Investor Relations

Message from chairman

Message from the Chairman and Chief Executive Officer

Dear Shareholders,

“Intense Story, Full Emotion” -- in addition to the new phenomenon of RS’s “Channel 8” presented to the audience in 2016, the past year was once again marked by intensifying competition in various media. The year witnessed the creation of truly rich content, with a range of emotional experiences. Both seasoned and new operators have been creating programs that grab as many viewers as possible; at the same time, advertising expenditure remains limited. For RS itself, our organization underwent changes in many areas, including the restructuring of the business to operate more efficiently and thereby function at a full capacity and with the focus of working together to achieve desired results. Entering the third year of the full transition to the digital TV business, “Channel 8” presented modern drama series, boxing, news, variety and foreign series, all of which aim to entertain and meet the needs of an increasingly diverse audience. In the meantime, we did not forget that cost efficiency is a key, and of no less importance than the quality of our programming. Another type of media is radio media, including “COOLfahrenheit 93”, which is in an industry that is saturated. We had to adapt in order to maintain our market share and leadership position. This included a move into the business of health and beauty, which faces challenges in the current economic conditions. RS sees the benefit from utilizing our own media channels in order to increase revenue for the Company. We started out by developing health and beauty products, focusing on sales and marketing through our media channels, including “Channel 8”, “Channel 2”, “Sabaidee TV”, radio and other media. The feedback was better than expected; in 2016, RS increased its revenue by expanding sales channels and broadly building its brands under “Lifestar Co., Ltd.”, led by a brand called “Magique” that was advertised on television and via out-of-home media. “Magique” is also sold in stores like Watsons, EVEANDBOY, Tops and Gourmet Market in The Mall branches near your homes.

On the whole in 2016, the figures for economic growth, compared with the previous year, remained flat. The economy grew by 3.2 percent. External factors remain highly uncertain, and the expansion of the global economy is low. The government has introduced economic stimulus measures, such as initiatives to increase income to low earners, help for farmers and the strengthening of the agricultural pillar, stimulus for the property sector, tax measures to stimulate the economy and tourism, and the speeding up of government disbursement and investment in infrastructure projects – all of which have progressed while interest rates and inflation remain low. Despite these measures, public sector spending has been low. As a consequence, this affected the advertising industry, which grows in relation to the country's economy. Also, the passing of His Majesty the King Bhumibol Adulyadej on 13 October 2016, the subsequent grief of the people and the mourning period, halted television and radio broadcasting. In the fourth quarter of 2016, ad spending during the first 30 days was postponed; later in the year, it only picked up a little. The media and advertising industry is expected to resume its activities after the first quarter of 2017, which typically sees moderate revenues for the media industry.

For the financial results of 2016, the Company earned total revenue of 3.249 billion baht, down from the previous year. The Company’s revenue from its satellite TV business, “Channel 2” and “Sabaidee TV”, fell significantly following the contraction of the overall satellite television sector. However, the Company has managed the costs associated with the satellite channels as efficiently as possible in the current situation. It is expected that once the economy improves, satellite television will come back as a major force in the creation of revenue for the Company. It should also be able to earn good profits due to the lower costs, compared to those of digital TV. As for “Channel 8”, which enjoys a top rating in the country, the channel earned slightly more revenue than in 2015, despite the impact of the deferral of ad spending in the fourth quarter. The result of a revamp and strengthening of the programming quality can be seen from ““Kui Kao Chong 8” (morning news), which has an audience reach of 1.5 million people and enjoys a number one ranking in news program among the new digital television operators, and the third ranking in the country, which includes its highly popular boxing programs and drama series. Revenue from the radio media business fell, given that the industry is relatively mature. However, “COOLfahrenheit 93” was able to maintain its market share in terms of revenue and number of listeners; it was ranked number one in the Easy Listening category, and ranked second nationwide. The music distribution business saw its revenue drop from that of the previous year, due to the increase of consumers who access their music online. The increase in online revenue has yet to compensate the decrease in revenue from traditional music distribution. RS did not stay passive -- we restructured the music business and are known as a leader in the field, and we moved in a direction believed to be stable and sustainable. We offered the opportunity for artists to be involved in music production investment and output planning as business partners. This has a positive impact on the artist in terms of planning, and maintaining the quality and standard of their work. It also helps them to regularly develop their own capabilities. At the same time, the Company has managed costs more accurately. The music distribution business is still crucial to the Company given it is main source of content; also, most of the artists are able to leverage their earning power in the media business. The revenue from event business increased from the previous year, thanks to recognition of revenue from large events. In terms of new business, health and beauty products under the “LifeStar” company launched products that have become known throughout the country. This helped expand distribution channels to more than a thousand branches of modern retailers in Bangkok and the provinces. On the whole, revenue was stable compared to that of 2015. The low economic expansion and subdued levels of household consumption have not recovered much, which affects the purchasing decisions of consumers. Moreover, in the fourth quarter, the company could not advertise and distribute products through its multiple media channels after October 13, 2016. However, from penetrating external markets, RS learned about the problems and challenges of this business. We believe that in 2017 we have developed appropriate and improved guidelines, and we are ready to make great strides in our health and beauty business.

Among the fast changes in the world, coupled with intense and diverse forms of competition, organizations that seek to grow sustainably must be ones of quality. RS thus does not remain static, we are ready to adapt at any time. In the past year, RS underwent an intensive reorganization, and we constantly develop ourselves. We work with our teams and support our personnel to improve corporate efficacy to achieve sustainability. This includes the restructuring of the administration to become more streamlined, and close communications between the Board of Directors and the management. Apart from the focus on the development of employee knowledge and skill, the Company also encourages employees and artists of RS to adopt the “Sufficiency Philosophy” of His Majesty King Bhumibol Adulyadej in their everyday lives. The Company has also fostered social benefits in its entertainment business operations. In 2016, we participated in social projects such as “Channel 8 Share To Child”, bringing artists to share the love on Children’s Day at Baan Nontapum children’s home. RS artists signed an agreement to serve as ambassadors for the Thailand Society for the Prevention of Cruelty to Animals. The news team helped flood victims in Ayutthaya province. RS celebrities supported a campaign to eradicate disease-carrying mosquitos and getting rid of mosquito breeding sites at the Government House. Everyone came together to do good deeds in honor of the Father of the Nation, such as going into areas to help victims of a cold spell in Chiang Mai province. And another source of pride for RS included the preparation of a special song “Rak Por… Mai Mee Wan Por Pieng” to commemorate the unparalleled grace of the late king. In terms of policies for good governance, the Company has been ranked among the Very Good CG Scoring from a survey of Corporate Governance Report of Thai Listed Companies 2016. The Company has also reviewed its policy on corporate governance and business ethics annually. The directors, executives and employees have always complied with such policies. In 2016, the Company adopted Anti-corruption Policy and it was assessed to become clearer, more comprehensive, and more aligned with sustainable business practices.

On behalf of the Board of Directors, thank you to the shareholders, business partners, customers, government agencies and benefactors for your unwavering confidence, trust and support for the Company. Also, thank you to all employees and artists who have dedicated their efforts and energy, always ready to adapt to any situation, even in the challenges of today's media industry. We will work together to lead the organization forward, to become a leading company for all.

Mr. Surachai Chetchotisak
Chairman and Chief Executive Officer