TV industry seeks foreign boost
By Antariksawan Jusuf
JAKARTA (JP): In which direction is the Indonesian terrestrial television industry heading? Will it be a part of global TV networking?
The simplest answer is: Are there any foreign interests in the country's television industry at all? Press reports and rumors circulating in industry circles have it that foreign investors are still eying up the stations here. However, a foreign consultant in the industry said the situation is more the reverse: the industry needs a foreign boost.
Rupert Murdoch's News Corp., was reported in June as "almost ready to clinch a deal" with the country's first-commercial station RCTI. The deal failed because both parties wanted to hold controlling stakes. It was not the first time RCTI received interest from overseas investors. Other high profile Hollywood firms such as Columbia Tristar were earlier on the list of would- be investors.
Indonesian third-ranked station SCTV was reported as having held talks with Arab Radio and Television (ART) of Egypt as its possible new strategic investor, an industry source said.
ART is expected to buy shares from AGIS, a subsidiary of Indonesian investment firm Bhakti Investama, which earlier this year took over SCTV from Datakom Asia and Mitra Sari Persada. U.S. investor George Soros owns 14 percent of Bhakti Investama
On April 24, Bhakti said it had signed an agreement to acquire 100 percent of the shares in SCTV. Shares in SCTV belonging to Peter Gontha's Datakom Asia and Mitra Sari Persada, which is owned by businessmen Henry Pribadi and Sudwikatmono, were believed to have been swapped for shares in AGIS.
The source said that Bhakti's core business is not in the broadcasting industry. "It bought SCTV shares to make a short- term investment, to make money, not to hold on to the business," the source said.
Indonesian's current "outdated" broadcasting law number 24/1997 still bans foreign holdings in the broadcasting industry. Many criticize the law as not anticipating the pressures for he creation of a global industry. The media and broadcasting industry is also still listed on the Foreign Investment Negative List issued by the ministry of trade and industry.
In a bid to avoid such restrictions, it is SCTV's holding company, which is now in the hands of AGIS, that is being offered for sale, the source said.
Meanwhile, the source also stated that ABS-CBN of the Philippines has also expressed interest in buying the Salim group's terrestrial station Indosiar Visual Mandiri (IVM).
Head of the Indonesian Bank Restructuring Agency's (IBRA) Asset Disposal Unit Dasa Sutantio told the press that IBRA plans to sell the assets of the Salim group, including BCA (Bank Central Asia).
Shortly after the crisis, several Indonesian banks, including BCA, were taken over by the government's IBRA as part of their recapitalization.
The Salim group's subsidiaries whose shares are to be sold off have been placed under a holding company set up by IBRA, called PT Holdiko Perkasa.
"They want a strategic investor and to make an IPO (Initial Public Offering) before the end of the year," said a source at an international securities firm.
IBRA, which holds 50 percent of IVM's shares, expects to raise Rp 5.2 trillion (US$559.13 million) from the sale of tycoon Liem Sioe Liong's Salim group, out of total Rp 18.9 trillion ($2.03 billion) targeted in this year's state budget.
Salim assets to be sold by PT Holdiko Perkasa include the Wisma BCA building, palm oil plantations, a granite quarry, sugar refineries, MSG producer Indomiwon, the Indomilk dairy and the Indosiar television station.
However, whether the Indonesian stations will realize what is expected of them is another story.
A foreign television consultant who declined to be identified said there are several factors to be considered before foreigners will establish a presence here.
"This country has great potential being the fourth largest nation in the world, but there is political uncertainty and the legal system is a mess," he said.
"Foreign investors will ask why should I invest here? They prefer Korea or Singapore," he added.
He said the Indonesian television industry has been trying to bring in foreign investors since 1998, citing big names such as Hong Kong-based STAR TV and GE which have been window shopping in the past.
"It is now already the year 2000 and they are still only looking," he said.
He said that the local television industry needs foreign investment to improve its performance. "They cannot expand. They cannot add facilities...I say whoever gets the dollars first, puts in $100 million dollars, will be able to dominate."