US Billionaire Invests in Indonesia’s Media Industry

By webadmin on 06:06 pm Oct 17, 2011
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Francezka Nangoy & Faisal Maliki Baskoro

Saban Capital Group, a Los Angeles-based investment firm, is buying 5
percent of Indonesia’s Media Nusantara Citra for Rp 692.3 billion ($78.2
million).

The investment firm, which specializes in media,
entertainment and communications, can also purchase an additional 2.5
percent in Media Nusantara Citra (MNC), which is controlled by Global
Mediacom, the country’s largest media company.

“We are strong
believers in the growth prospects of the Indonesian economy, its
positive consumer demographic trends and the growth of its media and
content industries,” Haim Saban, the chairman and chief executive of
Saban Capital, said in a statement.

Saban Capital will acquire
692.3 million MNC shares, equivalent to 5 percent of MNC’s total
outstanding shares, at Rp 1,000 per share, though it can also purchase
an additional 346 million shares within 27 months.

Both sides
are expected to complete the transaction by the middle of November, with
Saban Capital working through its affiliate, Indonesia Media
Partners. UBS Securities will advise Saban Capital in the transaction,
while Morgan Stanley will advise MNC, which is led by president director
Hary Tanoesoedibjo.

“We are very particular in selecting
significant shareholders in MNC, and we have a strong preference for
investors that can partner with MNC for the achievement of long-term,
sustainable growth,” said Hary, who is also chief executive officer of
MNC’s parent company, Global Mediacom.

“I believe Saban Capital
Group meets our criteria and we are very delighted to have them as a
shareholder and a partner on various areas of strategic cooperation,” he
added.

MNC is an integrated media company in Indonesia that
runs three national free-to-air television networks — RCTI, MNC TV and
Global TV — with nearly 40 percent audience share, according to Nielsen
research. It also owns a newspaper, a tabloid, a magazine, radio
networks, online media, an advertising agency and a talent management.

On
a subscription basis, Global Mediacom owns MNC Sky Vision, one of the
country’s largest pay-TV operators, through the brand services
Indovision and Top TV.

Saban Capital was established in 2001 by
Haim Saban, who was the founder of Fox Family Worldwide, which he owned
in equal partnership with News Corporation until its sale to the Walt
Disney Company in October 2001. Saban achieved great success from the
hit children’s TV series “Mighty Morphin Power Rangers,” and according
to Forbes magazine, he ranked 287th among the world’s richest people in
2010.

His company’s acquisition of MNC shares was a positive
move for both sides of the deal, said equity analyst Reza Priyambadha of
Indosurya Asset Management.

“The competition in the local media
is tough, and Saban could bring its expertise to MNC,” Reza said. “MNC
could learn from Saban’s experience, which will help MNC to maintain its
dominance in the local media sector.”

Saban Capital will also gain from MNC’s growth, Reza said.

“The
reason why Saban is interested, I think, is because MNC is the biggest
media company here,” he said. “So they [Saban] would enjoy MNC’s profit,
which is likely to remain strong given their dominance.”

MNC
also said it will increase its dividend payout, beginning with dividend
payable in 2012, to a minimum of 45 percent of the net income generated
during the preceding year.

MNC’s shares were up 0.9 percent to close at Rp 1,090 on Monday.