Fearing collapse, ITV asks for leniency

The defence team for iTV yesterday pleaded for leniency, saying the station could collapse and its workers become unemployed if the high court ruled to confirm the whopping fine of almost Bt100 billion.

The Supreme Administrative Court has scheduled its appellate ruling on the case for Wednesday.

"This court's primary duty is to dispense justice and disputed parties should not try to sway the ruling or make hasty criticism in advance," judge Charan Hatthakam said in the final session of the appellate review.

At the centre of the litigation is a contractual clause - Article 5, paragraph 4 - that empowers the station to seek mediation by a board of three arbitrators to revise its concession fees if authorities allowed advertising to be broadcast on cable television.

Based on this clause, the arbitration ruling allowed the station to pay reduced fees and revise programming to favour entertainment at the expense of news coverage.

The Office of Permanent Secretary for Prime Minister's Office, the regulatory body for iTV's broadcast contract, petitioned the Central Administrative Court to overturn the ruling.

The lower court ruled last year in favour of the regulatory body and ordered iTV to pay full fees and restore its original programming.

The regulatory body subsequently ruled to impose the fine for delayed and partial payments made since the arbitration ruling.

The station appealed the lower court's decision and postponed any fee adjustments pending the outcome of the appellate review.

In his closing statement to the high court, defence lawyer Praman Ruangwatanawanit said the station did not manipulate the contract because the clause in question was inserted by the Office of the Attorney-General when scrutinising the draft contract.

Praman said the station had sought and received the arbitration in good faith.

He went on to state that the regulatory body had complied with the enforcement of the clause six times since 1999.

The Nation

iTV share prices plunge by 25 per cent

Investors Wednesday dumped iTV Plc shares, leading to a 25 per cent plunge in the company's share price, following the Supreme Administrative Court's landmark ruling that iTV must be subject to the original concession fee and the programming ratio.

ITV plunged 26 per cent immediately after the afternoon bell rang to Bt2.06. At the close, it was Bt2.10, 25 per cent lower than the previous closing. Trading turnover was Bt631.38 million.

The Nation

-----------------------
THREAD MOVED TO BUSINESS

COURT RULING

Bankruptcy looms for reeling iTV

Struggling station in no position to pay Bt94 bn in fines and might have to surrender licence unless govt shows leniency

The fairytale is ending as iTV finds itself teetering on the brink of bankruptcy and losing its broadcast licence following yesterday's landmark court ruling to enforce the "independent" station's original concession terms.

The Supreme Administrative Court 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 Bt1 billion a year to the Prime Ministry's Office, which granted the concession, or at least Bt20 billion over the next 20 years of the concession term.

Plus iTV faces a fine of Bt100 million a day for breach of contract, amounting to Bt94 billion throughout the remaining contract period.

Reflecting the gloomy outlook, iTV's share price plunged 25 per cent yesterday to Bt2.10.

iTV, which is 54 per cent owned by Shin Corp, 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/Damapong families in its takeover of all of Shin Corp.

Over the first nine months of this year, when iTV was operating under amended concession terms, it eked out Bt364 million in net profit on revenues of Bt1.55 billion after deducting expenses of Bt1.20 billion. Its earnings pale in comparison with its greatly increased financial obligations.

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

Temasek might decide to cut its losses on its iTV investment by handing back the broadcast licence 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.

Yesterday's court ruling marks yet another setback for ousted prime minister Thaksin Shinawatra, who has been accused of tolerating policy corruption.

Under his 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 privatisation 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, said Jullayuth Hiranyawasit, permanent secretary of the PM's Office.

He said iTV was still obligated to pay a Bt1 billion annual concession fee to the PM's Office as well as a Bt94 billion fine for its long-running breach of contract.

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.

"The PM's Office can proceed with the fine payment now that the court's ruling has been issued [in favour of the office]," he added.

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.

iTV executive chairman Niwatthamrong Boonsongpaisan said the station would promptly correct its news and entertainment ratio from 50/50 back to 70/30. Then it would pay the concession fee at the old rate of Bt1 billion a year. However, iTV would hold talks with the Permanent Secretary's Office of the PM's Office first about the Bt94 billion in penalties, he said.

