Singapore's top media company MediaCorp plans to raise its share of ownership in Global Mediacom, the Indonesian media giant, to tap into the country's rapidly-growing advertising market.
The Singaporean company now holds a 5 percent stake in Global and a 6.85 percent stake in PT Media Nusantara Citra - Global's subsidiary operating popular television stations RCTI, TPI, GlobalTV, the Indonesia Stock Exchange data says.
MediaCorp CEO Lucas Chow said after Thursday the company would raise its stake to a higher level but still within the range allowed under existing regulations.
The regulations forbid foreign companies to have more than 20 percent ownership in local media.
"We are aware that we cannot take control in the company due to the regulations, but we are happy enough to be a partner of the company," Chow, who is also the commissioner of Mediacom, said after Mediacom's annual shareholders' meeting.
Chow said the broadcasting industry in Indonesia was more attractive than those in neighboring countries, where advertising growth was relatively small.
The latest Nielsen Company survey shows that spending on advertising rose in the first quarter of the year by 19 percent to Rp 10.36 trillion (US$1 billion) from a year earlier, despite the negative impact of the global economic downturn.
Lucas also said the sound macroeconomic indicators of Indonesia were another reason for the company's expansion in Southeast Asia's largest economy.
Figures from the Central Statistics Agency (BPS) showed that Indonesia's economy in the first quarter of this year grew by 4.4 percent from a year earlier, the third fastest in Asia after China and India.
The government has targeted that the economy will expand between 4 percent and 4.5 percent this year, and between 5 percent and 6 percent in 2010.
During the Thursday's shareholders meeting, Global president director Hary Tanoesoedibjo announced the company plan to spend up to Rp 500 billion acquiring more than 10 provincial TV stations in a bid to expand the coverage of the company's broadcasting network.
Hary however did not name names. "We do this *acquisition* to comply with the new regulation," Hary said.
A national TV station must establish a partnership with local TV stations to be able to broadcast in the regions, the new regula-tion says.
The company's net profit dropped 47.51 percent in the first quarter to Rp 41.38 billion from Rp 78.84 billion a year, earlier due in part to significant foreign exchange losses.
Global Mediacom, previously known as PT Bimantara Citra, is focused on media and telecommunications.
Aside from having a stake in numerous TV stations, it also has stake in PT Mobile-8. Global Mediacom also produces CDMA-based mobile phones (Fren), and also owns a majority stake in PT MNC Sky Vision, the owner of pay-tv Indovision.
