Media wages an advertising war

Media wages an advertising war

By Atmakusumah

The competitive media environment in Indonesia is
strengthening the strong and sidelining the weak. This is the
first of two articles.

JAKARTA (JP): Television viewers are in for a treat this year.
Jakarta will soon have another private television station, Satya
Mandara Televisi (SMTV). This means viewers will have a choice of
six private channels and one state-owned channel.

In addition, the government is planning to open a cable TV
channel that uses a decoder and transmission receiver for
viewers. This channel will air education and entertainment
programs for 12 to 18 hours a day. Initial programs will be
directed for university student audiences.

On the other hand, TV entertainment company Indovision offers
five foreign TV channels which subscribers can switch to with a
decoder: CNN (for news), HBO (films), ESPN (sport), The
Discovery Channel (science) and TNT (cartoons).

Indovision was established in 1994 by media entrepreneur Peter
F. Gontha.

The new privately-owned Indonesian communication satellite,
Cakrawarta, launched from French Guyana on Nov. 12 expands the
number of pay channels Indovision offers from 25 to 40. Gontha is
president director of the Datakom Asia group that is behind the
US$173 million satellite.

The government's domestic satellite, Palapa, can relay 16
transnational stations. After the launch of the third generation
C-1 series in January 1996, Indonesian satellite dish owners can
now have more stations to choose from. An estimated 700,000
dishes are now installed in Indonesian homes, offices and hotels.

All this sets the stage for a bigger scale "undeclared war"
between the print media and private television stations for
advertising revenues with little warning on Indonesia's media
scene. Now the faceoff apparently has spread into the newsroom
where editors plan the tactics and strategy to outreport the
opposition.

The advertising war started when the Indonesian government
permitted the airing of the nation's first private TV station,
Rajawali Citra Televisi Indonesia (RCTI), on Aug. 24, 1989.

Four other commercial stations quickly followed: Surya Citra
Televisi (SCTV), Cipta Televisi Pendidikan Indonesia (TPI),
Cakrawala Andalas Televisi (ANteve), and Indosiar Visual Mandiri
(Indosiar). All are based in Jakarta.

Before 1989, Indonesia had only one television station
transmitting nationwide, the state-owned Televisi Republik
Indonesia (TVRI). It debuted on Aug. 24, 1962 -- 27 years before
Indonesia's first private TV station.

Indonesia now has an estimated 20 million TV sets. Some 100
million Indonesians 10 years old and above, out of a total
population of 200 million, watch television.

The government also manages the first radio station
established in the country after Indonesian independence in 1945.
Radio Republik Indonesia (RRI) was established on Sept. 11, 1945
-- less than a month after the Aug. 17 proclamation of
independence. It now has 52 stations throughout Indonesia's 27
provinces.

There are also 146 government-controlled local radio stations
managed by provincial governments throughout the country.

Since the New Order under President Soeharto came into power
in mid-1960s, private enterprises have been permitted to open
radio stations. The number of commercial stations surged to 700
comprising 247 FM and 453 AM stations.

Indonesians use an estimated 40 million radios, 36 percent of
which are owned by urban dwellers. Altogether, radio has an
estimated audience of 150 million people.

Meanwhile the print media has 167 newspapers, 77 of which are
dailies and 90 weeklies, with a total circulation of seven
million. The print media also has 124 magazines with a
circulation of five million. This means there is only one copy of
a print publication for nearly every 17 Indonesians.

The Indonesian government restricts the number of print media
pages to 24 for broadsheet newspapers and 48 for tabloids. The
reason for the curb is to ease competition between the "strong
media" and the "developing media".

The information ministry limits advertising space to 35
percent of the entire number of pages of a publication. It also
places a cap of 20 percent and 25 percent of air time for TV and
radio respectively.

Over the past decade, the print industry has seen the growth
of press conglomerates. In the past, notably before the enactment
of the 1982 press law, a press company was managed by press
professionals themselves. Now, non-press businessmen have entered
the press business.

Among the businesses owned by media professionals or those
which started their business in the media are Kompas, Jawa Pos
and Tempo, Pos Kota, Media Indonesia and Suara Pembaruan.

Apart from publishing in Jakarta (except for Jawa Pos which is
based in Surabaya), a media group would also cooperate with
provincial media to develop small but potentially viable local
papers.

In what are known as "technical cooperation" arrangements, the
media group would send management and editorial staff to a
provincial publication that requested help. The cooperation
usually covers capital injection and provision of printing
equipment from the media group as well.

Other groups are Femina and Kartini, both in Jakarta, and the
Suara Merdeka group based in Semarang, Central Java.

Meanwhile, those new groups emerging in the past ten years
financed by investors who did not initially work and grow in the
media business include Bisnis Indonesia of hotelier Sukamdani S.
Gitosardjono, Gatra-Paron of forest industrialist Mohammad "Bob"
Hasan and Bintang under manufacturing magnate Sudwikatmono.

Others include Fadel Muhammad of the Bukaka group in Warta
Ekonomi, trade and building tycoon Aburizal Bakrie in the Sinar
Pagi and Berita Buana dailies, and department store developer
Abdul Latief, currently minister of manpower, who has invested in
Neraca, Belanja and Tiras.

A distinctively different kind of media entrepeneur has
entered the media business not for business reasons alone but
also for intellectual and Islamic reasons. The Republika group is
affiliated with a brain trust, the Association of Indonesian
Moslem Intellectuals, ICMI, chaired by B.J. Habibie, the minister
of research and technology and president of the national aircraft
industry, IPTN.

The group publishes the Republika daily and the bi-weekly
magazine Ummat, both in Jakarta, and owns shares in the Jakarta-
based daily Indonesia Times and the Surakarta-based weekly
tabloid Adil.

Big investors are also behind commercial TV stations. Bambang
Trihatmodjo is a major shareholder in RCTI. Bambang, President
Soeharto's second son, is chairman of the Bimantara conglomerate
that is involved in apartment complexes to automobiles.

Toll road builder Siti Hardiyanti "Tutut" Rukmana, the
President's eldest daughter, has a big investment in TPI.
Meanwhile, Bambang's wife, Halimah, and investor Henry Pribadi
have interests in SCTV. Bambang has a stake as well in Indosiar,
controlled by the family of Sudono Salim, a long-time friend of
Soeharto.

The Bakrie family holds the majority shares in ANteve.

The print media is not only competing among themselves for
circulation and public opinion, it now also has to accept the
reality of the new electronic media in the competitive arena.

Within only five years since the first private TV station,
RCTI, came on the air in 1989, commercial television has captured
50 percent of the advertising revenues in Indonesia. The
remaining 50 percent is scrapped over by the print media, radio,
billboards and movie theaters.

Absolute figures of ad revenues of the print media continue to
rise annually. However, the print media's take of the whole ad
pie is declining percentage-wise. In contrast, TV ad billings are
leaping in absolute and percentage terms.

The table below shows where the print media stands on ad
earnings vis-a-vis commercial TV in billions of rupiah. The U.S.
dollar is valued at Rp 3,500 for November 1997 exchange rates and
Rp 5,500 for December.

(Translated by Warief Djajanto Basorie, the Indonesian version
is appearing in the weekly magazine D&R)

Atmakusumah is an Indonesian media commentator. Formerly, he
was an editor at the investigative Indonesia Raya daily. He is
now executive director of the Dr. Soetomo Press Institute, a
Jakarta-based journalism school for motivated university
graduates who seek careers in the news media.