An iTV newscaster said most of the station's workers believe iTV will prevail no matter who will come to run it.

"None of the editorial staff wants to go anywhere else. We are still working as usual," she said. "However, I feel sorry for what happened. It seems the station is ill and we are waiting for the day it will recover."

An iTV newsreader said he has to wait and see what will happen after the court's verdict before deciding whether to stay or start looking for a new job.

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 organisation as intended when the station was set up.

iTV was born from the ashes of the pro-democracy movement to be an independent voice of the people.

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.

The Nation

IN 45 DAYS ITV WILL NEED TO COUGH UP

Bt100,000,000,000

Uncertainty reigns over what will happen to the broadcaster if it fails to meet the payment

Beleaguered television station iTV has just 45 days from today to pay around Bt100 billion to the PM's Office Ministry after the Supreme Administration Court's verdict on Wednesday.

However, iTV, which is 54 per cent owned by Shin Corp, will have another 45 days to comply with the verdict if it can't pay the money after the first 45-day deadline ends.

The Permanent Secretary's Office of the PM's Office, which deals with iTV's 30-year broadcasting concession, did not say in a statement issued yesterday what it would do next if the company could not pay the money after the 90-day period ended, apart from merely reporting iTV's non-payment to the Cabinet.

iTV owes Bt2.21 billion to the PM's Office for concession fees in the 9th, 10th and 11th years of its deal.

The fine calculated by the PM's Office for non-payment totals Bt97.76 billion, based on a major condition that iTV's breach of contract was subject to a Bt100 million daily fine. Neither figure includes interest.

Jullayuth Hiranyawasit, permanent secretary of the PM's Office, said the Cabinet would again consider how much to fine iTV or order the broadcaster's licence to be returned to the government.

Asked whether the government would hold talks with Temasek, which holds a major stakes in iTV through its purchase of Shin Corp, to discuss plans for the future of iTV, Jullayuth said the Cabinet was authorised to do so in principle. "When it comes to civil matters, not only the iTV issue, everything is negotiable," he added.

Poramet Intharachumhum, a deputy spokesman for the Office of the Attorney General, said the PM's Office submitted a request to the OAG two weeks before Wednesday's verdict asking it to calculate the total amount of money iTV was subject to pay over the issue.

The OAG will now re-examine the numbers proposed by both the PM's Office and iTV to see whether they were in accordance with the original deal signed by both parties. In civil terms, iTV will face bankruptcy if it cannot pay the entire amount of money to decided by the OAG, Poramet explained.

Regarding the dispute between the PM's Office and iTV over the calculation of the fines, Jullayuth said it was normal that one tended to interpret the wording in favour of itself, and given the huge amount of advertising iTV had enjoyed, it was committed to taking a chance with the original ratio of news/documentaries to entertainment programmes at 70:30.

"It's apparent that iTV agreed to pay twice the amount of the median bidding price in order to win the concession in the first place. This clearly indicated that iTV foresaw how lucrative its television operation could be," he said.

Jullayuth said iTV's advertising airtime was priced at Bt500,000 per minute. The airtime during prime time, which totals 150 minutes a day, earned iTV Bt7.5 million each day. And non-prime time advertising earned tens of millions of baht each day.

"If iTV interprets the wording to mean that it should be fined only Bt2 million a day, every company operating on government concessions will be more than willing to be fined" [at rates much lower than the amount it earns], he said.

iTV adjusted the ratio to 65:35 in 2004, without the PM's Office's approval. The PM's Office's rate for the fine is Bt100 million a day.

Prime Minister Surayud Chulanont yesterday declined to say what he was planning to do with iTV if it had not paid the fine at the end of the 90-day period. He said the PM's Office was currently dealing with iTV directly.

A law lecturer from Siam University, Dr Jate Thonavanik, said that as iTV staff took no part in violating the broadcasting concession they deserved to benefit from the government's career security service if iTV could no longer operate and faced bankruptcy.

He suggested iTV staff submit requests to relevant ministers responsible for career security services asking for assistance in case they were laid off.

Piyanart Srivalo,

Sathien Viripanpongsa

The Nation