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OPEN SKIES BECKON

Under President Suharto’s open skies policy, Indonesian broadcasting is being transformed into a multichannel smorgasbord of free-to-air and satellite-delivered channels.

The TV explosion shows the growing maturity and economic aspirations of the world’s fourth most populous nation.

The economy is growing at a steady 7% clip (although inflation is 10%, worrying the World Bank), and most showbiz sectors are expanding. Per capita gross domestic product has leapt from just $75 in 1966, when Suharto took office, to $884.

Aiming to ride the wave of rising prosperity, direct broadcast satellite licensee Indovision is aggressively marketing five international channels, including HBO Asia and CNN, and Rupert Murdoch’s Star TV is prepping 16-20 channels to launch later this year.

Satelindo’s Palapa bird C-1 is due to fly next January with its 34 transponders fully booked by an array of channels from the U.S., Indonesia, Malaysia, France, the Philippines, Australia and elsewhere. Indovision’s Indosat 1, skedded to launch late next year, will usher in at least eight new pan-Asian channels, including MGM Gold.

Bidding from Indonesia’s six terrestrial networks has seen the U.S. majors’ revenues from free-TV rocket from $3.9 million in 1993 to $7.3 million last year. In 1990, when there was just one privately-owned web, RCTI, plus pubcaster TVRI, Hollywood harvested a meager $2.2 million.

Local TV production is booming. Ironically, however, this has pushed up production budgets, making U.S. films and action series even better values.

Indonesia has evolved into a meaningful B.O. market for the Hollywood studios since they negotiated revenue-sharing distrib deals in 1991. Last year, the majors collectively earned some $13 million in rentals, up significantly.

After abandoning the video market to piracy, Hollywood distribs are finally making concerted efforts to carve out a legitimate homevid biz.

However, paradoxes abound. While Suharto has cut tariffs on thousands of items and recently opened up eight sectors previously closed to foreign investment, he has kept the shutters on several areas, including retail trade and cinemas.

Hence the Subentra group remains as the dominant distributor of U.S. and European films, and the leading exhib with the “21” theater chain.

The Motion Picture Assn., the Hollywood majors’ trade association, has been lobbying the government to open up the market.

Despite steady B.O. growth each year, the total number of screens has dropped to about 1,800 since 1992’s peak of 2,290, according to theaters’ association chairman Johan Tjasmadi.

Harris Lasmana, Subentra’s exec VP in charge of U.S. and European film distribution, says one reason is land prices have become so expensive that many theater owners have sold their buildings to developers.

“Some 700 to 800 screens are making money, the rest are just surviving. The middle- and upper-(class) cinemas still have a bright future,” Tjasmadi says.

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