TV industry seeks foreign boost

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Indonesian's current "outdated" broadcasting law number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."