New media magnates
Albertus Weldison Nonto and Yanto Soegiarto | June 30, 2011

If Mark Zuckerberg can create a billion-dollar empire from a university dorm, imagine the potential for Erick Thohir and Anindya Bakrie – already fabulously wealthy and prodigious – to transform Indonesia’s media landscape. Globe Asia met the pair to discuss PT Visi Media Asia’s local-content and convergence-pegged future.

Forty-year-old Erick Thohir, second generation of the Trinugraha Thohir Group, and 36-year-old Anindya, third-generation Bakrie, have joined forces in hedging their bets on Indonesia’s ravenous media appetite. With two television broadcasters, tvOne and ANTV, and the online news website vivanews.com, the illustrious duo now have just the multi-platform media machine they require.

Visi Media Asia’s IPO late June was still pending as GlobeAsia went to print, but is seen by the market as the first step in the company’s planned transformation.  Visi, also known as Viva, will release 14.21% of its shares, or as many as 2.286 billion, to the public as well as 571.5 million warrants. One of the underwriters for the float, Danatama Makmur, said it expected the IPO to raise around Rp650 billion.

The IPO funds, say Erick and Anindya, will enable Viva’s evolution from a media and news portal to a formidable convergence and local-content driven force. “He is the president director,” laughs Anindya pointing to Erick, when the two met GlobeAsia in an exclusive interview in June. Strong family ties mean that Erick and Anindya have been close friends for some time, an element they believe will allow them to coordinate a dynamic business together.

“No matter how sophisticated your business plan, if you can’t get along well then you have already half failed,” says Anindya. With a 40-million-strong middle class and growing, the potential of Indonesia’s media sector is set to trump the growth of analogous sectors in Singapore and Malaysia combined. Indonesia’s solid economic growth coupled with phenomenal rates of cell phone and social media penetration has the pair confident that Viva’s growth will be driven by Indonesia’s tech-savvy youth.

The exponential growth of internet usage, particularly in remote areas, and the rising number of digital entrepreneurs eager to tap into the market are also promising signs for a company pinning its hopes on the up-and-coming generation. The future of Viva, says Erick, hinges on a clear strategy that is heavily geared toward quality content and synergy with outside providers. The IPO is expected to value the firm at around $420 million.

While Viva might be a tiny player compared to the giant MNC Group, controlled by media tycoon Hary Tanoesoedibyo, and Chairul Tanjung's TransMedia Corp, Erick believes the company is well positioned to expand both in revenue and size over the next five years.

Online vigor

With the biggest number of hits on an online Indonesian news site, vivanews.com has come a long way in the past year. More than 1.8 million logged onto the site per day in 2010, a dramatic increase from only 500,000 hits per day in 2009. The impressive growth has surprised many analysts who believed it would take at least five years for Viva to break even. Defying the odds, Viva started clocking profits in just 20 months, says Viva news editor-in-chief, Karaniya Dharmasaputra.

“Although we are a new player, we recorded 20 million visits last month. We are surprised not only by the number of visits but the promised continuity of this business,” Karaniya tells GlobeAsia. While online advertising generates significantly less profits than print media, Viva’s advertising revenue still grew 35% last year. Karaniya says the growth of people accessing media online has grown almost fourfold.  “There is a shift in people’s attitudes, especially for those under 30.

They don’t read newspapers anymore even though their parents still subscribe,” he says. In terms of broadcast, ANTV’s strengths are in football and entertainment programs, with its Indonesia Super League (ISL) topping the charts as the most-rated sports program last year. In second place was Super Deal 2 Milliar, a profitable and image-boosting ANTV entertainment program.

“ANTV is like a media supermarket. It broadcasts all kinds of programs including entertainment, while tvOne is focused on news,” notes Erick, adding that Viva plans to launch sports and entertainment channels that can be accessed from mobile phones as well as expand its production studios from nine to 13 this year,” he said.

For Viva’s independent commissioner RM Djoko Setiotomo, the group’s subsidiaries have shown solid performances.  ANTV, for example, generated strong profits out of its soccer program.  “The sole reason is that the production costs of local programs, including sports programs, are far cheaper compared to say the English Premiere League,” says Djoko. While Erick and Anindya plan to nurture Viva’s existing broadcast strengths, media convergence is at the heart of their plans to drive the company’s future growth.

Over the next decade Erick believes that free-to-air (FTA) TV will account for 60% of advertising spending, but he is also keenly aware that any media industry worth its salt has to take account the growing number of internet users – estimated to have reached 30 million by 2010. Local talent “Content is the key to Viva becoming a leader in new media,” states Erick, adding that in-house production will account for between 66% and 88% of content at ANTV and tvOne, while another FTA local and international station is also on the cards.

Viva is 85% owned by the Bakrie Group, while the remaining 15% is shared between Australian media mogul Rupert Murdoch and Teddy Thohir. Despite its serious backing, however, Erick and Anindya say they are more interested in building a “business ecosystem” than a media conglomerate. To foster this, Erick is encouraging a pool of local creative entrepreneurs to step up. 

