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.