Indonesian television stations in selling spree

Indonesian television stations in selling spree

By Antariksawan Jusuf

JAKARTA (JP): A move by front runner in terrestrial
television, PT Indosiar Visual Mandiri (IVM), to be the first
Indonesian station to go public in March is considered a giant
leap in the industry, but poses a serious challenge to the
current broadcasting law.

"It is true that under the current political condition, the
current law is not relevant. But it is still effective before the
passing of a new broadcast law," said Hinca Panjaitan of
Indonesia Media Law and Policy Center, an NGO which observes laws
and policies on Indonesian media.

"I think Indosiar is taking advantage of the situation," he
said. However, at the same time the listing brings in a breath of
fresh air to the broadcast media, he added.

The current Indonesian Broadcast Law number 24 (1997), issued
under former president Soeharto, stipulates that foreign
ownership in the media is forbidden.

With the listing, a possible partial foreign ownership through
the market mechanism, thereby constituting a violation of the
Broadcast Law, is now possible.

IVM is offering a total of 298,374,500 new shares at 250
rupiah each (0.026 cents American dollars), or 15 percent of the
total shares.

The offer period will be from March 12 until March 14 and
listing at the Jakarta Stock Exchange will be on March 23, 2001.

Following the initial public offering (IPO), PT Holdiko
Perkasa -- a holding company set up by the Indonesian Bank
Restructuring Agency (IBRA) controlling all the assets of
conglomerate Salim group - will control 57.26 percent of the
shares, 27.74 percent will be held by PT Prima Visualindo, and 15
percent by the public.

The proceeds will be used among others to repay debts to state
bank BNI and to purchase studio equipment to enhance broadcast
coverage, and transportation and communication equipment to
support operational activities.

But, how will the market react to the offering? President
Director of PT Merrill Lynch Indonesia said: "As the first media
company going public in Indonesia it is likely to draw a great
deal of attention from investors."

He said Indosiar is recognized as one of the industry leaders
in Indonesia, so that is likely to assist the offer, despite the
current political turbulence. "Not to mention market conditions
can change very quickly," he added.

In the long run, the listing will be positive for the
company. Foreign investors, despite a xenophobic concern
reflected in the Broadcast Law, can also be a helping hand to the
industry.

"Any investor who can bring technology, capital, and
additional expertise should be a positive factor. Governments
sometimes worry that media companies controlled by foreigners
can be used to undermine the governments. The press in Indonesia
is already very open and we have access to foreign stations, so
it should not be a major concern," he said.

IVM hit the air for the first time in 1995 as the fifth
commercial station in Indonesia and now ranks number one in terms
of overall market share. In 2000, its average share stood at 28
percent, RCTI at number two with 26 percent and SCTV number three
at 24 percent, TPI fourth at 15 percent, while ANTeve and TVRI
respectively hold five and three percent.

Indosiar's net revenue last year to September 2000 reached Rp
402.3 billion (US$42.34 million), rising from Rp 313.4 billion
($32.98 million) in 1999. Its operating profit/loss in the first
nine months in 2000 was Rp 135.5 billion ($14.26 million), rising
from Rp 68.6 billion ($7.22 million) in 1999. Its net profit
reached 85.3 billion rupiah ($8.97 million) in the first nine
months of last year. Its total assets in 2000 were reckoned to be
Rp 627.3 billion ($66.03 million).

Two stations are expected to follow the steps of Indosiar to
go public this year. SCTV is believed to have given a mandate to
Credit Suisse First Boston to help it go public.

SCTV had earlier attracted foreign parties, including US
investor George Soros and the Australian, Singleton Group
Limited. Two firms, PT Bhakti Investama Tbk and PT Mitrasari
Persada, are believed to own 73 percent of SCTV, with the rest
are held by PT Datakom Asia. SCTV's earnings before interest and
tax in 1999 reached Rp 92 billion ($10 million). Due to improving
sales, the number is expected to reach Rp 195 billion ($21
million) in 2000.

RCTI, which has won interest from foreign parties including
the News Corporation of Rupert Murdoch, is also tipped go public
this year. While announcing a management reshuffle early this
month, former president director Harry Kuntoro said RCTI will
launch an IPO at the first opportunity it has.

The first Indonesian commercial station, RCTI, posted a 62
percent growth in its revenue in 2000, but its president director
Harry Kuntoro left to take up a new position managing Bimantara's
multimedia businesses.

After suffering a loss in 1998 due to the economic crisis,
RCTI posted a 62 percent increase in revenue in 2000 to Rp 668.2
billion ($70.33 million) from Rp 411.8 billion ($46.42 million)
in 1999.

Its net profit last year skyrocketed by 992 percent from Rp
5.2 billion ($536,842) in 1999 to Rp 53.9 billion ($5.67
million).

The management team includes Wisnu Hadi, an accountant from
Bimantara, as the new president director, Nenny Soemawinata
continues as the director of operations, while Daniel Resowijoyo,
a long time banker, is the new director of finance, replacing
Muhamad Yusuf, who is now the vice president for internal audit.