Managing And Sustaining Profitable Growth Analysis for VIVA

1
Haris Suhendra
Managing and Sustaining Profitable Growth
Analysis for
In 2011/2012

Table of Contents
• Overview
• Analysis on External Environment
• Industry Granularity Analysis
• Analysis on target VIVA’s internal environment
• Conclusion & Recommendation
2

Scope of work
• To look at the development of media industry in Indonesia, trends, future growth
rates, and market structures at much greater depth than the aggregate industry
level. In this paper,
• The author will be focus on VIVA as a player in the media industry.
• There was also discussion about the VIVA’s competitors.
• The author analyses using data from 2007-2011.
• Methodology
– In collecting the data, the authors use various sources of information such as
informants through interviews, library, internet, media such as magazines,
newspapers, TV and various other sources such as journals and publications.
– For the analysis of the problem and solution recommendations, the authors
use a variety of theoretical approaches such as PESTEL Analysis, "Porter's Five
Force Analysis" to analyze the industry. In this paper, the authors using the
Granularity of Growth theory to analyze distinguish between corporate targets
of achieving profitability & growth, Examine underlying drivers on profitable
growth, Analyses granularity factors in target company, Examine growth
factors in a company or industry.
4

Journey of VIVA’s Life
• PT Visi Media Asia Tbk (Viva or Company) is Indonesia’s
leading convergent media company, having its core
competency in providing quality content in the areas of
news, sports and lifestyle across its diversified operating
companies with multiple platforms including free-to-air
(“FTA”) television stations, internet and mobile phones.
• 2011 was indeed a landmark year for Viva as the listing of
its shares in the Indonesian Stock Exchanges (BEI) which
resulted in IPO proceeds of gross Rp. 500,175,000,000 [Five
Hundred Billion One Hundred Seventy Five Million].
5

Journey of VIVA’s Life (2)
impressive improvement in financial performance in-line with the ever so fast
growing of the Indonesian economy.
6
Source : VIVA’s Annual Report 2011

Analysis on external environment
7

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.
Natural conditions are
mutually separated island
nation caused the
construction of physical
infrastructure costs are
expensive. On the other
hand, the remaining
telecommunications
wastes may result in
environmental pollution on
soil pollution include
ecology, water and air.
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.
There is gap in
access to
conventional media
such as television,
are still hard to come
by people living in
remote and
underdeveloped
areas.

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
This is partly due to the severity of the
barriers to entry that must be taken such as
capital requirements, economies of
scale, and government regulations
regarding the conduct of a network
television station broadcasting system which
will be implemented in the near future.
in-house production, one of
strategy to reduce the cost of
production.
The other advantage players
can design budget TV coverage
more planned and controlled.
The development of Mobile technology
Development of the film & tourism
industry 9
This is because a lot of media agency
holding the funds accumulated large
amounts of ad spending. The
bargaining power of a
multinational media specialist
is very big because they have a
fund huge ad spending.
Major media groups in control of almost all
media channels in Indonesia, including
broadcast, print and online media. They are
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 of
the core Media.

Industry Granularity Analysis
10
Key industry players
Industry/product/market growth trends and Developments
Profitable growth strategic movements analysis: Strategies
of key industry players

15
Key Industry Players
TV
Players
Market
Share
Main Content Group
RCTI 17% Sinetron,
Coomedy
MNC
Group
SCTV 16% Sinetron,
Drama
EMTEK
Group
Trans TV 14% Variety Show,
sinetron,
Commedy
CT
Group
MNC TV 12% Religion
Drama, Local
Music
MNC
Group
Trans 7 10% Sport, reality
show, News
CT
Group
Indosiar
Visual
Mandiri
10% Sinetron,
Drama,
Reality Show
EMTEK
Group
Global
TV
8% Nickeledeon,
F-1 Racing,
MTV
MNC
Group
ANTV 7% Lifestyle,
family
entertainment,
sport
Visi
Media
Asia
TV One 5% News, Sport Visi
Media
Asia
Metro TV 3% News, Sport,
Documenter
Media
Group
Market Share FTA (Free-to-Air in Indonesia :
2011).
Market Share FTA (Free-to-Air in Indonesia : 2012.
Source : MPA analysis (2011)

Industry trends and developments.
The Prospect of a FTA’s TV advertisement
• MPA showed that in 2011, Indonesia again have net income growth of television media ads reached $
1.2 billion, grew by 18.6% as compared to last year.
• Further, 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 allocated on television are of 42.7%.
• The dominance of the television because of the popularity of television broadcast networks do not pay
that has a market share of 42.1% of total net advertising market.
• 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.
The prospects of ONLINE advertising
• The prospects of ONLINE advertising spending Increase in net advertising through online media in 2011
reach 75,1% or US $ 52 million compared to the previous year in the same period amounted to US $ 30
million.
• MPA predicts that net income CAGR through online media advertising will grow to 31.6% to reach US$
212 687 million, equivalent to 5.8% market share.
16

