Detikcom 2.0

Having bought Detikcom, how will Chairul Tanjung get a return on his investment?

By Pudji Lestari and Ardian Wibisono

Budiono Darsono.  © Ahmad Zamroni

Budiono Darsono started Indonesia’s first free news portal Detikcom in 1998 just as Indonesia was in a chaotic transition following the resignation of the late President Soeharto after 32 years of rule. The riots and other fast-moving events all lead to demand for breaking news online. As Detikcom was the only local news website at that time, an advantage it would hold for several more years, it quickly got recognition and page views. Today, despite a number of newcomers, Detikcom is still the largest news portal, ranked ninth of the most visited websites in Indonesia according to web rating service Alexa.com.

That market leadership was part of why billionaire Chairul Tanjung, Indonesia’s 18th richest man with a net worth of $1.25 billion, bought the entire company through his Para Group’s media arm PT Trans Media Corpora for an estimated $70 million—five times 2010 revenue of Rp 120 billion. It was easily the biggest deal in local online industry so far.

To those who take the risk get the reward. Budiono had gotten into the online industry by creating websites for some big print media companies through his PT Agranet Multicitra Siberkom, which he and a few close friends founded in 1995. So already having a website development company, he decided to create one for himself—literally by himself. In the early days of Detikcom he was the reporter, photographer and editor.

Para Group succeeded when six other investors, both local and international who had bid for the firm over the past several years, failed. Among the six is telecom giant PT Telekomunikasi Indonesia. The deal was signed in June in Para Group headquarters in Menara Bank Mega, Jakarta. “It took three hours to notify all the shareholders and finalize the purchasing agreement, but it was an accumulation of two years negotiation process actually,” says Budiono, 48.

Para Group has a plan for Detikcom to make the acquisition worth its expensive price tag. Ashish Saboo, director of Para Group, says Detikcom will become the central part of the group’s future strategy. It will be used to develop the Group’s existing offline businesses to go digital. “Detikcom now only offers news services, we are going to develop our existing business channels and build our businesses like media and financial services in digital platform,” says Ashish. Para Group’s empire includes media arm through Trans TV and Trans7; finance arm through a bank, securities, and insurance. It also has a retailer Carrefour and holds licenses for branded fashion items such as Mango, Prada, Tod’s, Aigner, and a tourism agency Anta Tour & Travel.

In fact the company had been moving towards monetizing its success for several years. PricewaterhouseCoopers had audited its book for the last five years, using standards of listed companies. This was done for two main reasons: as a report to the shareholders and also to prepare the company to take on new investors or go public. “We were ready to sell the company years ago,” Budiono says of the recent sale.  So seeking new investors had always been in the plans to bolster operation since the company had limited access to bank loans. Before the acquisition, the shareholders were Budiono, Abdul Rahman, Calvin Lukmantara and U.S. based Tiger Global, while some early Detikcom employees owned a small portion as well.

The Para Group’s plan for Detikcom is inline with Budiono’s expectations, saying that he had always envisioned Detikcom as more than a news site, as stated in its five-year roadmap to develop new business opportunities for the site. Some worked, some are still in a work in progress and some failed—including the idea to enter e-commerce through Detikshop. Aware of the increasing number of tablet users, Detikcom has been developing detiKios as a digital publisher and bookstore, selling e-book and e-magazine, to compete with Scoop and Wayang Force in the local market. It provides smaller files thus quicker to download.

It also builds new brand like Wollipop.com to accommodate female readers who always seek updates on lifestyle and fashion trends. “I believe this roadmap would be continued by The Para Group, in fact they could do even more. They have a retail business for example, Carrefour, imagine people buying rice or other stuff through Detikcom,” Budiono says.

Detikcom’s acquisition further highlights the country’s potential in digital media business, says David Wayne, senior vice president of Merah Putih, an investment company owned by the Djarum group. Currently, corporations allocate 3% of their advertising budgets to new media but within the next two years he estimates the allocation to grow to more than 45%. That is one of the reasons for big groups entering online media (among major players are Bakrie group with Vivanews, Media Nusantara with Okezone and Lippo with Berita Satu). He however questions Para’s expertise in this field: “Detikcom already boasts a strong brand, anyone who uses Internet knows it. Also, Para Group has no experience in the digital industry even though they are strong in content and television.”

Yet Detikcom seems to have all the right ingredients to be an even bigger success. It is the country’s most profitable local online company, generating Rp 20 billion profits last year. It has zero debt and last year’s profit is estimated to double to Rp 40 billion this year. And Budiono sees the acquisition as the way to optimize Detikcom’s potential. “There is plenty of potential we cannot yet optimize because we lack resources and capital,” he says. “Profits have doubled over the past few years but we know we have more upside. So, we came to the conclusion of letting someone who has the resources to unlock our potential and PakChairul was the best choice we had.”

*****

Coffee Break

For now, Budiono remains the editor of the site, despite having an estimated Rp 120 billion in his pocket from the sale of his reported 20% stake in Agranet. He will stay on, he says, until there’s a full transition to the new management, a process that could take a while. When that’s finished, he plans to try something completely different. “I want to get out of the arena,” he says.

So what has he got in mind? Starting a coffee shop. “My friends says that the coffee I made is good and I always wanted to open a coffee shop,” Budiono says,”I have travelled around the country to get to know many kinds of coffee and how best to serve it. In this coffee shop, I want to personally brew it, blending the ingredients, and serve it with my own hand to my friends. Same as I did with Detikcom—by being the founder, owner and chief editor.”First things first—he must wait to finish up this transition period. He says: “I have to retire first [before I can] open the coffee shop.”

* This story appears in September 2011 issue of Forbes Indonesia magazine. My note: in this article, especially in the last part where it is mention about Budiono pocketing Rp120 billion from the sales of Detikcom, we (me and Ardian) took very conservative estimation. According to a document (the notarial company deed dated May 21, 2010 by notary Muhammad Hanafi SH), there are two majority shareholders in PT Agranet Multicitra Siberkom which is Tiger Global (48%) and Fresh Insight Ltd (49%). The rest own by three other companies and 13 people, which some are Detikcom employees. Budiono directly only own Rp750,000 from total paid up capital Rp 7,967,502,000 in Agranet. Even though there are several companies that may have connected with Budiono, unfortunately he did not response to any of our phone call, SMS, and email confirmation requests.

            

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s