Thailand's iTV takes one on the Shin
By Shawn Nance
BANGKOK - When Thai troops opened fire on pro-democracy demonstrators on the
streets of Bangkok in May 1992, the military government censored all local
television news of the violence. Democratic reformers later moved to reduce the
longtime military and state monopoly over the broadcast media through the
establishment of the kingdom's first ever privately held independent news
station, iTV.
Fast-forward 15 years, and Thai soldiers are currently positioned at iTV and
across all other Thai television stations censoring news about former prime
minister Thaksin Shinawatra, who military
coup makers ousted last September, and who formerly controlled the station as a
subsidiary of the Shin Corporation he founded. It's now apparently only a
matter of time before the once hard-hitting, but since emasculated, news
channel is declared bankrupt and closed down.
A Supreme Court ruling in mid-December upheld a previous Central Administrative
Court verdict against the station for manipulating the terms of its original
operating concession with the Prime Minister's Office. It has been ordered to
pay prohibitive fines and back-interest payments amounting to nearly 100
billion baht (US$2.8 billion) by the end of this month.
Barring an out-of-court settlement, media analysts say the ruling will bankrupt
the beleaguered media company and in effect return monopoly control over the
national television airwaves to the military.
For Thailand's coup makers, the decision against iTV represents the first big
step toward dismantling the remains of Thaksin's once highly profitable
telecommunications and media empire, which his family offloaded to Singapore's
Temasek Holdings in a controversial $1.9 billion transaction in the months
leading up to his ouster.
Thailand's new military government is now pursuing at least a dozen
investigations of allegations ranging from tax evasion, conflict of interest
and outright graft against the ousted premier and his family members.
Government insiders have indicated to local financial analysts that a court
ruling is soon in the offing that will strip Shin Corp of its
build-transfer-operate mobile-telecommunications concessions, a decision that
would render the company worthless. From self-imposed exile, Thaksin has
strenuously denied any wrongdoing, as have members of his family.
The rise and fall of iTV is emblematic of Thailand's once-bold, now diminished
democratic aspirations. The promulgation of the country's progressive 1997
constitution significantly included measures guaranteeing press freedom, aimed
at guarding against the sort of state censorship the military imposed on the
bloodshed of 1992 and is enforcing on the broadcast media today. As the only
privately held channel, throughout the 1990s iTV outshone its state-controlled
rivals through its more in-depth news and investigative reports, including the
occasional on-camera expose of official corruption.
Stealing the show
From the start, however, news-dedicated iTV was hemorrhaging cash. When the
1997 financial crisis hit, its balance sheet plunged into the red, and by 2000
it turned in a 775 million baht (then $18 million) loss. That forced the Nation
Group, then responsible for the station's editorial content, to forfeit its
stake to creditors. Then-prime minister Chuan Leekpai moved to lift the 10%
ownership limit on the station, and Thaksin's Shin Corp - one of the few Thai
corporations that had the foresight to hedge its exchange-rate risk - in May
2000 paid 2.5 billion baht to Siam Commercial Bank for a 39% controlling stake
in the ailing news station.
The acquisition at once allowed prime-ministerial aspirant Thaksin to silence
one of his leading media critics and later for his family's Shin Corp to retool
the station as a mouthpiece in support of his Thai Rak Thai party government's
populist policies. Twenty-one reporters critical of Thaksin's candidacy were
forced out after he won the January 2001 election - though they were later
reinstated by the Labor Court, which ruled that their sacking was illegal. The
Nation Group, then still responsible for producing iTV's news content, was also
soon thereafter ditched. Thaksin's manipulative war on the media had claimed
its first casualties.
Elsewhere, several television and radio talk shows critical of his government
were without explanation taken off the air. Under Thaksin's command, the army
on at least one occasion ordered its stations to air only "constructive" news
about the government and its policies. Editors and reporters were sacked
without explanation at many once-hard-hitting publications. Companies close to
Thaksin reportedly pulled advertisements from critical media outlets, while his
government's few remaining media critics were fed a liberal dose of expensive
defamation lawsuits.
At iTV, several more reporters were fired for resisting politically motivated
editorial directives. The subsequent transformation of iTV from a financially
floundering public-service-oriented broadcaster into a money-spinning
entertainment channel represents a prime example of how Thaksin's government
sought to exploit public assets for private gain, and how his government's
policies often directly and indirectly benefited his family's business
interests.
With iTV's news content sufficiently tamed, Shin Corp set out to steer the
station toward profitability. In March 2002, iTV PLC debuted on the Stock
Exchange of Thailand, reducing Shin Corp's holding in the station from 78% to
55%. To make the stock attractive to equity investors, the station moved to
amend the terms of its original operating concession, which civic-mindedly
required that 70% of its programming was dedicated to news and documentaries
and only 30% to more profitable entertainment-oriented shows.
