this year from cancellations of many projects such as the David Copperfield magic show and the Bangkok 100 Rock Festival by 100 Pipers. But events awarded by state agencies show a bright outlook for next year.

The company next year will focus on its rising stars - digital content and in-store media in the modern trade. It predicts growth of the digital content business next year at about 30 per cent, in line with mobile operators.

Other businesses under RS such as film, TV and radio programmes will not get any capital expenditure budgets because of the economic crisis and political situation.

"The film business relies on the mood of consumers, while showbiz has to depend on sponsors, yet we foresee that TV and radio programmes will be affected because sponsors may cut marketing budgets," she added.