Eric Thohir moves on

Entrepreneur's Story

By: Agustinus Gius Gala

Globe Asia-25 Juli 2008. Erick Thohir's first business venture was in lime mining but his interests were grabbed by the media industry, in which he's carved a name for itself that attracted Irish major Independent News and Media. After seven years at the helm of PT Abdi Bangsa Tbk. Erick Thohir is moving on from his post as president director of the publisher of Republika daily. At a gathering with a handful of journalists last month, Erick explained that he had decided it was time to hand over his position to a professional after June 30. “If the shareholders' meeting agrees, I want to give a chance to the professionals to lead PT Abdi Bangsa,” he said.

Nominated to replace Erick is Rudi Lesmana, while Abdulgani, a former head of Bank Duta and a former commissioner of PT Garuda Indonesia, will be president commissioner of PT Duta Bangsa Tbk. Erick will remain the principal shareholder in Abdi Bangsa.Erick is not going far, at least in the short term, but some new partners present the opportunity for some major moves. ”I will stay at Republika daily newspaper as president director for the next two years,” he explained, but that too will eventually be handed over to professional management. PT Abdi Bangsa Tbk. controls media including the daily newspaper, Radio One, the production house Mahaka Visual, Republika Publishing (with the novel Verses of Love in its collection) and billboard operation Avabanindo Perkasa.PT Abdi Bangsa Tbk. has proved itself to be a long-term presence in the market.

Revenue has grown steadily from the level when the company listed on April 3, 2002. In 2007, the company gained revenue of $12,2 million, an increase of 18.5% on the year earlier.This steady growth was presumably a magnet that attracted one of the bigest media holdings in the world, Ireland-based Independent News & Media Plc. (INM). It sealed a deal for some 20% of a stake in Abdi Bangsa last May.”We are extremely pleased to be investing with Erick Thohir in Abdi Bangsa and to be part of the exciting and rapidly developing Indonesian media market,”Gavin O'Reilly the COO of INM, said at the time.According to Thomson Financial, INM's all-cash consideration for the 20% stake is being made through a rights issue of 170 million shares at Rp250 per share and partly through purchase of shares from an existing

shareholder. Erick, as the principal shareholder, will retain a 52% interest in the group.

The deal allows Abdi Bangsa to get $7.33 million from the rights issue, allowing it to move to acquire more assets. Among its shopping list is a share in PT Radioner Cipta Karya, which controls the top-ranking Prambors FM, Female Radio and Delta FM radio chains as well as Radio Nett media buying. And, says Erick, the management also plans to acquire PT Praisindo Teknologi, an IT solution company which controls and manages Rileks.com. The acquisition is designed to contribute to the development of Republika Online.

A part of the cash will go to working capital and a boost in participating capital in the Republika and Mahaka billboard business units.

Mahaka Media

Erick cannot be separated from the Mahaka Media Group, the force behind PT Abdi Bangsa. Mahaka was established in 1993 by Erick together with his old friends M. Lutfi (now chairman of the Investment Coordinating Board, BKPM), Wisnu Wardhana and R. Harry Zulnardy.Mahaka is Javanese for a good first step, an appropriate name for the company they founded soon after they graduated from college. Initially, the company got involved in lime mining. It then shifted to manufacturing, plantations and trading. Erick, meanwhile, got more involved in what became the company's media division.

Today, as an established presence in the media industry, Erick has a lot of plans in his head. An early move will be for Jak TV to set up a partnership with the largest local TV station in Indonesia, Jawa Pos Televisi (JTV). ”Pak Mashuri (Himawan Mashuri, the president director of JTV) is here, helping us operates Jak TV,” says Erick.JTV, Erick added, will continue to control a stake in Jak TV but he refuses to mention the amount, though admitting it will not be more than 50%. The tie-up was irresistible for Jak TV. ”Up until now Jak TV has been lost.

It has been hard for it to be great on its own so it is better for Jak TV to create a partnership with JTV, which already has 11 TV stations,” Erick says.Indeed, since the government introduced the Broadcasting Law in 2002, many local TV stations emerged. According to Jimmy Silalahi, executive director of Indonesia's Local TV Stations Association, there are currently 200 local TV stations in Indonesia. The bad news is that most of them are bankrupt, with only a lucky few still surviving. Among them are JTV and Bali TV, which belongs to the BaliPos Group.TV One is slated to go public soon. ”We may float in September but it will certainly be before the end of this year,” says Erick, a proud father of four.

Yet, before TV One goes public, Erick plans to make it bigger by adding more media to the mix within the VMA holding company. Erick's partner in VMA told GlobeAsia that VMA will offer 25%-30% of its shares to the public. The funds will be used to develop TV One, he says.”We have discussed putting ANTV and Kanal One underneath VMA,” Erick adds. Kanal One is a news website which will be launched in the near future. Erick predicts that if ANTV and Kanal One become part of the VMA portfolio, the company's assets will rise to $315,2 million. Jak TV and Gen FM radio will also join the VMA stable, making the IPO a major media offering.

TV One

Historically, TV One is no new TV station. Formerly it was Lativi, a national private TV station which belonged to Abdul Latief, a former minister for labor and transmigration. PT Lativi Mediakarya was established in 2001 but failed to attract advertisers because its audience for its mix of crime and horror shows was in the wrong economic group. Latief sold Lativi to the three young entrepreneurs - know as the three musketeers - to focus on his family's core business.The three moved to buy the station after Capital Managers Asia Pte Ltd (CMA) paid $45.4 million to Bank Mandiri in 2007 to cover Lativi's debts. CMA is a financial institution based in Singapore and connected closely to the Bakrie Group. In 2004, CMA invested $27.2 million in Bakrie Telecom (Esia) and is a minority shareholder in ANTV.

Erick admits that it is not easy to manage TV One. The change of name was an essential step, but a change in image was equally important. “We have to change the positioning from CDE (middle-down) to be ABC (middle-up),” he says.
Gone are the horror films, eroticism, crime and magic shows. TV One now presents 70% news with the rest of its programming dominated by sports and entertainment shows. In the first week of June, the TV station won a rating of 5.1, enough to put a smile on the face of the three musketeers.Transforming the station didn't come cheap: Erick, Anin and Rosan had to put in $141.3 million to give the station a chance in the tightly competitive Indonesian television market.