1

Haris Suhendra

Breakout Strategy To win The Competition

In 2011/2012

2

Table of Contents

Overview External Analysis Internal Analysis Review on VIVA’s Business Strategy: Propose Improvement

3

Overview

4

VIVA’s Climbing a Growth Staircase

5

VIVA’s Life

impressive improvement in financial performance in-line with the ever so fast growing of the Indonesian economy.

Source : VIVA’s Annual Report 2011

6

External Analysis

Macro-environment

The power to control the media, seems to have become the power to also control policy and media law, hence confirming the regulation is more oriented towards group interests rather than public interests.

Indonesia's economic growth is expected to continue to grow by 6-7% per year in the 5 (five) years.

social networking/ social media has opened the space without limits for people to communicate.

Geographic Conditions are mutually separated island nation caused the construction of physical infrastructure costs are expensive.

Development of Media Digitization has given new challenges

One of the regulations that have changed the face of media in Indonesia is the UU No. 32/2002 which brought a wave of new freedoms and democratic spirit of the media.

8

9

10

Industry trends

11

12

13

Industry trends and developments.

• The average growth rate per year (CAGR) net income of these ads will grow 4.4% up to 2016, reaching US$ 2.5 billion, equivalent with 44.0% market share.

• In 2011, the amount of net advertising media expenditure : 42.7%.

• Free-to-air (“FTA”) television reach more or less 35 million families or 56% of families in Indonesia and is forecast to rise by 60% by 2016.

Source : MPA showed that in 2011

14

Porter's Five Forces in National Media Industry in 2011/2012

Threat of entry is LOW

the bargaining power of supplier is LOW

The bargaining power of buyer in the industry

is High

The threat of substitute product in the industry

is medium

The intensity of competition is high

barriers to entry : capital requirements, economies of scale, and government regulations.

in-house production, one of strategy to reduce the cost of production.

The development of Mobile technology Development of the film & tourism industry

Media agency holding the funds accumulated large amounts of ad spending.

MNC Group, Kompas Gramedia, EMTEK Group, VISI Media Asia,

Jawa Pos group, Mahaka Media, CT Group, BeritaSatu Media Holdings,

the Media Group, MRA Media, Femina Group and the Tempo

Media.

15

RCTI 17%

MNC TV 12%

Global TV 8%

SCTV 16%

Indosiar Visual Mandiri

10%

Trans TV 14%

Trans 7 10%

ANTV 7%

TV One 5%

Metro TV 3%

Market Share

MNC36%

EMTEK25%

CT24%

VIVA 12%

Key Industry Players

Market Share FTA (Free-to-Air in Indonesia : 2012). Source : MPA analysis (2011)

16

Profitable growth strategic movements analysis: Strategies of key industry players

VIVA MNC EMTEK VIVA MNC EMTEK VIVA MNC EMTEK VIVA MNC EMTEK2008 2009 2010 2011

-1,000,000.00

0.00

1,000,000.00

2,000,000.00

3,000,000.00

4,000,000.00

5,000,000.00

6,000,000.00

TOTAL REVENUESNET INCOME

17

Profitable growth strategic movements analysis: Strategies of key industry players

New focus: Strategy • increase the share of viewers • Developed a network of local television• Optimize revenues and manage expenses to ensure adequate profit and margin.• Continue to creating synergy inter-unit business.

EBITDA margin grew from 30% in 2010 to

33% in 2011.

18

Profitable growth strategic movements analysis: Strategies of key industry players (2)

Revenue : Rp. 3,466 .5 billion,

increased by 23.3% of the revenue of Rp. 2864.5 billion in 2010.

New Focus : • The first is the success we acquired a controlling stake in Indosiar & digital pay-TV (NexMedia).• Focus on cost control strategy that carefully and increased cash flow.

EMTEK Group

19

Internal Analysis

20

Resources

Tangible asset Intangible asset Financial VIVA in Indonesia stock exchange (IDX) and

grab the funds (gross) of Rp. 500. billion Reputations & Recognition Good Brand Positioning : TV One in a short time has become a news station number 1 in Indonesia with news coverage

Physical 31 transmission stations so as to reach 170 cities and districts in Indonesia with 143 million inhabitants.

3G facilities Satellite News Gathering (SNG) Human Capital

Number of Employee : : 2,690 professionals• 2,205 permanent employees• 485 outsourced employees. There are 2,121 male workers and 569 female workers.

“Bakrie Learning Center” & “KampusOne” Organization Bakrie Group‘s

21

• Engaged in the broadcast media, online media, a developer of technology that will be developed up to the telecommunications infrastructure.

