April 08, 2014 00:00 By Bamrung Amnatcharoenrit The N
Suthichai: firm has prepared well for digital TV era, expects big rewards
Nation Multimedia Group Plc is confident that it will remain ‘‘profitable’’ this year despite spending a whopping Bt5 billion on launching two digital terrestrial TV channels – Nation TV and NOW.
Chairman Suthichai Yoon told the shareholders’ meeting last Friday that NMG, which is one of the country’s leading media groups and also the publisher of The Nation, would push the project ahead and strongly believes that the two channels would be a big hit in the industry.
In the first two years, the company’s sales would not grow rapidly, but they would take a big leap afterwards.
In the second half of this year, the digital TV picture will become even clearer, especially with the audience growing and advertising spending continuing to rise.
Last year, about Bt69 billion of ad spending was allocated to TV stations and in three years that figure is expected to balloon to Bt100 billion.
The group hopes to capture a slice of this cake. Ad spending on TV news programmes runs about Bt17 billion, or 25 per cent of total TV spending. The firm hopes that Nation TV on Channel 22 would gain 5-6 per cent of total news-time ad spending, with Bt850 million-Bt1 billion in sales.
Ad spending on variety programmes is estimated at about Bt25 billion, or 27 per cent of total TV ad expenditures. NOW on Channel 26 is projected to grab 3 per cent of the variety segment, with Bt760 million-Bt1 billion in sales.
‘‘We are strongly ready to invest in digital TV, which has shown big potential in the future. The firm has prepared itself in advance. When we move into this industry seriously, pushing ahead to achieve its growth is possible.
“However, the group will go carefully, with the goal to become an international news channel covering all aspects of news content,’’ he said.
Most shareholders showed interest in the digital TV investment during a question-and-answer session and eventually agreed with it.
According to JD Partner, the company’s independent financial adviser, investing in digital TV shows promise.
NOW will generate an internal rate of return (IRR) of 29.58 per cent and take six years and five months to break even, with current cashflow of about Bt1.48 billion.
Nation TV’s IRR is projected at 25.88 per cent and breakeven at six years and seven months, based on current cashflow of Bt416.73 million.
NMG president Duangkamol Chotana said that although the company has faced barriers like slower economic activity and an unclear political scenario, it has made big efforts to make the company profitable and also to pay dividends to shareholders.
One measure was to control operating costs.
Large client companies are getting set to support the digital TV channels, especially NOW, because it is different from other channels, with clearer positioning and target audience.
‘‘Digital TV is a high potential industry in the future. In comparison, the print industry is growing at 3 per cent a year on average, or probably staying flat.
“Then, the trend forces the company to adjust by attempting to maximise benefits from existing information in the print version via other formats, as a way to create value added,’’ she said.