In September 2002, iTV submitted an appeal to the Arbitration Court to increase
to 50% its allowed ratio for entertainment content and to slash its annual
concession fee to the government from 44% of before-tax revenues - or an annual
minimum of 1 billion baht - to a mere 6.5% of revenues, or a minimum of 230
million baht. Then, the thrust of iTV's legal argument was that the government
had violated their original concession agreement by allowing a new cable
channel, World Star TV, to operate commercially and compete with iTV for
advertising revenue.
Although Thaksin at the time had no managerial role at Shin Corp, investors who
sensed his political star was on the rise and anticipated a legal victory bid
up iTV's stock price a whopping 592%, closing that year at 29.75 baht per
share. That same year, the now publicly listed media company saw its market
capitalization soar 622% to 35.7 billion baht, up from a mere 4.9 billion baht
the previous year.
True to those market expectations, an arbitration panel in January 2004 ruled
in the station's favor and ironically ordered the Prime Minister's Office,
which granted iTV's original concession, to pay the station 20 million baht in
compensation. This led to opposition cries of conflict of interest, and the day
of the verdict iTV's stock shot to an all-time high of 34.5 baht. Under the new
commercially friendly operating conditions, the station in 2004 recorded a 205
million baht profit, its first since its 1995 establishment. In 2005, iTV
posted a 679 million baht profit.
Offloading the lemon
By 2006, with mounting anti-government protests rocking Thaksin's
administration, the Shinawatra family unloaded its 49% holding in Shin Corp to
Singapore's Temasek Holdings, a transaction that added fuel to the fire of the
demonstrations, and one that has since been called into question for its
alleged use of Thai nominees to dodge foreign-ownership limits on
telecommunications and media investments. This week the Thai government amended
the Foreign Business Act to close that loophole, a move that could adversely
affect thousands of foreign-invested companies in the country.
Amid the anti-Thaksin and anti-Singaporean groundswell, Thailand's Central
Administrative Court in May overturned the Arbitration Court's 2004 decision in
iTV's favor on the legal grounds that the amendment was never endorsed by the
cabinet. The court also fined iTV 76 billion baht in interest and
back-revenue-share payments, which the now-military-run Prime Minister's Office
last month hiked to nearly 100 billion baht through increased fines and
back-interest payments.
The management of iTV is now desperately trying to whittle that fine down to a
mere 260 million baht, according to an iTV reporter familiar with the
situation. But with total assets of just 3.7 billion baht and cash equivalents
of only 1.2 billion baht as of September 30, media analysts say the augmented
annual concession fees alone will be enough to bankrupt the station. Meanwhile,
Singapore's Temasek, badly bruised by the nominee controversy, is unlikely to
put up much of a fight and will likely let the broadcaster go under rather than
pay the fines, media analysts contend.
Proposals under consideration to save iTV include returning the broadcasting
concession to the government, which could open the way for new bidding from a
Thai, not foreign, investor. Others would like to resurrect iTV in its original
incarnation as a public-service broadcaster, along the lines of the British
Broadcasting Corp or the US Public Broadcasting Service. But the current
military government's attitude toward media freedom doesn't augur well for the
revival any time soon of iTV's mid-1990s fighting spirit.
Meanwhile, the future of iTV's 1,000 or so employees hangs in the balance. And
significantly, the Thai public that once fawned over the station's go-getting
news coverage now seems uninterested in its possible demise. That's probably
because few of the station's current staff complained when Thaksin's family
sidelined or sacked independent reporters and Shin Corp management later
slanted editorial content to Thaksin's political advantage.
On September 19, soldiers rolled tanks in front of all television stations,
including iTV's, and blocked coverage of Thaksin's reaction to the coup. Nearly
four months later, soldiers are still positioned outside iTV's offices, and the
military this week issued a directive barring all television broadcasters from
reporting on comments made by Thaksin's lawyer.
Initial hopes that the coup makers would move to restore the media freedoms
Thaksin's government so badly eroded have foundered on the military's shredding
of the 1997 charter and its shuttering of more than 300 community radio
stations across the country's north and northeastern regions, where grassroots
Thaksin support still runs strong.
Employees of iTV who spoke to Asia Times Online contend that the Council for
National Security government has employed even cruder censorship tools than
Thaksin and Shin Corp administered. Thepchai Yong, the group editor of The
Nation and former iTV news editor who was forced to resign after Thaksin's
takeover, harbors little sympathy for the iTV staff. "Under Thaksin,
self-censorship was the order of the day. They internalized the demands of the
[Thai Rak Thai] party," he told Asia Times Online. "But now he's gone, they
should have stepped up to the military."
In the current media environment, there's little room for criticism. In
November, after iTV was the only station to air news about a Bangkok taxi
driver who protested against the coup by hanging himself from a pedestrian
flyover, a senior army official threatened to close down the station, several
iTV reporters said. But after years of acquiescence to government meddling,
even before the recent court ruling bankrupting the station, many argue that
iTV had long ago hanged itself.
Shawn Nance is former deputy editor of The Irrawaddy newsmagazine. He is
currently a Thailand-based freelance journalist.
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