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All 41 DTTV applications qualified

Media - Broadcasters

All 41 DTTV applications qualified

What's new? On December 9, 2013, The National Broadcasting and Telecommunications Commission (NBTC) announced that all 41 applications from the 29 companies taking part in the auction for 24 commercial digital terrestrial TV (DTTV) licenses qualified. The greatest demand is for SD (standard definition) variety channels, for which there are 16 applications; there are six applications for children’s channels, 10 for news channels, and nine for high-definition (HD) variety channels. (Source: Bangkok Post, December 10, 2013)

What's next?

The NBTC will officially announce the qualified bidders on December 12. According to the information memorandum, the auction for the 24 commercial DTTV licenses will take place 30 days after the announcement, which would put it at no later than January 11, 2014.

On December 16 the NBTC will officially announce venue, date and auction sequence.

The NBTC has prepared three possible scenarios for the auction. #1: The auction for all four license categories will be held on the same day. #2: It will hold two auctions, each one for two categories. #3: It will hold four separate auctions, one for each category. However, Col. Natee Sukonrat, chairman of the NBTC’s broadcasting committee, said the auctions for all four categories (HD variety, SD variety, news and children’s channels) will most likely be held on the same day.

The NBTC will conduct mock auctions on December 18 for the media and then December 19-20 for bidders at CAT Telecom’s headquarters.

Impact from DTTV. DTTV will benefit the industry in the long term by generating greater efficiency with regards to frequency allocation and a greater supply. This latter will give advertisers more choices, especially helpful for mid-sized to small companies with low budgets that now use TV sparingly due to the high ad rate.

We expect satellite TV operators and newcomers joining the bidding to enjoy a rush of optimism ahead of the auction since DTTV channels will enlarge their viewer bases and give them the ability to raise ad rates down the road. We note, however, that DTTV for all players - from incumbent free TV broadcasters to satellite TV operators and newcomers - will initially be a drag on earnings because of the costs involved. Costs include payment for the license, annual network/facilities cost, annual license fee and higher content and production costs, and all of these will need to be covered before ad revenues come in to provide some offset. Advertisers are likely to be cautious initially since audience penetration and ratings will still be unknown. Talks with several operators and industry experts indicate that they expect their DTTV channels to run at a loss for from two to five years.

Cautious stance on broadcasters. Share prices of BEC and MCOT have underperformed the market YTD by 25% and 36%, respectively. However, we maintain a cautious view on broadcasting and see no near-term positive catalyst in view of the flagging economy and political concerns that will deteriorate consumer spending leading to ad budget cuts plus the uncertain success of DTTV channels. Catalysts for the sector will be recovery in consumer confidence and consumption and the industry-wide benefit from the traditional pre-election ad spending.

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