Thai DTT subsidy delay helps FTA broadcasters attract advertisers
| 17 November 2014
The delay in digital terrestrial television (DTT) subsidies in Thailand will see incumbent free-to-air (FTA) broadcasters Channel 3 and Channel 7 continue to dominate TV advertising spend over the next two years, according to Fitch Ratings.
The new digital television network operators, which launched in May 2014, will take a longer time to break even on cash costs after a slower than anticipated adoption of DTT in Thailand, says Fitch.
The delay "is mainly due to the regulator's delay in distributing subsidy coupons, which has resulted in viewers deferring purchases of digital TV set-top boxes. However, we expect the adoption rate to increase rapidly in 2015 and 2016 after the regulator began to distribute subsidy coupons in October 2014," Fitch said in a statement.
Fitch estimates that variety digital TV channels may require average annual revenue of at least 1.4 billion baht (US$42.68 million) to cover annual production and operational costs of around 800 million baht and capex (including licence fees) of between 500 million and 600 million baht per annum.
Competition for advertising is likely to be "fierce" over the coming two years, putting some pressure on advertising fees, with free-to-air broadcasters such as Channel 3 and Channel 7 emerging victorious, the ratings agency believes.
Channel 3 and Channel 7 already account for a combined total of 60% of TV advertising spend in Thailand.