Bangkok Bank (BBL) is reportedly ready to pay Fox Networks Group Asia to comply with its obligations on two separate bank guarantees securing payments for distribution of Fox channels in Thailand by GMM Grammy Plc and CTH Plc, if Fox can prove its clients are violating the contracts.
The bank is in talks with GMM Grammy and CTH, pending the legal process, said a high-ranking BBL source who requested anonymity.
BBL has collateral whose value is sufficient to back up the bank guarantees, the source said without elaborating further.
"We are closely monitoring the digital TV business, as risks are elevating," the source said.
Meanwhile, Kanit Si, executive vice-president of BBL, said CTH insists that Fox is the one who violated the contracts.
Mr Kanit declined to give further information because the case is still under court review.
Fox Networks Group Asia has filed legal action in Hong Kong and Bangkok against BBL for failure to honour two separate bank guarantees securing payments for distribution of its channels in Thailand by GMM Grammy and CTH, both major operators of pay-TV platforms and the holders of licences of failed digital TV channels.
Under separate channel-licensing agreements signed with Fox in 2013, GMM Grammy and CTH, in aggregate, have obligations to pay Fox a principal amount in excess of 2.5 billion baht and interest on late payments.
As security for payment of such amounts, BBL has issued separate bank guarantees to Fox to guarantee each of GMM Grammy's and CTH's payment obligations.
Grammy said in a statement that the company had a sublicensing contract with GMM B to use Fox Channel content in March 2013.
Later, GMM B told Grammy to cancel the sublicensing contract with Grammy, as GMM B claimed that Fox violated practices in the contract with Grammy.
Grammy then informed Fox and ended the channel-licensing contract with Fox on Feb 6, 2016.
Grammy did not provide details about the alleged violation by Fox. Grammy and BBL will have a preliminary hearing before the Central Intellectual Property and International Trade Court next year.
Since late 2015, BBL has failed to comply with its guarantee obligations, Fox said in a release.
"Fox has a long-standing commitment to the media industry in Thailand and to delivering the highest-quality entertainment and sports programming to our Thai viewers," said Zubin Gandevia, president for Asia-Pacific and Middle East at Fox Networks Group.
"It's a severe disappointment to us that a major Thai bank is failing to honour its guarantees, and the consequences go well beyond my own company, especially at a time of heightened sensitivity for investor confidence."
BBL is the largest guarantor to Thailand's digital TV operators, having provided bank guarantees for 14 of the 24 channels totalling more than 20 billion baht or 41% of the spectrum licence fees.
"A bank's letter of guarantee is a financial instrument that is fundamental to the financial and commercial ecosystem of a country, and the belief that such guarantees will be honoured is essential to investor confidence in Thai banks," Mr Gandevia said. "A failure to honour such a guarantee risks putting the trustworthiness of Bangkok Bank into question."
He said Fox did not violate a contract with Grammy. "What Grammy says is the excuse of a person who didn't want to pay the money," he said. "The guarantee should be a guarantee that you have to pay us."