A bloody victory won on lack of public trust

Published on September 18, 2005 - Matichon saga probably marks the first chapter in an epic battle involving two leading publishing houses

While Prime Minister Thaksin Shinawatra was bashing the United Nations in New York, at home entertainment tycoon Paiboon Damrongchaitham was launching hostile bids against two distinguished publishing houses and TV Channel 9 was taking the big step of removing Sondhi Limthongkul’s “Muang Thai Rai Sapda” from its programming.

These three spectacular events, occurring early last week in the month of Black September, might have nothing to do with each other.

Yet they looked almost like perfectly coordinated attacks, in the style of al-Qaeda, to achieve dramatic and decisive results. They reminded us of a stern recent warning from the lips of the prime minister, who was upset with several political attacks on his premiership. “I never retreat,” he said. “I only hold up my guard. Be careful, when I strike back.”

The strong words were a riddle that may take time to become clear.

Recently, the prime minister had a meal at Tour de France, a high-end restaurant at the Grand Hyatt Erawan Hotel in Bangkok, with a group of senior editors from Matichon daily. Matichon might carry some hard-hitting reports but it has never been too harshly outspoken against the premier personally, so they had a good time together. But before leaving, the prime minister left another riddle for the senior editors of Matichon daily to work out.

On a piece of napkin he wrote cryptically about his grand strategy for Thailand, beginning: economy = politics, and saying that in the economy, free-trade agreements would be the highlights, accompanied by mergers and acquisitions, achieving economies of scale and economies of speed.

In spite of being branded a populist leader, Thaksin’s vision on the piece of napkin demonstrates that he is actually a pure capitalist, from head to toe.

Matichon Weekly reported about the luncheon meeting as an exclusive story. It also proudly reproduced Thaksin’s handwritten grand strategy. Hardly did the editors realise that that piece of napkin, in a way, amounted to a death warrant.

On 9/12, Paiboon, who is known to be a very good friend of the prime minister, launched twin hostile takeover bids against Matichon Plc and Post Publishing Plc.

The bid against Post Publishing looked friendly enough, as the Chirathivats and the Italian-Thai Group agreed to sell out their combined shares, amounting to 23.6 per cent, to Paiboon’s GMM Media. Yet behind the scenes, it could be an arm-twisting deal as Suthikiati Chirathivat, who is chief executive and holds about 11 per cent in Post Publishing, has declared that he will never sell his stocks.

Italian-Thai would like to get contracts on the mass-transit systems and other big projects, while the Chirathivats are keen to renew their contracts with the State Railway of Thailand on the prime property at Central Lat Phrao.

Upon returning from his US trip, Suthikiati will be negotiating eye-to-eye with Paiboon over how they will co-exist in Post Publishing, the publisher of Bangkok Post and Post Today.

The real story for the time being is the hostile takeover of Matichon. Khanchai Boonpan, the company’s founder, was only informed about the hostile bid on September 12, the day when GMM Media began to buy big chunks of Matichon stocks through bit-lot transactions. Khanchai was shocked, but swore that Paiboon would only win over his dead body.

The next day, GMM Media completed all the big-lot transactions and emerged as a 32.23-per-cent shareholder of Matichon. At the same time, Paiboon, who transformed himself into a corporate raider overnight, announced that he and GMM Media were ready to tender for 100 per cent of Matichon’s shares at Bt11.10 apiece.

The battle then began. And it was fought across multiple fields, from politics, the social and civic movements and the corporate world, to the complicated dealings of the capital market.

So why did Paiboon want Post Publishing and Matichon in one grab? Was there any political motivation?

During the Thaksin I government, Paiboon and Pongsak Ruktapongpisal – now transport minister – were asked by Thaksin to negotiate to buy the Liverpool Football Club. It quickly turned into a public uproar over attempts to use state money to buy out a money-losing English Premiership club, while Thailand was still badly in need of better education and healthcare. The deal subsequently collapsed and became a big joke.

