The planned 1.08-billion-baht takeover of digital Spring News Channel 19 by TV Direct Plc (TVD) was finally scrapped Tuesday after a resolution by TVD's board.
Initially, TVD was going to buy a 90.1% stake in Channel 19 for 1.08 billion baht. The board's resolution to cancel the deal came after the two parties failed to reach a final agreement, mainly due to a recent announcement by the telecom regulator that it would use funds from the 700-megahertz spectrum licence auction to subsidise digital TV operators.
Songpol Shanmatkit, chief executive of TV Direct, said TVD and Spring News Corporation, the parent company of Channel 19, previously postponed signing the deal, which was originally scheduled for last December.
"We [TVD] understand the situation of Spring News Corporation, as it is also a listed company and has to wait for subsidies in the future, while the planned 700MHz auction is uncertain and hard to predict," Mr Songpol said.
Despite having no takeover deal, he said TVD aims for total revenue of 4.8 billion baht in 2019 or a 20% rise from 2018, driven by increasing awareness of TV shopping through omnichannel platforms.
TVD will continue renting airtime on Channel 19 for broadcasting its TV shopping programmes.
The company previously entered into a collaboration contract with Spring News in April 2018 with a four-year term of validity. Under the four-year contract, TVD was co-producer of the channel, revamping it from solely news reports to news and TV shopping programmes.
TVD has spent 16 million baht per month through an existing co-producing collaboration contract with Spring News Channel 19, covering responsibility for TVD's spending for broadcasting network fees, airtime fees of TV Direct's shopping programmes and expenditure for ratings and universal service obligations (USO).
"TVD booked 57.5 million baht for its net profit in 2018, up 187% from 2017," Mr Songpol said. "The 57.5-million-baht net profit was the highest in the past five years."
Chutchai Tawandharong, chief operating officer of Spring News Corporation, said the company had no choice but to back out of the deal, as both parties acknowledged that there is still uncertainty of the outcome of the planned auction of the 700MHz spectrum.
More importantly, the expected assistance for digital TV operators is still unconfirmed, while it's unknown when the auction will be and if it will be successful.
Mr Chutchai said that if the deal had gone through and later Channel 19 received government subsidies, the board could have risked a legal backlash by the company's shareholders.
Mr Songpol said that of TVD's targeted 4.8 billion baht in revenue, 3.3 billion will be generated by TVD and the remaining 1.5 billion by subsidiaries such as TVD Shopping, delivery business Last Mile Direct, insurance service TVD Broker, TVD Services, marketing service Magic P Watch and Tre-RD.
More importantly, TVD expects sales revenue through online platforms in 2019 to account for 20% of the total, up from 10% in 2018.
