Indonesian media major Surya Citra Media (SCMA) launched a new company this week: Indonesia Entertainment Group (IEG), 72% owned by SCMA and 28% owned by SCMA parent Emtek.

It’s the start of a long journey to fulfil SCMA director Alvin Sariaatmadja’s vision of a domestic content dynamo with strong IP and international aspirations.

IEG will focus on content development and library monetization, as well as content creation for international markets.

It’s also a pragmatic move as IEG creates a driver for better utilization of SCMA’s studios, with some near-term cost efficiencies for both SCMA and Emtek.

Under the terms of agreement with SCMA and its parent Emtek, the structure around IEG has five key levers:

1. A 50.1% interest in local animation producer Animasi Kartun Indonesia (AKI), which IEG will buy from Emtek for Rp15 billion (US$1.2 million).


2. The fully amortized library of top three free TV broadcaster SCTV (part of SCMA), which IEG will acquire for Rp14.8 billion.


3. The fully amortized library of top five free TV network Indosiar (also part of SCMA) which IEG will buy for Rp6.2 billion.


4. IEG has also acquired 70% of AS Productions, which produces many of SCTV’s primetime shows.


5. Various intra-company and related party land sales, totaling Rp635.5 billion, have been transferred to an IEG subsidiary.

Drama and TV movie specialist Screenplay, another big local producer which is 51% owned by SCMA, has not been included in this transaction.

Various news and reality production and talent functions have also been left out.

Nonetheless, the move signals the start of a potentially transformative process as IEG assumes SCMA’s content and production capabilities over the medium-to-long term.

VALUABLE IP

Creating an independent content company could help develop valuable IP for distribution within Indonesia and across Southeast Asia and international markets, meeting demand for differentiated content across free TV, pay-TV and online video platforms.

AS Productions, established in 2012 by former employees of MD Entertainment, currently produces three shows for SCMA: Ganteng Ganteng Serigala, Madun and Samson and Dahlia.

Demand drivers for local Indonesian content have largely been restricted to the US$1.6 billion domestic free TV market, while key domestic groups such as MNC and Trans Media have leveraged large libraries to create exclusive channels for their pay-TV platforms, MSky and Trans Vision respectively.

MNC has also started to export some content overseas (i.e. Singapore).

“It’s an interesting time for the formation of such a pure-play content asset,” notes MPA director Vivek Couto.

“There are growing drivers of demand for local Indonesian content across pay and OTT platforms in Indonesia, Malaysia and Singapore,” Couto adds.

“With the global expansion of players such as Netflix and also HBO [which has started to shoot its first all-local Indonesian production], there will be growing appetite and opportunity for co-productions and joint ventures."