• Integration and strategic coordination• Increased in-house production from 53% (2008) to

86% at the end of 2011.• In-house content content• VIVA can produce and broadcast programs directly

(live) and record (taping).• on the air for 24 (twenty four) hours per day

Capabilities

22

Core Competence

• Delivering content including news, sports, and lifestyle through the convergence of television services, the internet, and mobile phones.

• VIVA owns and manages two FTA TV stations with national coverage: ANTV, tvOne and and the leading online news portal in Indonesia-VIVAnews.com.

Content Creation Content Packaging

Content Distribution

User Interface End user

VIVA’s Value Chain Analysis

23

86 % In-house production

Outsource

Broadcast TV

Cable Network

Broadcast TV Station

Cable TV

Pay TV

Internet

TV

Laptop/ PC

Mobile Device

Website

Viewers/ Consumer

News programs, current affairs, talk shows, documentaries and sports

selectively purchase licenses from overseas for a credible news content and can attract the attention of viewers, such as BBC Worldwide Limited, Associated Press Television News Limited, Reuters and others.

31 transmissionstations so as to reach 170 cities and districts inIndonesia

www.tvone.co.idwww.an.tvVivanews.com

143 million Viewer (2011).

24 hours

Local Contributors (news bureau) : Surabaya, Medan and Makassar Foreign Contributor (news agencies) : APTN, SNTV, Reuters , VOA, and others.

Outside broadcasting van ("OBvan").3G facility tvOne Satellite News Gathering (SNG) that uses the Global System for Mobile Communications (GSM) to direct the news coverage (live). TV One renting satellite with 12MHz bandwidth in satellite owned by Indosat.

24

Analysis/Review on VIVA’s Business Strategy

25

VIVA’s SWOT Matrix analysisStrength leading media convergence in

Indonesia to focus on content provision news, sports and lifestyle

Free-to-Air (FTA) television stations, the internet and cell phones.

Weakness• Product service similar to the first

competitor to dominate the market.• Only TV and Online Media• Low quality

OpportunitiesNet income of these ads will grow 4.4% up to 2016, reaching US $ 2.5 billion, equivalent with 44.0% market share. - Free-to-Air television reach more

or less 35 million families or 56% of families in Indonesia and is forecast to rise by 60% by 2016.

Strength – Opportunity • Increasing market share.• Increase Brand Equity.

Weakness – Opportunity Creating innovative event

programs. Improving the quality of

reporting.Threats• Convergence and digitizing media• The growing number of local TV

area.• Low interest of society to news

programs.• Regulations are still in favor of the

media conglomerate.

Strength – Threats Pursuing a strategy of

digitization of media Giving more benefit to

advertisers

Weakness – Treats The involvement of the

community in presenting the news

26

VIVA's Generic Strategies

Porter's Generic Strategies (source: Porter, 1985, p.12)

COMPETITIVE ADVANTAGE

COMPETITIVESCOPE

Lower Cost Differentiation

BroadTarget

NarrowTarget

1. Cost Leadership 2. Differentiation

3A. Cost Focus 3B. Differentiation Focus

VIVA concentrate in a Focus Strategy :

• Focus on delivering content including news, sports, and lifestyle through the convergence of television services, the internet, and mobile phones.

• VIVA owns and manages two FTA TV stations with national coverage: ANTV, tvOne and and the leading online news portal in Indonesia-VIVAnews.com.

27

• Being media company option advertisers through good relations and communication more intensive cooperation and more comprehensive.

• Constantly present content program line with trends interest viewers, and lifestyle obviously with the best quality broadcast.

• Always present accompanying viewers in every platform and canals

• Build a two-way dialogue with viewers through the medium of the internet and social networks.

• Forming communities most unique most modern and most loyal in Indonesia.

• Continue to maximize preeminence to hold utilizing the momentum.

Value Proposition

28

VIVA’s Current Business model CanvassKey Partners

Advertiser Ads Agency -Foreign News Agency (APTN, SNTV, VOA)IT Vendor (JAVA & Linux) Broadcasting infrastructure Vendor Social Media/ Social NetworkUniversities Telecommunication Provider (TELKOM, Indosat)

Key Activities

Program Design Program DevelopingIn-House ProductionMarketing Selling R&DImplementation of Good Corporate Governance (GCG)CSRTechnology Development ((3G Satelite) Learning Center

Value Proposition

Focus Provision content news, sport and lifestyleProviding a Good ProgramProviding a Good Quality of Program Providing Unique & Interesting Program Providing Online Portal News