One may say that the Thaksin government needs to win public opinion back to its side. After the CTX scandal, public trust in the government deteriorated rapidly. One Cabinet member admitted recently that Thai people and the government were drifting apart and the trust gap between them was becoming wider. The CTX bomb-detection machine scandal had one clear effect: the people have begun to question or scrutinise the government’s each and every move.

Therefore, it might not be completely wrong to suggest that if the Thaksin government could win over more media organisations to its side, it would be in a better position to shape public opinion in its favour.

Already, most of the broadcast media are under tight-knit government control. Thai Rath, the most influential mass-circulation daily, has not been creating any big problems for the government, although it might try to sound critical.

Sondhi Limthongkul’s “Muang Thai Rai Sapda” talk show was surgically removed from Channel 9’s programming on Thursday because he had been very critical of the government.

A Democrat member of Parliament once said: “If any government could control the broadcast media and win Thai Rath to its side, it would have a good chance of having the public and the votes on its side.”

Once again, Paiboon’s attempt to take control of Post Publishing and Matichon – which publishes Matichon daily, Khao Sod, and Prachachart Thurakij and Matichon Weekly – might have nothing to do with the government’s attempts to win more favourable news coverage.

Yet the corporate raider has never concealed his close relationship with the prime minister. In fact, he is one of the ultimate insiders of the premier’s Club of Billionaires.

The story line from Paiboon was that Post Publishing and Matichon would form a synergy with GMM Grammy Group, transforming him overnight into a formidable entertainment and media mogul to be reckoned with.

Almost two years ago, a person who knows Paiboon well, saw Paiboon’s master plan his imagined empire.

“He said he would like to create a Grammy empire, covering TV, radio, newspapers, and magazines,” said this person, who asked not to be named. “Khun Paiboon said if he could turn Thongchai ‘Bird’ McIntyre into a star, he should also be able to give an anchorman the status of Walter Cronkite. The Grammy logo would prevail everywhere in the media.”

Investment bankers liked Grammy’s takeover story be-

cause it looked like transforming Paiboon’s empire into a true en-tertainment and media conglomerate.

But it was launched at a time of threadbare public trust in anything vaguely associated with the government. It was precisely this absence of trust that led to an unprecedented uproar against the Matichon deal.

The various social movements, academics, civic and press organisations came out strongly over Paiboon’s attempt to take control of the press. Paiboon was roundly condemned for raiding Matichon and threatening the independent voice of this publishing house at a time when press freedom was operating in thin air.

The rally threatened to spill over into a boycott of Grammy’s entertainment products. Sensing the danger, Paiboon agreed to back off.

Late on Wednesday, there were signs that Paiboon would agree to reduce his stake in Matichon from 32.23 per cent to 20 per cent so that he would retain only the status of a strategic partner. He would sell 12 per cent of Matichon back to Khanchai at his purchase cost – Bt11.10 apiece.

The Khanchai camp declared victory the following day. There was also a throng of support for Khanchai from other institutions such as the Bank of Ayudhya, which had agreed to finance Khanchai’s share buy-back.

Khanchai and his allies currently hold about a 31-per-cent stake in Matichon. Khanchai had never considered the possibility of a hostile takeover, with Matichon’s stocks floating into the hands of various groups of investors. Perhaps it serves as a wake-up call to other listed companies that remain complacent about hostile takeovers.

But Khanchai’s victory comes with a big price tag. He will have to raise almost Bt300 million to buy back the 12-per-cent stake from Paiboon. Then he will have to make a tender offer for all the remaining stocks of Matichon.

The offer will cost him about Bt1 billion if all the other shareholders agree to sell their stocks to him.

It is a blood-soaked victory for Khanchai, who will have to bring in new allies with financial muscle to help him share the burden of the share buy-back scheme.

In the meantime, Matichon’s stock prices have jumped sharply from less than Bt10 a week ago to between Bt15 and Bt16.

Khanchai may have emerged victorious from the takeover battle, but he looks like a loser in the money game. Paiboon is still in the money game, for he will stand to make a good profit if he sells out his portfolio.

The weeklong saga marks only the first chapter of an epic battle involving the two publishing houses. The eventual outcome remains anybody’s guess.

Thanong Khanthong
The Nation