'TVRI' runs ads in age of competition

'TVRI' runs ads in age of competition

Luas Samudera, Contributor, Jakarta

While four budding commercial television stations are counting
the days ahead a deadline for their maiden broadcast at the end
of October, Indonesian state television TVRI made a surprising
move by defying a 20-year ban on running television commercials.

The 39-year-old station issued a 128-page guide for
advertisers and advertising agencies to run commercials at the
end of September.

"We are not a new player, like someone waking up from a long
sleep," said TVRI marketing director Sutrimo. "So, we have been
there, but still there are a lot of things to learn."

Established in 1962, TVRI was the sole television station in
the country until the introduction of commercial stations in
1989. In 1981, the then president Soeharto issued a decree which
prohibited TVRI from running commercials, citing the negative
impact of commercials on Indonesian viewers.

In June 2000, its status was changed into a state company
under the finance ministry from being a foundation under the now-
defunct information ministry.

In the words of president director, Sumitha Tobing, the
station is "technically bankrupt". This is also one of the main
reasons to introduce the new policy.

With 23 provincial stations, 395 relay stations and 7,500
employees throughout the country, TVRI needs Rp 1.2 trillion from
the state budget annually to lead a normal broadcast life,
Sutrimo said. But the state budget can only provide Rp 138
million or about 10 percent of it. About Rp 55 million is
allocated for salaries and the remaining Rp 83 million covers the
station's operation costs.

"You can imagine, a commercial station with only 600 employees
budgets Rp 400 million for their annual operations," Sutrimo
added, illustrating how unfair the competition is.

Sutrimo said the new policy was mainly aimed at financing
day-to-day operations.

"There is a huge potential to be exploited to support the life
of this station. We don't want to be a burden on anyone. If we
can make money, we can even contribute to the nation by paying
taxes," he said.

"We are setting the rules, introducing new and more
interesting programs and hopefully advertisers will flow in with
their commercials," he said. Since August, TVRI has aired several
live programs that soon gained popularity among viewers such as
Dansa Yo Dansa.

However, the challenge lies ahead. TVRI's outdated facilities
will be its biggest hurdle. "Within five years, we have no other
choice but to refurbish our facilities," Sutrimo said.

Another reason for introducing advertising is TVRI can no
longer depend on the income earned from subscription fees of TV-
set owners and contributions from private television stations.

Although commercial stations are required to set aside 12.5
percent of their advertising revenue for TVRI, they have not
fulfilled their obligation in the past twelve months.

"It is a public secret that TVRI has aired commercials,"
Indosiar spokesman Gufroni Sakaril said. "We have to face the
fact and live with it."

He said there had been some misunderstanding over this issue
between TVRI and the association of the commercial stations
resulting in the latter suspending its contributions to TVRI.

Indosiar does not consider commercials on TVRI as a threat.

"We have the sources and experience to bring in commercials,
thanks to our infrastructure and good programs," Gufroni said.

"TVRI has its own market. This is a challenge for commercial
stations to improve their current performance," he said.

Indonesian advertising expenditure this year is expected to
rise by 23 percent to Rp 9.717 trillion from Rp 7.899 trillion in
2000.

Annual publication MediaScene said that television adspend
this year was projected to increase by 18 percent this year to Rp
5.821 trillion (US$529 million) from Rp 4.933 trillion ($448
million) recorded last year.

The figures are based on gross rate card without taking into
account discounts from the stations.