“The biggest problem with local start-ups is financing, so we can help finance and market their product,” he says. “So far, only foreign movies flood onto Indonesia's TV screens. We would like to see Indonesian content aired in Europe and America in the future,” he notes, adding that Murdoch will help open up new markets for local content.  “We invite local creative people to produce their programs in our studios and share the profits.” Tapping into the local talent is a direction that Anindya fully supports. “I don't mean to be discriminatory, but this is the way to give opportunities to young local players, to allow them to compete at the national and international level,” he says.

The financing model used for his telecommunications business Bakrie Telecom will be used as the benchmark for this strategy, he explains.   “For example, one young software developer in Bandung successfully sold his ‘ESIA Hidayah,’ a phone application that provides Islamic content. The production cost was only Rp40 million, but it will generate revenues of around Rp7 billion a year.

“There is a lot of talent out there and not enough money is being spent to support it, but at least we have this synergy in this that works,” says Anindya. Anindya earlier launched a Rp100-billion incubation fund to support local content players in expanding their businesses.  “The first goal is collaboration. We are going to enlarge the market first then we will start strengthening this collaboration in terms of quality. In the future, we want creative people to become not just the vendors but also the owners of this business,” says Anindya.

Back to basics

Stepping back from the hype, independent business analyst Teguh Hidayat was more ambivalent about Viva’s future success. Noting that the company made profits after just three years of operation, Teguh also pointed out that Viva has also amassed $995 billion in debt. In the eyes of investors, says Teguh, media shares are not a “hot” stock, while Viva’s Bakrie connections may mean the company is viewed as a political tool rather than a credible business.

“For share investors the best way is short-term trading, but long-term investors should wait until the group announces big steps that will boost share prices in future,” he says, adding that the new sports and entertainment channels are likely to have a good impact on Viva’s share price. While Teguh acknowledged that internet businesses are the next big thing, he was surprised by Viva’s equity growth.  “Usually its parent or affiliated company will help boost its assets,” he estimated, warning that debt-based businesses always face difficulties in the future. 

While the analyst confirms the benefits of supporting creative talent, he reiterated that investors are more interested in fundamentals. Despite the scepticism, the Nusantara Incubation Fund launch indicates that Anindya and Erick may be more aptly described as business drivers rather than creators.

On Viva’s media convergence strategy, independent media observer Gunady Atmosubroto says that Viva’s plan differs little from other media companies such as MNC. From a national perspective tvOne ranked ninth among the top 10 FTA television stations, according to a poll conducted by Nielsen in late 2010. RCTI took the top spot, while ANTV was ranked seventh. The figures, the poll showed, have remained relatively stable over the past five years. “How will they (Viva) change these statistics in the future?” asks Gunandy.  “It will depend on the corporate actions taken by its parent company, particularly the Bakrie Brothers Group.”

Family future

The Murdoch, Bakrie and Thohir trio make Viva the convergence point for three very powerful families – within Indonesia and far beyond. Australian tycoon Rupert Murdoch boasts a global media empire, while the Bakrie Group, founded by the late Ahmad Bakrie, is known for its aggressive expansion in the energy sector, among a swathe of other markets.

Viva chairman Anindya says the Bakries and the Thohirs share good business and personal relationships – both are originally from Lampung – and believe family values are a fundamental element of business growth. “The family is a solid base and is central to ensuring that our business is blessed with longevity,” says Erick, adding that his family has always supported his move into the media industry.

The Thohir family interests have their roots in Astra International, a leading automotive firm established by Teddy Thohir and William Soeryadjaja. Erick’s brother Boy Thohir is known as a tough investment banker with a controlling interest in Adaro, one of Indonesia’s largest mining firms. Through its $2 billion holding company Trinugraha Thohir, the family has an increasing interest in the automotive industry, especially motorcycles.

The Wahana Group is a main reseller and financing agent through WOM Finance, where the family has a 20% stake. The Thohir family also has interests in property and lifestyle businesses and shares in 30 outlets of the Hanamasa and Pronto restaurants. While its main focus is still the energy sector, the family controls significant shares in the Adaro Group, along with tycoon Edwin Soeryajaja, TP Rahmat and Sandiago Uno.  

Erick says that his parents still control 75% of shares in the family company, while the rest are divided between their three children, Boy, Rika and Erick, although Boy is the figurehead. As a self-confessed stubborn kid, Erick says one of the reasons he was drawn to the media industry was to carve his own path. Separately, he has a stake in the Mahaka group, along with Wishnu Wardhana, Muhammad Lutfi and R. Harry Zulnardy.

The Mahaka group has interests in plantations and trading as well as media operations such as JakTV, Republika daily, Radio GenFM and lifestyle magazine A+ among others. “All the founders of the Mahaka Group agreed not to get involved in sectors that our families already work in. I am interested in media as a business, not for its power plays,” says Erick, well known as a keen basketball fan.

Outside of his business interests, Erick promotes basketball throughout the country and was head of Indonesia's Basketball Association (PERBASI) until 2006. He set up the ASEAN Basketball Association, in collaboration with Tony Fernandez from AirAsia. “We purely aim to make a profit out of Asia’s strong interest in basketball and so far we have made good progress,” he says. GA      

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