Profitable growth strategic movements analysis: Strategies of key industry
players
New focus: Strategy
• increase the share of viewers and advertising expenditures and to improve the quantity and quality of content over
production in-house.
• Developed a network of local television
• Optimize content libraries by selling licenses for each program and channel
• Enlarging circulation and advertising revenues from print media, especially newspapers Around Indonesia.
• Develop and manage well the portal on-line news and entertainment www.okezone.com
• Optimize revenues and manage expenses to ensure adequate profit and margin.
• Continue to creating synergy inter-unit business. 17
Media Nusantara Citra (MNC)
Group
As the number one television
network in Indonesia. In 2011,
advertising revenue increased by
20%.
EBITDA margin grew from 30% in
2010 to 33% in 2011.
CEO Plan :
Concurrent to enhancing
revenues, MNC implemented a
range of activities to improve
operational synergy across all
business units

Profitable growth strategic movements analysis:
Strategies of key industry players (2)
CEO Plan:
• Focus on cost control strategy that carefully and increased cash flow. As well as positions with conservative balance
sheets, this will help us to seize opportunities in the future.
New Focus :
• The first is the success we acquired a controlling stake in Indosiar, and digital pay-TV service in our company, namely
NexMedia.
• Focus on cost control strategy that carefully and increased cash flow. As well as positions with conservative balance
sheets, this will help us to seize opportunities in the future.
18
EMTEK Group
• Three main business areas: media, solutions and
connectivity.
• In 2011, the Group's media business and
solidifying Emtek connectivity with the takeover of
84,77% share of the national television transmitter
station, Indosiar, as well as the launch of the digital
pay-TV service, which covers the metropolitan area
NexMedia
• Revenue of Rp. 3,466 .5 billion, increased by
23.3% of the revenue of Rp 2864.5 billion for the
year ended December 31, 2010.
• The Media Division contributed 66,9% in 2011,
which increased by 58,9% from the previous year.

