GMM Grammy, CTH plan share swap to keep lid on pay-TV business loss

Corporate July 23, 2014 00:00

By Usanee Mongkolporn
The Nation

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GMM Grammy will make a share swap with CTH via its wholly owned subsidiary Z Trading in a Bt1-billion transaction as Grammy tries to focus solely on digital television and exit pay TV, while CTH strives to expand its viewership and content.

A GMM source said that after the deal, the company would concentrate on its two digital TV channels and its entertainment-content business, not on pay TV, while CTH would have more content for its pay-TV platform. 
After the transaction, if successful, GMM Grammy via Z Trading Co will hold a will hold a 15.6 per-cent stake of CTH’s Bt1.925 billion paid-up capital , which is majority-owned by Wichai Tongtaeng, and CTH will hold 100 per cent of Grammy’s pay-TV operator GMM B.
According to GMM’s filing to the Stock Exchange of Thailand, Z Trading has entered a memorandum of understanding regarding the acquisition of 30 million common shares of CTH totalling Bt1.03 billion (Bt34.33 per share). In this regard, the company will settle the acquisition of those shares by the selling of the common shares of GMM B Co to CTH’s subsidiary CTH LCO Co, with the total amount of 38,659,700 common shares (Bt26.64 per share), representing 100 per cent of GMM B’s paid-up registered capital. Thus GMM B will cease to be a subsidiary of Grammy.  
This transaction is expected to be completed by July 31.
The filing to the SET said that yesterday, the Grammy board of directors passed a resolution approving Z Trading’s acquisition of the common shares of CTH. 
The board ratified the MoU to acquire the common shares of CTH on July 14, and the settlement will be made by the sale of the common shares of the company’s subsidiary to a subsidiary of CTH. 
GMM B operates around 2.5 million set-top boxes and has 180,000 subscribers. 
CTH says it has around 500,000 pay-TV subscribers.
The source added that this deal could create a strong competitor for the pay-TV market leader TrueVisions, which has around 2 million set-top boxes with 1 million active subscribers. 
CTH is an exclusive broadcaster of English Premier League soccer while GMM has Uefa and Bundesliga football. GMM spends about Bt2 billion on its pay-TV business per year. It incurred loss of around Bt1.3 billion last year.

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