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Media - Broadcasters

Day 1 of DTTV auction - High demand for SD

Media - Broadcasters

Day 1 of DTTV auction - High demand for SD

- December 26, 2013: first digital TV auction, for HD and SD variety channels

- SD - highest demand, with final license price 6x starting price

- Still cautious towards broadcasting sector on high costs, uncertain success

DTTV auction - High demand for SD variety. On December 26, 2013, the National Broadcast and Telecommunications Commission (NBTC) held the first digital TV (DTTV) channel auction for HD and SD variety channels. As expected, highest demand was for SD variety channels and this pushed the average final price up 6x above the starting price (average of ~Bt2.3bn vs. Bt380mn). The average final price of HD variety channels was double the starting price (~Bt3.4bn vs. Bt1.5bn). Total value for the first day of the DTTV auction was Bt39.7bn. BEC-Multimedia Co., Ltd (BEC subsidiary) offered the highest final price for the HD variety channel of Bt3.5bn. Thai Broadcasting Co., Ltd. (WORK subsidiary) offered the highest final price for the SD variety channel of Bt2.4bn. Winner names and their final bids are in Figure 2.

Winners: BEC and GRAMMY both get HD and SD. BEC and GRAMMY, through subsidiaries, each won both HD and SD variety channels.

Day #2 today: auction of news and children's channels. Today (December 27) the DTTV auction for news and children channel categories will be held. High demand is expected for children's channels, with more bidders than there are licenses on offer.

Official announcement in 15 days. The NBTC will officially announce the winners within 15 days after completion of the auction. Winners must comply with the conditions set out by the NBTC, including payment of the first installment, provide a guarantee for the second payment and contract for network use with DTTV network providers within 30 days after the announcement of official winners.

Payment method. The installment payment is separated into two parts: 1) payment of the starting price, made in four payments - 50% paid in the first year, 30% in the second year and 10% in each of the third and fourth years and 2) payment of the amount bid over the starting price, which will be paid in six installments of 10% in each of the first and second years and 20% in each of the third to sixth years.

Still cautious on broadcasters. We continue to be cautious towards broadcasters, and see no near-term positive catalysts. The economy is faltering, particularly now, as the political morass is expanding, and together these factors will lessen consumer spending, leading to ad budget cuts. Players also face operating losses initially, widely expected to last two to five years after DTTV operations start. Compared to the incumbent free TV operators, smaller players such as satellite TV operators are less well grounded financially, forcing them to raise debt. Newcomers have little experience and this puts them at greater risk. We note that our earnings forecasts for BEC and MCOT do not factor in the impact of DTTV, but we see downside from the expected initial losses from DTTV operations.

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