Competition heating up in TV industry<\/p>\n
Luas Samudera, Contributor, Jakarta<\/p>\n
The Indonesian television industry will remember the year 2001 as
\none of the most crucial in its history, while preparing to face
\nwhat could be the toughest competition ever next year.<\/p>\n
This year saw several new players rushing to get their signals
\non air, several changes in the ownership of major networks, and
\nstate television station TVRI broke its 20-year ban by running
\ncommercials and going head-to-head with commercial stations.<\/p>\n
The advent of several new stations this year, including four
\nnationwide terrestrials, makes Indonesia one of the most
\ncompetitive, free-television markets in the world. A
\nrepresentative of a Hollywood major distributor, who declined to
\nbe named, said that the advertising expenditure, the staple food
\nof the industry, could not sustain it.<\/p>\n
\"It's difficult to sustain a healthy market under the current
\npolitical and economic conditions,\" he said.<\/p>\n
Four of the new stations -- Trans TV, TV7, LaTV and Global TV
\n-- were given an Oct. 25 deadline to hit the air. Technical
\ndifficulties, however, forced them to start trial broadcasts
\nlater than that.<\/p>\n
In contrast with their spirited plans earlier this year, a
\ncombination of a depreciated rupiah against the greenback and
\npolitical uncertainty made four stations revise their plans to
\nair for 20 hours per day from their launch date.<\/p>\n
Making a surprise move, one of the country's largest media
\ngroups, Jawa Pos, started up a station named JTV in East Java's
\ncapital, Surabaya. It targeted people in East Java only. Its
\nsister, Riau TV, has broadcast to local inhabitants in Riau
\nprovince, near Singapore.<\/p>\n
Another company, Ar Rahman Media, launched a free Islamic
\nsatellite TV station -- Ar Rahman -- which focused on education.
\nAbout 80 percent of the 227 million-strong Indonesian population
\nis Muslim. This station has targeted groups of Muslims in Islamic
\nboarding schools throughout the country.<\/p>\n
The fall of former president Soeharto in 1997 also brought
\ndown several businessmen who were close to him. This year it was
\nPeter Gontha's turn. Once an Indonesian media mogul, Gontha had
\nto face the fact that his Datakom Asia (DA) group could no longer
\nsupport his existence in the industry, leaving behind only a
\ncouple of unpopular content providers for cable television, such
\nas Quick channel and legislature-dedicated Swara.<\/p>\n
DA, which controls ailing satellite platform Indovision and
\nterrestrial stations, as well as a pay-TV platform, among other
\nmedia outfits, has been taken over by media-hungry PT Bhakti
\nInvestama, under the command of Hary Tanoesoedibjo.<\/p>\n
Bhakti was reported to have paid DA's debt of up to US$30
\nmillion. This included an estimated $20 million to News Corp's
\nHong Kong-based STAR TV for program supply and management fees in
\nthe late 1990s. DA and STAR TV had a 10-year platform management
\ndeal that went awry over unpaid bills and strategy disagreement.<\/p>\n
Former president Soeharto's son Bambang Trihatmodjo of the
\nBimantara business group was closely involved in the startup of
\nDA.<\/p>\n
Bimantara owns 69.8 percent of the shares of second-ranked
\ncommercial station RCTI, which Gontha helped establish in 1989.
\nGontha's ties with RCTI were cut in 1998 in sweeping boardroom
\nchanges.<\/p>\n
DA subsidiaries include PT Matahari Lintas Cakrawala, which
\ncontrols the country's first DTH platform, Indovision, pay-TV
\noutfit PT Indonusa Telemedia and PT Media Citra Indostar, which
\noperates an S-band Cakrawarta satellite. DA also has a minority
\nshareholding in cable television Kabelvision.<\/p>\n
DA was also reported to have lost its shares in third-ranked
\nSCTV to Bhakti Investama. An unconfirmed report said the funds
\nfrom Bhakti were used to pay back bond holders, who had
\nsubscribed $260 million in overseas bonds in 1997. Most of the
\nrevenue from the bonds was used to pay for Datakom's Cakrawarta
\nsatellite.<\/p>\n
Meanwhile, this year seemed to be a fruitful one for Bhakti.
\nAlthough losing its grip on SCTV at the end of this year,
\nBhakti's CEO Hary Tanoesoedibjo was appointed as head of RCTI's
\nboard of commissioners, representing shareholders.<\/p>\n
The departure of Bhakti saw another investors' entry to
\ncommercial station SCTV. An IT firm, Elang Mahkota Teknologi
\n(EMTEK), whose shareholders are close associates of Australia's
\nadvertising Singleton group, has secured its position. EMTEK has
\nits founders, Eddy and Fofo Suriaatmadja, as members of SCTV
\ncommissioners' board.<\/p>\n
Australian daily The Age reported that Mark Carnegie, chairman
\nof the Singleton group, had teamed up with John Wylie and the
\nSingleton group, and injected $37.5 million for a one-third
\nownership of an entity which, in turn, is 73 percent of SCTV. The
\nnetwork is valued at $125 million for that sum.<\/p>\n
Other ownership changes also happened in front-runner
\nIndosiar. Shortly after going public in March this year by
\nselling 15 percent of its shares, the government, through the
\nIndonesia Bank Restructuring Agency (IBRA) sold another 49
\npercent of its shares to PT TDM Aset Manajemen.<\/p>\n
The current major shareholder, PT TDM, was set up in August
\n2001. Many suspect that the Salim group, former sole owner of
\nIndosiar, was behind this firm, which has been eying most of the
\nSalim group's assets that are currently in IBRA's hands.<\/p>\n
This year was also marked by the bold step of state television
\nstation TVRI to separate from commercial stations. Shortly after
\nits status changed from a foundation under the now-defunct
\ninformation ministry to a state firm under the finance ministry,
\nTVRI cut its ties with commercial stations, to go on its own.<\/p>\n
Aside from an insufficient government subsidy, TVRI used to
\nfind support from commercial stations, which set aside 12.5
\npercent of their gross revenues. However, since the economic
\ncrisis in 1997, the commercial stations were reluctant to meet
\nthe requirement. Now the debt levels of all five commercial
\nstations have reached $33.8 million in total.<\/p>\n
It is fascinating to see how the industry will develop next
\nyear. The existence of more players certainly guarantees tighter
\ncompetition, and a station or two will fall victim sooner or
\nlater. An account of the Indonesian television industry for next
\nyear is likely to be quite different from this year's.<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/competition-heating-up-in-tv-industry-1447893297",
"image": ""
},
"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
}