ADOI Blog

WHEN TWO MEDIA TITANS CLASH

Ham on 09 2, 2008

A storm brewing among two media giants is destined to shake up Indonesia’s broadcast industry!

Two of Southeast Asia’s richest tycoons, Malaysian T. Ananda Krishnan and Indonesian James Riady, who formed an alliance in recent years are now facing breaking point in their partnership. A Straits Times Singapore article revealed
some troubling details and I quote largely from their report…

The partnership began in early 2005 with Astro’s (Ananda’s baby) entry into a joint venture to operate a pay-TV business in Indonesia through a Lippo subsidiary (Riady owns the Lippo Group), PT Direct Vision (PTDV). The subsidiary owned a legal multimedia licence and the tie-up soon led to other JVs. In April 2005, Ananda-controlled Maxis paid US$100 million (RM330 million) to acquire a controlling 51% interest in Lippo’s wholly owned cellular telephone company Natrindo.

But their joint venture into the pay-TV business has turned hostile with their businesses engaged in a legal battle. Allegations of embezzlement and fraud, plus charges that unauthorised payments were made to a family member of a former Malaysian premier. Relations are so bad that three employees of Ananda’s business divisions in Jakarta had to flee the country for fear of being arrested.

The turning point came in April 2007, when Ananda’s Maxis bought out Lippo’s remaining 44% interest in Natrindo for US$124 million. Two months later Ananda sold a 25% interest in Maxis and another 51 per cent in Natrindo to Saudi Telecom for a staggering US$3.05 billion! The Riady boys went wild, as they felt Ananda had lined up the Saudi Telecom deal before he bought Lippo’s remaining interest in Natrindo and in the process deprived Lippo to profit from the Saudi sale.

Astro has reportedly ceased its licensing pact with PT Direct Vision. What happens to the existing 150,000 pay-TV subscribers remains to be seen as Astro stops delivering programmes to PTDV. Astro is said to be initiating legal proceedings for US$250 million as compensation from the Lippo Group for funds and technical services to PTDV in developing its pay-TV business in Indonesia.

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