Indosiar sees 10-15% revenue growth this year

Rendi A. Witular, The Jakarta Post, Jakarta

Publicly listed television company PT Indosiar Visual Mandiri, which broadcasts the Indosiar television network, said on Thursday that its revenue was expected to grow by between 10 percent and 15 percent this year alongside an increase in corporate advertisements.

Indosiar finance director Phiong Phillipus Darma said advertisement spending this year was projected to be higher than last year, as business activities were expected to remain robust amid confidence that the general election would be peaceful.

Phiong said according to consultant firm AC Nielsen, advertisement spending last year increased by around 20 percent to Rp 16.79 trillion (US$1.97 billion) and this year, growth in advertisement spending would be at least the same as last year.

The company's revenue rose to Rp 1 trillion last year, from Rp 980 billion in 2002. However, its net profit plunged by around 50 percent to Rp 101 billion.

Indosiar president Handoko said the decline in profit was primarily attributable to higher expenses in producing high- rating TV programs in order to maintain its audience share.

He explained that the company had to come up with better programs to compete in the television sector, which was jam- packed with 11 television companies that broadcast nationwide.

"Our spending for programs surged by 31 percent to Rp 589 billion last year, from Rp 447 billion in 2002," said Handoko.

A decline in audience share will, in turn, negatively affect the advertising revenue of the company, which was once controlled by the Salim Group.

In regards the company's plan to delist from the stock market and establish a holding company to accommodate a larger ownership for foreign investors, Handoko said Indosiar expected the plan to be realized this year.

The company is facing difficulties in procuring funds from foreign investors, as the existing regulation limits the maximum direct ownership of a foreign company in a local TV station to 20 percent.

Indosiar has decided that shareholder PT Indosiar Karya Media (IKM), which currently holds 27.74 percent of its shares, would become the holding company.

Handoko said IKM would be listed on the Jakarta Stock Exchange in place of Indosiar Visual Mandiri. Foreign investors could then invest in the TV station indirectly through the holding company.

Many believe that the move aims to pave the way for the Salim Group to reacquire its controlling stake in Indosiar through its special purpose vehicle company, which is registered aboard.

Phiong did not dismiss the rumors, saying only that: "We have no idea that the Salim Group has plan to reenter the company. It is not a problem for us (if Salim takes over)".

Indosiar, which broadcasts in 130 cities throughout the country via 22 relay stations, plans to spend Rp 100 billion in capital expenditure this year, most of which will be used to build new relay stations to cover three additional network cities.