Indosiar suffers 50% drop in profit

The Jakarta Post Jakarta

Publicly listed television company PT Indosiar Visual Mandiri, which runs Indosiar television network, reported on Tuesday over a 50 percent decline in unaudited net profit for 2003, mainly due to higher operating costs.

In its report to the Jakarta Stock Exchange (JSX), the company said that its profit plunged to Rp 101 billion (US$11.8 million) last year from Rp 205 billion in 2002, although it enjoyed relatively strong revenue from its operations.

The company's revenue went up to Rp 1 trillion from Rp 980 billion. However, its operating income dropped to Rp 201 billion from Rp 346 billion.

Indosiar first went on air in 1995.

The company's corporate secretary Andreas Ambessa said the management would make a public announcement to investors and media on Thursday to explain the company's performance.

Analysts have previously projected that Indosiar would book a lower net profit in 2003 because it had to spend more money to buy or produce high-quality programs, which were expensive, in order to maintain its audience share.

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

The analysts said that Indosiar had to come up with better programs to deal compete in the country's television sector, which was jam-packed with 11 television companies that broadcast nationwide, and four television firms with provincial coverage.

Indosiar, which has eight studios in Jakarta, Purwakarta and Cikampek, has a coverage in 130 cities throughout the country via 22 relay stations.

In a bid to increase profits this year, the company said in its report that it planned to launch a cost containment program, develop new artists, undergo operation restructuring and broaden coverage areas.

The company's shares on The Jakarta Stock Exchange ended down by Rp 25 to Rp 550 on Tuesday's trading.

Since last year, several TV stations have reported lower profit due to the stiffer competition. In fact, some of them have planned to invite foreign investors in a bid to strengthen their performance, but existing regulation limits foreign ownership in local TV station at 20 percent, a factor that is discouraging foreign investment in the sector.