What I Learned from the Biggest Digital Media Deal in Indonesia
Guest Post - 12 May 2015
It’s official now, MediaCorp acquires 52% stake in Indonesia’s KapanLagi. We have been working on this deal for the past one year. Singapore-based media giant MediaCorp 52% invest in Indonesia’s KLN Group (KLN), one of the largest and most successful online media companies in the archipelago. Our role includes mapping the Indonesia Internet industry for potential investment, selecting the industry focus, sourcing the potential candidate for investment, preparing the company roadmap to be ready for the investment, negotiating the investment terms and preparing the due-diligence. Ideosource now owns shareholding option for the company and have an aligned interest with MediaCorp & KLN to grow the company by various strategic investment in the digital media space.
MediaCorp, is a group of commercial media companies in Singapore, with business interests in television, radio broadcasting & interactive media. As the largest media broadcaster and provider in Singapore, MediaCorp runs 7 television channels and 13 radio channels and the only terrestrial TV broadcaster in the city-state.
In Indonesia, KLN is the only independent digital media that is not part of a media group, naturally should be the one that Temasek explore. With combined page views of more than 1 billion per month, KLN growth is amazing and they are looking for a strategic partner to become the biggest digital media in Indonesia.
Steve Christian and Eka Wiharto are KLN’s original founders. Steve is the technical genius and the one that envision what KLN can become. Eka’s business acumen is the one that makes things simple and practical. With the KapanLagi–Fimela merger, this brings Bernhard Subiakto (Ben) & Dian Muljadi to become co-founders. Ben brings in marketing ability to grow KLN revenue and Dian brings in her vast network of influencers. Sugiono Wiyono invested in both companies that enables the merger between KapanLagi–Fimela. The vision to become number one digital media in Indonesia need this combination of leadership, skills, entrepreneurial spirit lies within the founders and the financial resources from the investor. The partnership should reflect the freedom for the entrepreneurs to achieve this ultimate goal.
Mediacorp with its regional media leadership are able to provide market access to multinational advertisers and financial resources for the company to become even more than digital media leader in Indonesia. With its regional brand leadership, Mediacorp & KLN partnership will strengthen its position as an independent media while growing the company supported by Mediacorp resources.
Ideosource’s role includes mapping the Indonesia Internet industry for potential investment, selecting the industry focus, sourcing the potential candidate for investment, preparing the company roadmap to be ready for the investment, negotiating the investment terms and preparing the due-diligence.
Ideosource now owns part of KLN to grow the company together so we will all benefit whenever our option exercised.
Lesson 1. Envision Your Story
The story was started as an invitation to present at Goldman Sach’s Consumer Tour to Indonesia. Invited to share about the Indonesian Internet landscape, we mapped the Indonesian market potential especially the vertical industry that will giving birth to billion dollar company within the next 3 years, this includes digital media, e-commerce and payment.
Temasek has been actively investing in Indonesia consumer business, and now they are looking for potential investment in Internet space. Digital media has reached its mainstream adoption and the digital advertising grows significantly within the past few years, so I recommended them to look into digital media investment. Since Temasek wholly owns MediaCorp, this industry focus would be a perfect strategy for them to get into.
Our approach has been focusing on the industry first and looking into the market landscape. By comparing the industry more mature market like US, we learn that there’s potential to invest in digital media. And by understanding the industry value chain, we see a story for potential value chain integration. And Ideosource now replicating the investment model in various industry verticals like e-commerce, financial technology and many others.
Lesson 2. There’s No Marriage without Chemistry & Trust
In the initial meeting, the KLN founders consider it’s an unrealistic opportunity to pursue since KLN are in talk for potential partnership with another group. Then I have a chance to talk to the founders to capture each of their individual aspiration. Logically, the partnership with the local partner is very good, however, there might be a deal breaker because of the aspiration for each of the founder has not been met. Without a personal trust, to gain the individual aspiration of the founder is very difficult.
Through a few meeting and discussion, the chemistry and trust between Mediacorp and KLN are formed. This is the basis why both have the vision and belief that this partnership will elevate KLN can become a regional/global player.
Lesson 3. Think of Everyone’s Aspiration
The strategic direction for Temasek and Mediacorp is to enter the biggest Southeast Asia market, Indonesia. Without the local know-how, access, and insight, it will be difficult for them to get into the market since there are culture, language and trust barrier. While the successful local entrepreneur provide this, then they are able to help with a strong financial backing and access to the region.
As for the founders/entrepreneurs, KLN have built enough muscle to challenge other Indonesia biggest digital media. And their bigger aspiration to become regional/global player can only be done through strategic partnership and heavy lifting by Mediacorp.
Lesson 4. Be Passionate About The Deal & Be Fair to Everyone
We decided it’s not wise to position potential investor as a bidder, so we wait for the chemistry and trust to come first, followed by the vision and beliefs that the partnership should benefit everyone. Working by purely financial standpoint will hurt future relationship since both parties only see the deal from a single point of view. Ideosource put itself as a mediator who adds value and bringing the partnership roadmap in which both parties will win. When each party sees the potential and future partnership may result, everyone become passionate to pursue this vision.
Lesson 5. Align Interest with Everyone
It is our believe that the future KLN can become one a great company not only in Indonesia Internet history, but put the company in the global map. This story can’t happen with only an organic process. We believe by combining organic and un-organic growth will make sure that the company can grow fully to its potential. To align our interest with everyone, Ideosource invest in this partnership together with KLN founders and Mediacorp.
Lesson 6. Share the Win
For a failed deal, there are so many things that can go wrong in the processes. And for a successful deal to happen, there’s so many people and processes involved. Every detail counts. We believe that this deal can happen because all the KLN founders and Mediacorp board share the same vision and belief.
I would like to congratulate to everyone at Mediacorp, KLN and Ideosource to make this deal happen. Let’s make history together!
- Initially published in his Medium page and republished with his permission.
Andi S. Boediman is the Co-Founder and Managing Partner of Ideosource, a local venture capital. He can be reached on Twitter @andisboediman