Broadcasters Wednesday, December 11, 2013
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INDUSTRY UPDATE Media - Broadcasters Wednesday, December 11, 2013 All 41 DTTV applications qualified Raweenuch Piyakriengkai What’s new? On December 9, 2013, The National Broadcasting and (66-2) 949-1002 Telecommunications Commission (NBTC) announced that all 41 applications from the [email protected] 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. Valuation Summary Rating Price Target ETR P/E (x) EPS growth (%) P/BV (x) ROE (%) Div. Yield (%) EV/EBITDA (x) (Bt/Sh) (Bt/Sh) (%) 12A 13F 14F 12A 13F 14F 12A 13F 14F 12A 13F 14F 12A 13F 14F 12A 13F 14F BEC Sell 52.00 66.00 32.4 21.8 19.0 17.3 35.2 14.9 9.5 12.52 11.19 10.26 60.7 62.3 61.9 4.3 5.0 5.4 11.6 10.7 9.8 MAJOR Neutral 18.20 22.00 26.4 21.5 16.8 16.4 (3.6) 28.3 2.3 2.70 2.39 2.46 12.5 15.1 14.8 4.8 5.6 5.5 9.2 7.8 7.9 MCOT Sell 29.50 33.00 19.1 11.5 12.9 12.5 29.7 (10.5) 3.3 2.52 2.47 2.43 22.4 19.4 19.7 7.8 7.0 7.2 6.9 7.7 7.4 Average 18.3 16.2 15.4 20.4 10.9 5.1 5.91 5.35 5.05 31.9 32.3 32.1 5.6 5.8 6.1 9.2 8.7 8.4 Source: SCBS Investment Research Tel. (662) 949-1000 The information in this report has been obtained from sources believed to be reliable. However, its accuracy or completeness is not guaranteed. Any opinions expressed herein reflect Fax: (662) 949-1030 our judgment at this date and are subject to change without notice. This report is for information only. It is not to be construed as an offer, or solicitation of an offer to sell or buy any www.scbs.com securities. We accept no liability for any loss arising from the use of this document. We or our associates may have an interest in the companies mentioned therein. Media Wednesday, December 11, 2013 Figure 1: Commercial DTTV channel license details No. of DTTV channel No. of application Reserve price/starting price Commercial DTTV channel category licenses qualified (Bt mn/license) Children 3 6 140 News 7 10 220 Standard-definition (SD) variety 7 16 380 High-definition (HD) variety 7 9 1,500 Total 24 41 Source: NBTC and SCBS Investment Research Figure 2: Names of qualified bidders Bidder names Remarks Children Rose Media and Entertainment Co., Ltd Satellite TV operators BEC-Multimedia Co., Ltd. BEC World: BEC Thai TV Co., Ltd. The publisher of TV Pool magazine MCOT Plc. MCOT Nation Kids Co., Ltd. Nation Multimedia Group: NMG True DTT Co. Ltd. TrueVisions News Post TV Co., Ltd Post Publishing: POST Voice TV Co., Ltd. Satellite TV operators Springnews Television Co., Ltd. Satellite TV operators Thai TV Co., Ltd. The publisher of TV Pool magazine NBC Next Vision Co., Ltd. Nation Multimedia Group: NMG Mono Generation Co., Ltd. Mono Technology: MONO I-Sport Media Co., Ltd. Joint venture between Samart Corporation and Siam Sport Syndicate 3A Marketing Co., Ltd. Channel 5's content providers DN Broadcast Co., Ltd. The publishing house of the Thai-language Daily News paper Thai News Network Co. Ltd TrueVisions Standard-definition (SD) variety BBTV Satelvision Co., Ltd Channel 7 GMM SD Digital TV Co., Ltd GRAMMY Touch TV Co., Ltd. Intouch: INTUCH BEC-Multimedia Co., Ltd. BEC World: BEC Voice TV Co., Ltd. Satellite TV operators Thai Broadcasting Co., Ltd. Workpoint: WORK Thai TV Co., Ltd. The publisher of TV Pool magazine MCOT Plc. MCOT Bangkok Media and Broadcasting Co., Ltd. Owned by Mr. Prasert Prasarttong-Osoth Mono Broadcast Co., Ltd Mono Technology: MONO Bangkok Business Broadcasting Co. Ltd. Nation Multimedia Group: NMG True DTT Co. Ltd. TrueVisions RS Television Co., Ltd. RS Amarin Television Co., Ltd. Amarin Group Triple V Broadcast Co., Ltd. Thai Rath newspaper 411 Entertainment Co., Ltd. Mahagitsiri Family High-definition (HD) variety BBTV Satelvision Co., Ltd Channel 7 GMM D Digital TV Co., Ltd GRAMMY BEC-Multimedia Co., Ltd. BEC World: BEC Thai Broadcasting Co., Ltd. Workpoint: WORK MCOT Plc. MCOT Bangkok Media and Broadcasting Co., Ltd. Owned by Mr. Prasert Prasarttong-Osoth Triple V Broadcast Co., Ltd. Thai Rath newspaper Amarin Television Co., Ltd. Amarin Group PM Group Co., Ltd. Mahagitsiri Family Source: NBTC and SCBS Investment Research Figure 3: Timeline Date Detail August 27, 2013 Announcement of Information memorandum September 10-12, 2013 Application forms will be available September15, 2013 Announcement of network fee October 15, 2013 The broadcasting panel will hold an open house about how to fill out the application forms October 28-29, 2013 The broadcasting panel has set the application period December 12, 2013 NBTC will make an official announcement naming the qualified bidders December 16, 2013 NBTC will officially announce a venue, an exact date and the sequence of the auction. December 18, 2013 Mock auction for the media at CAT Telecom's headquarters December 19-20, 2013 Mock auction for bidders at CAT Telecom's headquarters January 11, 2014 Last day of the commercial DTTV licenses auction (30 days after official announcement) January - March 2014 Digital TV channels will start the broadcasting Source: NBTC and SCBS Investment Research 2 Media Wednesday, December 11, 2013 Disclaimer SCB SECURITIES COMPANY LIMITED (“SCBS”) ACTS AS MARKET MAKER AND ISSUER OF DERIVATIVE WARRANTS on the ordinary shares of ADVANC, BANPU, BAY, BBL, BCP, BEC, BGH, BJC, BTS, CENTEL, CK, DTAC, GLOBAL, HMPRO, INTUCH, IVL, JAS, KBANK, KKP, KTB, PS, PTT, PTTEP, PTTGC, SCC, TCAP, THAI, TISCO, TMB, TOP, TRUE. Before making an investment decision over a derivative warrant, an investor should carefully read the prospectus for the details of the said derivative warrants. 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