'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 TVRI's outdated facilities will be its biggest hurdle.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.