Media analysts said multinational brands started to cut ad budgets or delay spending in the aftermath of Sept 11. But major media houses said that after the second quarter of 2002, the local industry picture should become clearer.

They said firms had started to shift media spending to marketing events and trade promotions to target niche segments and save on costs.

But despite the bleak business outlook, the entertainment business, especially music and movies, showed its mettle, turning over record sales and with an excellent outlook for 2002.

AD INDUSTRY UNCERTAINTY

Suriyothai was the year's box-office champ, taking in 500 million baht.

In 2001, the Thai advertising industry was expected to show zero growth at best, according to media analysts. As a result, they predict agencies would lay off more employees in 2002.

But Parames Rachjaibun, president of the Advertising Association of Thailand, said the revival of the property market and vehicle sales were likely to bring a 10% increase in spending on advertising in 2002, rather than the zero growth previously forecast.

Media spending next year is estimated at 51 billion baht. Mr Parames said the increased growth would also come because of low interest rates that had spurred a recovery in property and vehicle purchases.

Advertising spending in 2001 was estimated to finish at 49.1 billion baht, an improvement of 19.19% from the previous year. However, analysts said the figure did not reflect the industry's true growth because of media inflation of 15% in 2001.

Despite a more cautious approach to ad spending, the operators of the top-rated television stations, Channel 3 and Channel 7, announced plans to raise their commercial airtime rates.

Bangkok Broadcasting & TV Co said its rates on Channel 7 would rise to 420,000 baht per minute from 360,000 baht for evening prime time when soap operas were presented.

BEC World Plc said the top rates on Channel 3 would rise to 390,000 baht from 360,000. The new rate was to take effect in October.

But agencies cried foul, saying the increases could not be justified in the current climate, and both TV stations subsequently changed their plans.

Channel 7 decided to offer more discounts, from 15% to 25%, until the end of march 2002 to advertisers who bought slots in prime time. Channel 3 postponed its rate increase to the beginning of 2002 or possibly beyond, pending a review.

Despite the gloomy outlook, 2001 held some good news for the industry. The ad agency Chuo Senko (Thailand) Co announced plans to list on the Stock Exchange of Thailand to tap public funds for business expansion both at home and overseas.

In the newspaper business, the Nation Multimedia Group Plc, the publisher of The Nation and Krungthep Turakij dailies, launched the mass-circulation Kom Chad Luek, the largest new daily paper to enter the market since the 1997 crisis.

MUSIC SECTOR VIBRANT

In 2001, the music industry was projected to grow by 15-20%, with sales of four billion baht, due largely to a crackdown against piracy and price reductions for legitimate products.

It would be the first time since 1997 that the legitimate music industry had recorded significant growth, as revenues had been stagnating due to rampant piracy. The outlook for 2002 is also positive, as music is cheap entertainment in tough times.

As a result, in November, BEC Tero Entertainment Co, a subsidiary of BEC World, formed a joint venture with Sony Music Thailand Co to produce and distribute local music.

Apirak Kosayodhin, CEO of GMM Grammy Plc, the country's largest record firm, said the market had been flat in the past few years due mainly to piracy. Grammy and RS Promotion 1992, its main rival, tackled the problem by cutting the retail prices of their CDs by 50% in August.

Grammy saw a huge surge in sales in the first two weeks of the promotion, and RS forecast that its sales for 2001 would increase by 20% from the previous year.

While the industry enjoyed a surge in CD sales, a new problem in copyright fee collection emerged, triggering a protracted dispute between recording firms and users.

In November, Grammy announced it would start collecting its copyright fees by itself, despite protests from music users, especially karaoke operators, who called the rates unfair.

The Thai Magnetic Tape and Record Association, led by RS Promotion, then refused to collect its fees from karaoke operators due to the economic downturn. However, the association said it would collect fees from operators who paid fees to Grammy.

Grammy then decided to postpone collections in order to explain its policy to users. Deputy Commerce Minister Suvarn Valaisathien attempted to end the dispute by discussing the possibility of setting up a central collection organisation.

He proposed that the Intellectual Property Department take on the role of distributing money collected from music users to recording firms. However, the proposal is still under consideration.

Grammy is now collecting fees, arguing that the practice is in line with the law and would be a boon to users of music for commercial purposes.

ROBUST MOVIE INDUSTRY

The movie industry looks upbeat in 2002 with projections that about 30 new local productions will be released, compared with 12 in 2001.

A total of 130 films were released in Thai cinemas, with 118 of them international films, dominated by Hollywood releases.

Box-office takings for 2001 were estimated at 3.5 billion baht, 6% higher than a year earlier. Thai films were estimated to have earned 1.5 billion baht, up from 1.2 billion a year earlier.

The leading local film producers are Grammy, Avant Co, Film Surf Co, Mongkol Cinema, Tai Entertainment Co, and Five Star Production Co.

Grammy plans to release four films in 2002, aiming for the pan-Asian market. The production costs per film will average 40 million baht, but for joint-venture productions with overseas partners, especially from Hong Kong, the cost will reach US$2 million.

Avant and Film Surf, the two subsidiaries of RS Promotion, also plan a total of four films.

The top-three box office earners in 2001 were the epic Suriyothai with more than 500 million baht in ticket sales, followed by the historical war drama Bang Rajan with 150 million baht in sales, and 115 million baht in ticket sales for Killer Tattoo.

The Mummy II ranked fourth in earnings, at 106 million baht, and was the top earner among Hollywood films. Harry Potter and the Sorcerer's Stone was also closing in on its goal of 100 million baht at year-end.

In 2002, Columbia Tristar's Spider-Man, Star Wars Episode II from Fox, and the thriller Collateral Damage from Warner are among the films forecast to be top earners, in the 100-million-baht range, at the Thai box office.