Customer Relation

Event Program

Customer Segment

SES ABCD(Urban & Sub Urban)

Key Resources Creative TeamIT ExpertEmployee JournalistR&D Team Marketers

ChannelFree-to-Air Television (FTA) – National (ANTV & tvOneOnline Media (Website) Portal Online Media (Portal VIvanews.com)AdvertisementMarketing Kit

Cost

Operational CostProgram Development CostMarketing CostGeneral & Administrative CostResearch & Development ICT CostPeople Development Cost

Revenue Stream

Advertising Revenue SponsorshipInvestorPartnershipIn-House Production

29

Review of VIVA’s past/current competitive strateg(ies)

Innovation Partnership Leadership & Culture

Quality & Coverage

To improve efficiency People Profit

Focus on news. Sport and lifestyle programs

Some excellent & Unique program

Purchase licenses from overseas : BBC Worldwide Limited, Associated Press Television News Limited, Reuters and others

Local Contributors : Surabaya, Medan and Makassar

Foreign correspondence (news agencies) : APTN, SNTV, Reuters , VOA, and others.

Commitment to the implementation ofGood Corporate Governance (GCG)

Building 37 transmitters throughout Indonesia,

Technology Development : broadcasting equipment outside broadcasting van ("OBvan") & 3G facility tvOne Satellite News Gathering (SNG) that uses the Global System for Mobile Communications (GSM) to direct the news coverage (live).

Consolidating & Synergy all BU’s

increased the number of in-house production of 53% in 2008 to 86% at the end of the year 2011.

the acquisition of non-news content and news from various production houses and distributors of leading through a rigorous selection process.

People Deleopment with “Bakrie Learning Center” dan “KampusOne”

Conducting the process of expanding access to broadcast and production process is commercialized

30

Propose Improvement

31

VIVA’s New Business Model CanvassKey Partners

External : Advertiser Ads Agency -Foreign News Agency (APTN, SNTV, VOA)IT Vendor (JAVA & Linux) Broadcasting infrastructure Vendor Social Media/ Social NetworkUniversities Telecommunication Provider (TELKOM, Indosat)

Internal : Editorial DeptHR DeptIT DeptGAL DeptMarket DeptFinance DeptOther BU’s

Key Activities Program Design Program DevelopingIn-House ProductionMarketing Selling R&DImplementation of Good Corporate Governance (GCG)CSRTechnology Development (3G Satelite)Learning Center

Value Proposition Focus Provision content news, sport and lifestyleProviding a Good ProgramProviding a Good Quality of Program Providing Unique & Interesting Program Providing Online Portal NewsMulti platformsCreate business information program

Customer RelationEvent Program Community Program

Customer SegmentSES ABCD(Urban & Sub Urban)

Key Resources Creative TeamIT ExpertEmployee JournalistR&D Team MarketersDigital Media ExpertPublisher Expert

ChannelFree-to-Air Television (FTA) – National (ANTV & tvOneFree-to-Air Television (FTA) – Local TV Print Media Pay TVRadio StationDigital MediaOnline Media (Website) Portal Online Media (Portal VIvanews.com)AdvertisementMarketing KitMobile Device

Cost Operational Cost; Program Development Cost; Marketing Cost; General & Administrative CostResearch & Development; ICT CostPeople Development Cost

Revenue StreamAdvertising Revenue; Sponsorship; Investor; PartnershipIn-House Production RevenueContent Provider Revenue

Arena

VehicleStaging Economic Logic

Differentiators

Arena • Convergence Media• Target Professional , Executive, Woman• Area : Jakarta and Outside Jakarta

Vehicle focus on content provision news, sports and lifestylemultiple platforms, Including Free-to-Air (FTA) television stations, the internet and cell phones. Collaboration with Key Agency Partners 3G Satellite Technology

Staging Foundation StageInnovation year Growing StageGo GlobalWinning StageMedia of Choice

Economic Logic • Increasing revenue from

advertising• sponsorship

• Increasing Brand Equity • Recognition, Brand

Image, trust

Differentiator • Focus on News & Sport• 24 hour off-air • Provide the variety of programs

Strategic Movement : VIVA’s Diamond Strategic

33

Implementation Stages

34

Implementation (2)

Improve its operational and financial performance : 1. Improved profit and margin by continuing to focus on

producing a quality program of in-house. 2. Optimization of operational activities and create synergies

between television networks and online news portal. 3. Improved and broadened the scope of the television is not

paid on an ongoing basis to increase the share of viewers and increase revenue from advertisers.

4. Develop content distribution through the internet platform. 5. Maintains and strengthens the company's position as the

market leader in news coverage