RI's television industry hopes to tune in to good times
RI's television industry hopes to tune in to good times
By Antariksawan Jusuf
JAKARTA (JP): In a free television landscape, where size, of
advertising expenditure, does matter, 1999 was considered a
turning point for Indonesian stations, from the doom and gloom of
1998 to a brighter, rosier future.
Research firm AC Nielsen Media International found Indonesia
recorded the highest increase in terms of percentage of the gross
advertising expenditure from 12 Asian countries surveyed.
Television ad-spend, which fueled the increase, rose 29
percent to Rp 2.555 trillion in the first six months of the year.
It even surpassed the total ad-spend for 1998 of Rp 2.212
trillion.
It is not surprising that foreign parties, such as
Scandinavian Broadcasting (SBS), have in the past three months
intensively investigated taking major shares in Indonesian
stations.
Exactly 10 years after the introduction of the first
commercial station RCTI, there were two dramatic changes in the
industry this year. First was the issuance of five licenses for
five public television stations, followed by the scrapping of the
draconian information ministry.
In its final week in office in October, the Habibie government
allowed five of 14 new terrestrial TV licensees, which have in-
principle agreements from the government to launch new UHF
channels, to begin their operations.
They are PT Televisi Transformasi Indonesia (Trans-TV) backed
by Para group and Chairul Tanjung's Mega Bank; PT Duta Visual
Nusantara (DVN-TV), which is related to executives of paging
servicer Star Page; PT Global Informasi Bermutu (Global-TV)
backed by Islamic organization IIFTIHAR; PT Pasaraya Mediakarya
(PR-TV) of former manpower minister Abdul Latief; and PT Media
Televisi Indonesia (METRO-TV) of Media Indonesia daily's
administrator Surya Paloh.
Most of the stations say they will be on the air by 2001.
The newly licensed players will compete against Indonesia's
five existing private channels and two state-run services. Each
must submit a Rp 1 billion (US$142,857) bank guarantee before it
can begin broadcasting; the money would be forfeited if the
station is not on the air in two years. Additional terrestrial
UHF licenses will be awarded when digital spectrum becomes
available, but this is not expected until 2005 when the economy
is predicted to be in a full recovery.
President Abdurrahman Wahid's decision to disband the
notorious ministry of information led to the first major street
protest of his administration, only nine days after his election.
The 56,000-strong information ministry was often blamed for
suppressing development of the country's media during Soeharto's
rule.
But the new government has yet to determine whether the TV
industry will be supervised by a particular ministry or an
institution which will report directly to the President. Under
the ministry was the directorate general of radio, television and
film, which had sweeping powers to issue or revoke publishing
licenses and to oversee the broadcast industry, including state-
run TVRI's two channels.
There is speculation that TVRI could be stripped of its
government subsidy and turned into a commercial operation. TVRI
also receives a 12.5 percent share of gross revenues of the
country's five private television stations.
TVRI must wait until the legislature passes a new broadcast
law to see if it will undergo a change in its status.
A new independent regulatory body, the National Commission for
Broadcast, is expected to be installed by the President soon. The
commission has finalized a draft proposal of a more progressive
broadcast bill to be submitted to the legislature.
Private television
When it first struck in mid-1997, the economic crisis dealt a
devastating blow to leading commercial station RCTI. From its
debut, RCTI was always ahead of the rest, with its pride of place
built on programming.
RCTI is 69.87 percent owned by Bimantara Citra and the
remaining shares by the Rajawali group, owned by Peter Sondakh.
However, the devaluation of the rupiah by a staggering 70
percent was devastating to its programming deals. By late 1997,
RCTI could not pay its programmers and was forced to rely on
repeats.
RCTI owes $12 million to its foreign programmers, and has a
further Rp 85 billion in outstanding debt. For the first time in
its history, the station posted a loss of Rp 90 billion in 1998.
In early 1999, the management's attempt to lay off 30 percent
of its 1,100 workforce was scuttled by worker opposition. The
management finally agreed to a voluntary-redundancy scheme for 90
workers, but 13 others are suing for Rp 13 billion compensation.
In June, RCTI dismissed four executives, including high-
profile president director Andi Rallie Siregar and operations
director Alex Kumara, in a move reportedly tied to the station's
financial woes.
The industry's lack of human resources allowed several former
RCTI directors and workers to find jobs at several new stations.
Siregar has joined Global TV as a president commissioner and
Jilal Mardhani, RCTI's former business development manager, is
now a director of Global TV. Kumara is a director at rival
newcomer Trans-TV; Chrys Kelana and leading TV newscaster Desi
Anwar reportedly have joined PR-TV.
Bimantara's troubleshooter, Harry Kuntoro, has taken over as
president director of RCTI, but six of the eight network
commissioners have departed. Among them was Soeharto's son
Bambang Trihatmodjo, Soeharto's son-in-law Indra Rukmana and
Datakom Asia president director Peter Gontha.
Other stations sharing similar financial problems are now
under the supervision of the Indonesian Bank Restructuring Agency
(IBRA), the government body charged with sorting out the debts of
ailing banks, because their lending banks are in the hands of
IBRA.
Indosiar and SCTV are reported to have an undisclosed debt to
BCA and BBD banks respectively, while ANteve is controlled by the
Bakrie Brothers, which has debts to state bank BNI 46.
Pay television
On the pay-TV front, there is growing optimism about the
potential niche to be found among one million Jakarta residents,
from the total population of nine million, with the spending
power for luxury goods.
This year saw the return of ESPN/Star Sport to the only Direct
To Home (DTH) service, Indovision, in December. ESPN/Star Sport
was among nine channels of Hong Kong-based News Corp.'s Star TV,
which pulled out of its agreement with Indovision in December
last year.
Star TV opposed the move to Indovision's sister firm Media
Citra Indostar's Cakrawarta-1 satellite. Suits and countersuits
ensued in Jakarta and Singapore courts.
Indovision claims to have 21,000 DTH subscribers and 8,000
Satellite Master Antenna Television (SMATV) customers.
PT Ekajaya, 100 percent owned by former Indovision executive
Herawan Rusli, is considering launching a rival DTH service when
the economy picks up.
The firm, which was granted its license in August this year,
picked up the distribution contract for the Caltex oil firm in
Riau, near Singapore, but subleased this to cable operator
Indonusa.
There are 10 companies with pay-TV licenses (two DTH and eight
cables), but only one DTH operator and three fledgling
cable/SMATV groups have launched their operations.
One of them is Kabelvision (formerly TV Kabel), majority owned
by the Lippo group's Tanjung Bangun Semesta. It claims to have
15,000 homes served by HFC out of 60,000 fixed wire network homes
passed.
Rival Metra of PT Multimedia Nusantara hopes to expand to
resort island of Bali and East Java's capital Surabaya. Metra
claims to provide services to 10,000 outlets, including
apartments and hotels. SCTV's part owners Sudwikatmono and Henry
Pribadi own 49 percent of Metra.
Indonusa Telemedia relies on its close alliance with PT
Telkom, owner of a 35 percent stake, followed by Datakom Asia (25
percent) and RCTI (20 percent). Indonusa has 3,000 hotel and
SMATV customers in Jakarta.
It is early days for the cable-TV industry, with only 35,000
subscribers in the country. The question remains whether local
consumers will tune in to them, particularly with the more varied
choice of local private TV stations.