Thai iTV loses in dispute on concession fee, facing bankruptcy

December 15, 2006
Singapore Democrats

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People’s Daily Online
14 Dec 06
http://english.people.com.cn/200612/14/eng20061214_332458.html

A long-lasting dispute on a concession fee and programming time between Thai independent TV station iTV Plc. and the Prime Minister’s Office had been finally wrapped up with the Supreme Administrative Court deciding to uphold the Central Administrative Court’s verdict, forcing iTV operator liable for fines.

The Wednesday judgment made iTV finds itself teetering on the brink of bankruptcy and losing its broadcast license as the fines could be more than 94 billion baht (2.68 billion U.S. dollars), which far exceeds the company’s assets of about 3.7 billion baht ( 104.9 million U.S. dollars).

The Supreme Administrative Court on Wednesday upheld the Central Administrative Court’s order to void the arbitration ruling on concession fee payments won by iTV. This means that iTV would have to pay 1 billion baht (28.6 million U.S. dollars) a year to the Prime Ministry’s Office, which granted the concession, or at least 20 billion baht (571 million U.S. dollars) over the next 20 years of the concession term.

Also iTV faces a fine of 100 million baht (2.86 million U.S. dollars) a day for breach of contract, amounting to 94 billion baht (2.68 billion U.S. dollars) throughout the remaining contract period.

Reflecting the gloomy outlook, iTV’s share price plunged 25 percent soon after the ruling Wednesday.

The iTV, which is 54 percent owned by Shin Corp of the ousted prime minister Thaksin Shinawatra, is virtually in no position to pay the concession fee, not to mention the huge fine that exceeds what Temasek Holdings of Singapore paid to the Shinawatra families in its takeover of all of Shin Corp in January this year.

Somkiat Tangkitvanij, a research director at the Thailand Development Research Institute, said iTV is facing a financial crunch and might have to surrender its TV license to the state.

Temasek might decide to cut its losses on its iTV investment by handing back the broadcast license since the television business is not its main money-spinner, he said.

If Temasek decides to give iTV back to the government, iTV could be improved to become a truly independent station or its name might be changed, depending on the government, he said.

Wednesday’s court ruling marks yet another setback for ousted prime minister Thaksin Shinawatra, who has been accused of tolerating policy corruption, although the loss has been transferred to Temasek.

Under Thaksin’s administration, iTV, still under the control of the Shinawatra family, was allowed by an arbitration panel to revise its concession with the PM’s Office to the detriment of the office.

Earlier this year, the Supreme Administrative Court ruled against the Thaksin government by jamming the brakes on the privatization of Egat Plc just before it launched its initial public offering.

Now iTV must immediately adjust its programming back to the original 70:30 ratio of news/documentaries to entertainment, permanent secretary of the PM’s Office Jullayuth Hiranyawasit was quoted by Thai news group The Nation as saying.

The PM’s Office has not decided whether the huge fine would be reduced or remain unchanged, he said, adding the PM’s Office still has six months to go to court on the fine payment before the statute of limitations expires.

A few hours after learning of the ruling, iTV staff issued a statement accepting the court’s decision and vowing to abide by it. But they still reserved the right to call for “fairness” over the huge fine iTV is liable to pay to the state.

The statement said all of iTV’s 1,070 employees needed fair treatment so iTV can continue operating as a news station without intimidation from any individual or business.

“None of the editorial staff wants to go anywhere else. We are still working as usual,” iTV’s executive chairman Niwatthamrong Boonsongpaisan said. “However, I feel sorry for what happened. It seems the station is ill and we are waiting for the day it will recover.”

Darunee Hiranruk, a mass media lecturer and architect of the concession for iTV in 1992, said there was a good chance for iTV to be transformed into a real public media organization as intended when the station was set up.

Darunee said she believed that Temasek could negotiate with the government on the fine.

“When iTV is returned to the state, the government should cut the concession fee as the old rate is too high, while the news-to- entertainment ratio of 70:30 can’t bring in much income,” she said.

The government should rapidly redistribute iTV’s shares to the people in order to make iTV become a real public TV station, she added.