Opening Pandora’s Box: Indonesia’s TV industry

Regulation and market issues are just a start as broadcasters face ever increasing challenges

By Ria Putri Santoso and Gilang Ardana
Monday, August 22, 2016

According to the Indonesia Television Broadcasting Association (ATVSI), Indonesia has the most free-to-air (FTA) national TV stations in the world at 10. The transmission frequency for an FTA, or terrestrial broadcast, TV station is owned by the public, and thus it is controlled and regulated by the government.

Indonesia’s broadcast environment is such that requests to create a new TV station are easily granted by the government, making competition in the already highly competitive market even tighter. It is not efficiency of the market that is being achieved, but rather, the complete opposite – an unhealthy competition climate.

“From the business perspective, we have to know the market capacity to provide a thriving environment,” the chairman of ATVSI, Ishadi Soetope Kartosapoetro, told AmCham Indonesia. “The TV industry lives from its advertisements, making the market limited.”

FTA TV stations have to compete with network TV, digital TV, and the Internet. It is a highly competitive environment where consumers are exposed to a wide variety of choices and social media and streaming sites have all drained the advertising from terrestrial TV stations.

“We do have growth in advertisements, but it has been stagnant at around 5 percent in the last few years,” said Ishadi. “Online advertising has reduced the TV ones to as much as 4 percent.”

Muhammad Haychael, a director of Remotivi, a national think-tank that focuses on media, told AmCham Indonesia that a major problem for the TV industry is the overzealous regulatory environment, with many regulations full of holes and the lack of law enforcement.

“The regulations are very abstract,” he said. “Take for example the KPI’s [Indonesia’s Broadcasting Commission] P3SPS [sanction guidelines] is aimed at programs. What I mean is that, if a sanction is being given, to whom it is given to? The program, the TV [station], or who? It is not specific.

“To add to that, if the violation is in a different clause, then the warning will also be different, resulting in a non-elevated sanction,” he said. “In reality, though, the P3SPS states that sanctions have to be elevated, for deterrence. Meaning, the regulation is defective, and the commissioner’s commitment is bad.”

Opening Pandora’s Box

Yet, market size and regulations are just a few of the myriad problems that need to be addressed in the FTA TV industry. 

“The problem is that there are too many broadcasting issues if we cluster them,” said Haychael. “I do not see the government’s focus. If we are talking about broadcasting issues starting from networks, they are so large. There are too many problems from the broadcast industry, the audience itself and media literacy.”

Remotivi is also concerned that the notion of freedom of the press seems to be taken for granted.

“What they have forgotten about is that being free has a purpose: to serve the public,” said Haychael. “If the media is serving a particular conglomerate for political purposes then that is not free. After being incarcerated for 32 years [during the Soeharto era], we are experiencing a media that is being incarcerated by owners. It means that all content has two aims: to serve the needs of politics and the economy.”

Public awareness of the nature of FTA broadcasters is also a worry, with only 8 percent able to correctly answer that TV frequencies are owned by the public, according to a 2010 Remotivi survey of 10 private universities.

“This is saddening because, in fact, people need to understand that FTA is using public means,” said Haychael “Thus Remotivi is here to change the perspective of the relationship between the audience and the show’s producers - consumers to frequency borrowers.”

“Very few people know about the KPI,” he said. “If it is KPK [the Corruption Eradication Commission], the KPU [the General Elections Commission], they still know about them, but once we start asking whether they know about the KPI, they know nothing about it. They do not even know their rights, so how do we expect them to know about media literacy?”

Path to reform

Both Ishadi and Haychael emphasized the need for all stakeholders to work hand-in-hand developing the industry and seeking reforms.

“Do not see the industry as the enemy,” said Ishadi. “If we continue to do so, the industry will be finished.” He also urged the KPI to take a better approach and maintain good relations with the industry.

Haychael said that there is a need to base the decision-making process within the industry on valid data, to avoid using too many false perceptions that later can disadvantage the growth of the industry itself.

“Do not be trapped by myths,” said Haychael. “Intervention has to be based on data.”

He also recommended the government be aware of the current competition levels in the TV industry, and to consider barriers to entry to give space for the existing players to develop.

“We do not want TV to die.  Isn’t it crazy that government keeps giving permits to establish new TV stations when in fact the already existing TVs are dying?” he said  “What we want is to push so that regulation will create a healthy market.”

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