Thai Euro 2012 dispute to bring tighter rules

Dispute over broadcast of Euro 2012 football matches in country could lead to satellite TV sector being regulated as early as third quarter this year. This means higher costs for operators but more content access for consumers, analyst says.

Following the dispute over broadcasting rights of the Euro 2012 football tournament in Thailand, one analyst believes the government would soon introduce tighter regulations on the previously unregulated industry. This, in turn, would improve consumer access to more content but result in higher costs for operators.

Relative newcomer to the satellite TV scene in Thailand, GMM Grammy, clinched the broadcasting rights to the tournament over local incumbent service provider TrueVisions. However, the GMM Grammy deal involved revenue-sharing with free-to-air TV channels 3, 5, and 9, but these channels were carried by TrueVisions as well, according to a blog post by ZDNet Asia's sister site, CNET Asia.

The dispute arose because while the three TV channels can broadcast the matches, they are prohibited from showing them on other satellite TV providers' channels they have prior partnerships with, it stated. This is because GMM Grammy only secured broadcasting rights for Thailand, but these other providers offer services to neighboring countries as well.

The local broadcasting regulator National Broadcasting and Telecoms Commission (NBTC) subsequently got involved. Local news agency Bangkok Post reported on Jun. 8 that NBTC ordered TrueVisions to air the games regardless of the GMM Grammy agreement. "It's the duty of TrueVisions to comply with its terms of service to its customers by broadcasting normal free-TV programs continuously," said Natee Sukonrat, chairman of NBTC's broadcasting committee.

In the end, TrueVisions did not block out the channels in question but operators of channels 3, 5, and 9 each transmitted a static image notifying viewers who were not subscribers of GMM Grammy that they were not allowed to transmit Euro 2012 matches through any other services, the CNET Asia blog stated.

Commenting on this, Pisut Ngamvijitvong, analyst at equities research firm CIMB, said the country's broadcasting regulator had faced difficulty in exercising its power over the unregulated satellite TV industry.

"This came after 5 million to 6 million households, watching free terrestrial TV program from the satellite TV system, were blacked out from the Euro 2012 soccer tournament," Ngamvijitvong added in his research note.

He noted that despite the NBTC's ruling for TrueVisions to air the Euro 2012 matches, it could not compel GMM Grammy to comply because it was not a licensee under the regulator's jurisdiction.

Regulations could squeeze satellite TV players
The satellite TV industry in Thailand, which includes players such as TrueVisions, PSI, DTV, and GMM Grammy, currently does not have a licensing system, according to the CIMB analyst. However, this is likely to change by the third quarter of this year as all satellite TV providers will need to be registered. He based this observation on discussions he had with a source from the NBTC. "We believe the NBTC will accelerate the regulation drafting process in order to install its regulatory power over the satellite TV industry," noted Ngamvijitvong.

"The licensing of satellite TV operators is a negative development for them. Although the licenses might formalize their business status and ensure continuity and legitimacy, they also come with some onerous and unfavorable obligations."

One example of such obligations would be that satellite TV operators would have to pay a licensing fee at the rate of 2 to 4 percent of its revenue, the analyst said. Based on GMM Grammy's financial year 2011 when it made 9.37 billion baht (US$295 million), 4 percent of its revenue would be 374 million baht (US$11.7 million)--nearly half of its net profits that year.

Additionally, censorship regulations would then apply to these operators and this may restrict the content they currently carry, he noted. Advertising time for companies would also be limited due to existing rules.

New rules beneficial for customers
Consumers will stand to gain from the regulator's intervention though. This is because the NBTC is set to introduce the "must carry" rule for all TV platforms by end-2012, which means that all locally-licensed TV stations must be carried on a satellite provider's system, Ngamvijitvong explained.

"We see the 'must carry' rule as a positive development for terrestrial TV operators as it provides a broad audience base in every TV platform, thus strengthening their mass medium proposition," noted the analyst.

The "must carry" rule could also help the industry be more competitive in offering other value-added services, such as bundling with other offerings over mobile, added Ng Kian Teck, lead analyst at SIAS Research.

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