ASTRO ... Oct 08

There is talk that it could be eyeing a new partner in Aora TV. PT Karyamegah Adijaya’s Aora, which started nationwide broadcast in Indonesia barely two months ago (Aug 2008) is controlled by Rini Mariani Soemarno, Indonesia’s former minister of trade, and her brother Ongki P Soemarno.
Market watchers cite the fact that Aora, a newcomer to the Indonesia broadcast arena, got off to a good start, with exclusive pay TV rights to both the 2008 Beijing Olympics and the current EPL 2008/2009 season in Indonesia.

While tvOne, an Indonesian free to air channel, had from Sept 13, 2008 begun broadcasting selected EPL matches, only Aora subscribers can watch in full the 370 EPL matches for the season from Aug 2008 to May 2009.

Astro had heavy investments in sporting events. Aora’s current sports channels include Goal TV1 and Goal TV2, being football channels that Astro is promoting and distributing in this region via a JV with Yes Television (HK) Ltd, formed in June 2005. Aora is also broadcasting using Measat-3 satellite owned by ASTRO’s sister company Measat Global Bhd.

Rini is currently Aora’s president commissioner while Ongki is its president director. They collectively own 95% of the company. Solihin Kalia, a son of Indonesian Vice President Jusuf Kalla, holds some of the remaining 5% stake held by Indonesia HGC Telecommunications. Astro did not have any stakes in Aora. Rini may have kinked with Astro because Ongki’s coursemate at Harvard Business School. They used Measat 3 because it has four transponders whereas Indosat has one.

Aora is the siblings’ first pay TV venture. The Soemarno siblings’ known ventures include PT Semesta Citra Motorindo, which produces Kanzen motocycles in Indonesia.

Considering the Soemarno siblings’ background, some Indonesian bloggers argue that Aora’s owners may not need to go beyond content partnerships with ASTRO. There is a very indication that ASTRO remains a strong believable in the potential of the Indonesian pay-TV market. It intends to retain its position as a supplier of TV content, channel content and broadcast services to the pay TV industry in Indonesia.

In any case, ASTro’s experience and strong ties with content providers may come in handy for Aora, plans to have a full commercial launch in the first quarter 2009, offering at least 50 channels to customers across Indonesia.

And given that a lot of cash is needed to grow the pay TV business, the cash injection for 20% equity in Aora by ASTRO could well give the company a bigger war chest.

But there are those who reckon that both ASTRO and Aora still have other issues to clear up at the moment, regardless of whether they are open to a tie up.

There are parties who are clamouring for the Dept of Communications and Informatics to revoke the broadcast licenses given to Aora’s operator. This was based on complaints from the Press and Braodcast Society of Indonesia alleging the illegal reshuffling of Aora’s shareholdings, after it received its broadcasting permit from the Ministry of Technology and Information. Rini was reportedly confident of being in compliance with the law.

Astro still has to sort out issues with PTDV. Astro said the extension was purely as a gesture of goodwill, with the Rm20 million cost already been accounted for in its second quarter results ended July 31, 2008 (Astro wrote off RM231 million in provisions in relation to its termination of services to PDTV and incurred RM78 million costs for providing services to PDTV, rsulting in AstrO’s 2Q2009 losses widening to RM247 million from RM54 million in 2Q2008).

There was no mention of whether Astro had managed to overtun an Aug 29, 2008 ruling by the Business Competition Supervisory Commission, which ordered ASTRO to continue providing services and support to PDTV until the legal settlement of the ownership status of PDTV

Industry observers believe that ASTRO will not continue providng support and services to PDTV indefinitely as it not PDTV’s shareholder and is therefore, not obliged to do so.

An extension of its presence in Indonesia would reduce the RM231 million provisions taken in 2Q2009 results, but could lead to further startup losses. If indeed ASTRO finds Aora appealing, a clean break up with PDTV may be all that stands in its path from stating its intentions.

Astro All Asia Networks plc has extended the provision of support and services and also the trademark licence agreement to Indonesia’s PT Direct Vision (PT DV) until Oct 19 2008. As a gesture of goodwill and in good faith, it had agreed to continue providing the support which was scheduled to be terminated.

This is the second time that Astro had extended the provision of support and services. Under the original agreement, the contract expired on Aug 31 2008 but Astro decided to extend the provision of the services.

The cost to provide services for this period will amount to about RM20mil and has already been accounted for in the group’s results for the second quarter ended July 31 2008, previously announced.