Profitable growth strategic movements analysis: Strategies of
key industry players (3)
19Figure 2 : Financial performance MNC, EMTEK and VIVA Group (2008-20011)
Source : Bloomberg Finance
Currency in 31-Dec 31-Dec 31-Dec 31-Dec
Millions of Indonesian Rupiahs 2008 2009 2010 2011
IDR IDR Reclassifie
d
IDR
VIVA MNC EMTEK VIVA MNC EMTEK VIVA MNC EMTEK VIVA MNC EMTEK
Revenues 421,065.00 3,921,940.00 3,123,122.30 668,356.20 3,862,572.00 2,828,636.00 889,101.10 4,436,365.00 3,353,538.30 992,634.80 5,047,714.00 4,136,532.90
Other Revenues -- 61,273.00 419,542.00 342,760.00
TOTAL REVENUES 421,065.00 3,921,940.00 3,123,122.30 668,356.20 3,923,845.00 2,828,636.00 889,101.10 4,855,907.00 3,353,538.30 992,634.80 5,390,474.00 4,136,532.90
Cost of Goods Sold 370,283.40 2,268,641.00 2,081,030.00 356,473.30 2,224,875.00 1,806,817.80 376,670.90 2,464,580.00 2,030,500.70 316,304.20 2,517,374.00 2,117,654.50
GROSS PROFIT 50,781.70 1,653,299.00 1,042,092.30 311,883.00 1,698,970.00 1,021,818.20 512,430.20 2,391,327.00 1,323,037.50 676,330.70 2,873,100.00 2,018,878.40
Selling General & Admin
Expenses, Total 391,199.40 863,492.00 543,082.00 407,176.30 925,403.00 529,454.00 446,614.80 956,394.00 523,597.20 523,972.50 1,081,944.00
765,662.90
Depreciation & Amortization,
Total 40,578.00 175,294.00 94,129.20 72,943.70 202,841.00 94,402.60 37,362.60 245,801.00 -- -- 209,586.00 --
OTHER OPERATING EXPENSES,
TOTAL 431,777.40 1,038,786.00 -- 480,119.90 1,128,244.00 -- 483,977.40 1,202,195.00 -18,507.30 523,972.50 1,291,530.00
39,758.20
OPERATINGINCOME -380,995.70 614,513.00 637,211.20 -168,237.00 570,726.00 623,856.50 28,452.80 1,189,132.00 505,089.80 152,358.20 1,581,570.00 805,421.20
Interest Expense -30,554.20 -204,168.00 404,881.10 -20,797.50 -228,591.00 397,961.70 -10,546.20 -198,439.00 817,947.70 -38,612.90 -144,653.00 1,213,457.20
Interest and Investment Income 294.5 63,376.00 -125,720.30 1,148.10 29,435.00 -70,789.10 932.1 33,720.00 -65,965.80 4,258.50 43,591.00 -139,048.70
NET INTEREST EXPENSE -30,259.70 -140,792.00 45,837.00 -19,649.40 -199,156.00 47,654.30 -9,614.00 -164,719.00 59,290.70 -34,354.40 -101,062.00 68,895.80
Income (Loss) on Equity
Investments -- 430 -79,883.30 -- 140 -23,134.80 -- -- -6,675.10 -375.7 --
-70,153.00
Currency Exchange Gains (Loss) -131,194.90 -202,121.00 742 94,565.00 230,193.00 -32,471.10 -2,312.90 59,318.00 -12,577.90 -8,056.70 10,581.00 -3,677.70
Other Non-Operating Income
(Expenses) -6,660.30 -53,909.00 -23,960.70 -48,175.50 -41,211.00 7,193.70 -26,803.30 -58,662.00 -- -67,991.90 -7,381.00
--
EBT, EXCLUDING UNUSUAL
ITEMS -549,110.60 218,121.00 301,779.10 -141,496.90 560,692.00 349,549.40 -10,277.50 1,025,069.00 798,694.70 41,579.50 1,483,708.00 1,139,626.50
Merger & Restructuring Charges -- 12,773.00 -- 54,028.40 -- -13,483.60 -- -- -91,557.40 -- -- -1,943.70
Gain (Loss) on Sale of
Investments -- 5,206.00 453.3 -- -- 2,294.40 -672.8 -- -2,948.50 -- -- -12,720.20
Other Unusual Items, Total 380,615.80 -- 668.7 -60,013.40 -- -- -- -- -- -- 26,816.00 --
Other Unusual Items 380,615.80 -- 668.7 -60,013.40 -- -- -- -- -- -- 26,816.00 --
EBT, INCLUDING UNUSUAL
ITEMS -168,494.80 236,100.00 302,901.20 -147,481.80 560,692.00 338,360.20 -10,950.30 1,025,069.00 704,188.70 41,579.50 1,510,524.00 1,124,962.50
Income Tax Expense -17,810.50 71,120.00 163,988.90 5,185.50 164,024.00 136,414.90 -14,606.50 280,850.00 200,516.40 15,273.00 385,353.00 386,925.00
Minority Interest in Earnings 12.5 1,975.00 -35,184.70 0.1 -11,051.00 -40,185.30 -0.1 -14,001.00 -74,484.80 -46.5 -54,968.00 -130,429.60
Earnings from Continuing
Operations -150,684.30 164,980.00 138,912.30 -152,667.30 396,668.00 201,945.30 3,656.20 744,219.00 503,672.30 26,306.50 1,125,171.00
738,037.60
NET INCOME -150,671.80 166,955.00 103,727.60 -152,667.20 385,617.00 161,760.00 3,656.10 730,218.00 429,187.50 26,260.00 1,070,203.00 607,608.00
NET INCOME TO COMMON
INCLUDING EXTRA ITEMS -150,671.80 166,955.00 103,727.60 -152,667.20 385,617.00 161,760.00 3,656.10 730,218.00 429,187.50 26,260.00 1,070,203.00 607,608.00
NET INCOME TO COMMON
EXCLUDINGEXTRA ITEMS -150,671.80 166,955.00 103,727.60 -152,667.20 385,617.00 161,760.00 3,656.10 730,218.00 429,187.50 26,260.00 1,070,203.00
607,608.00

Analysis on VIVA’s Internal
Environment
20

Core Competence
• Focuses 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
VIVAnews.com.
• Through integrated operational synergies, VIVA has been able to push cost
efficiencies and operational stability and enhance its competitiveness in order to
compete amid intense competition in the Indonesian media industry.
• In order to expand distribution of its content, VIVA has undertaken various
cooperative proceedings with the telecommunications provider and has taken
advantage of social media networks so that its content can be received via mobile
phones and internet platforms.
21

VIVA’s Climbing a growth staircase
22

Capability platform
23
• The emphasis on the five main pillars of the
company. The five main pillars are
– A healthy financial performance,
– The organizational structure is responsive to changes,
– System and a work environment that is modern and
dynamic,
– Human resource management the competitiveness of
high-power and cultured,
– As well as the consistent application of good
corporate governance (Good Corporate Governance-
GCG).

• Being media company option manufacturer ( advertisers ) through good
relations and communication more intensive cooperation and more
comprehensive.
• Into parts, not just a spectacle, of Indonesians through is 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,
especially where viva can 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.
24
Value Proposition

VIVA’s Business model Canvass
25
Key Partners
Advertiser
Ads Agency -
Foreign News Agency (APTN,
SNTV, VOA)
IT Vendor (JAVA & Linux)
Broadcasting infrastructure
Vendor
Social Media/ Social
Network
Universities
Telecommunication
Provider (TELKOM, Indosat)
Key Activities
Program Design
Program Developing
In-House Production
Marketing
Selling
R&D
Implementation of Good
Corporate Governance (GCG)
CSR
Technology Development ((3G
Satelite)
Learning Center
Value Proposition
Focus Provision
content news, sport
and lifestyle
Providing a Good
Program
Providing 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 Team
IT Expert
Employee
Journalist
R&D Team
Marketers
Channel
Free-to-Air Television (FTA) –
National (ANTV & tvOne
Online Media (Website)
Portal Online Media (Portal
VIvanews.com)
Advertisement
Marketing Kit
Cost
Operational Cost
Program Development Cost
Marketing Cost
General & Administrative Cost
Research & Development
ICT Cost
People Development Cost
Revenue Stream
Advertising Revenue
Sponsorship
Investor
Partnership
In-House Production

Review of VIVA’s past/current competitive strateg(ies)
26
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
of
Good 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
Communication
s (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.
“Bakrie
Learning
Center” dan
“KampusOne”
Conducting the
process of
expanding
access to
broadcast and
production
process is
commercialized

Financial Highlight 2007-2011
27

Consolidated
Income
Statement
28

VIVA’s New Business Model Canvass
30
Key Partners
External :
Advertiser
Ads Agency -
Foreign News Agency (APTN,
SNTV, VOA)
IT Vendor (JAVA & Linux)
Broadcasting infrastructure
Vendor
Social Media/ Social
Network
Universities
Telecommunication
Provider (TELKOM, Indosat)
Internal :
Editorial Dept
HR Dept
IT Dept
GAL Dept
Market Dept
Finance Dept
Other BU’s
Key Activities
Program Design
Program Developing
In-House Production
Marketing
Selling
R&D
Implementation of Good Corporate
Governance (GCG)
CSR
Technology Development (3G
Satelite)
Learning Center
Value Proposition
Focus Provision
content news, sport
and lifestyle
Providing a Good
Program
Providing a Good
Quality of Program
Providing Unique &
Interesting Program
Providing Online
Portal News
Multi platforms
Create business
information program
Customer Relation
Event
Program
Community Program
Customer Segment
SES ABCD
(Urban &
Sub Urban)
Key Resources
Creative Team
IT Expert
Employee
Journalist
R&D Team
Marketers
Digital Media Expert
Publisher Expert
Channel
Free-to-Air Television (FTA) –
National (ANTV & tvOne
Free-to-Air Television (FTA) – Local TV
Print Media
Pay TV
Radio Station
Digital Media
Online Media (Website)
Portal Online Media (Portal
VIvanews.com)
Advertisement
Marketing Kit
Mobile Device
Cost
Operational Cost; Program Development Cost; Marketing Cost; General & Administrative Cost
Research & Development; ICT Cost
People Development Cost
Revenue Stream
Advertising Revenue;
Sponsorship; Investor; Partnership
In-House Production Revenue
Content Provider Revenue

Three horizon framework
31
HORIZON 1
Extend and defend core
businesses
HORIZON 2
Build emerging businesses
HORIZON 3
Create viable option
PORTOFOLIO
MOMENTUM
Resources allocation to boost
portfolio.
VIVA’s capability represent source
of advantage
Exploited the VIVA’s capability into
new market
New partners
Build new businesses (radio,
news paper and magazine)
MERGER &
ACQUSITION (M&A)
Global Recognition
Global Presence
Brand Equity
co-operation with
foreign news agencies
SHARE GAIN
VIVA drive increase
commercial advertising,
increasing market share and
create operational excellence
VIVA’s proposition and/or delivery
model with constantly present
content program line with trends
interest viewers, and lifestyle
obviously with the best quality
broadcast;
the repair quality of content by
airing programs unique and
interesting
Multiplatform media business model

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. Adds sports content platform for distribution.
5. Develop content distribution through the internet platform.
6. Maintains and strengthens the company's position as the
market leader in news coverage
33

Implementation (2)
Increase ad revenue VIVAnews is as follows:
1. extending the market segmentation of advertising towards
products for target women with a way to make portal specific
to a target market of women (VIVAlife).
2. Expand market potential towards products for soccer fans
with a target market how to create special web VIVAbola.
3. Expand and develop more programs are community-based
interactive (photo blog contest, competition, etc.).
4. Developing activities off commercial water aligned with
content VIVAnews (fun bike, cooking class, etc.)
34

Managing And Sustaining Profitable Growth Analysis for VIVA

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