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MNC Rides Ratings Uplift Into 2016

[This story has been updated to include January's full-month ratings and share price, as well as the latest ad spend estimates from Media Partners Asia.]

Indonesia’s biggest broadcaster, Media Nusantara Citra (MNC), could be an attractive bet for investors after ratings rebounded into pole position following a spell in second place last year, while its market cap slipped to a four-year low.

The company has sustained a three-month run with more than 40% share of the primetime audience, thanks to big hits such as Anak Jalanan or Street Children (pictured).

By the end of January, MNC’s share of primetime reached 46.5%, led by flagship channel RCTI with 30.6%.

The closest trailing group was main rival Surya Citra Media (SCM), including SCTV and Indosiar, which attracted 25.1% of the primetime audience in January, versus a 32.1% slice in December.

MNC’s tumbling share price, which has continued into this year amidst a broader selldown, largely reflects sizable debt denominated in US dollars, heightened by currency depreciation.

Indonesia’s ad market is also depressed. The latest numbers reported by industry analysts Media Partners Asia (MPA) show a 3% decline in net advertising for Indonesia’s dominant free TV sector last year.

MPA projections call for a 4.5-5.0% rebound in free-to-air advertising this year but the firm cautions on any significant growth over the next six months.

Both MNC and SCM – both heavily reliant on ad revenue – still managed to increase their share of the pie in 2015, while rivals such as Trans Media experienced a deep slump.

Meanwhile, MNC can also expect an uptick in free cash flow and Ebitda as content synergies bring down costs, once work on new studios is completed this quarter.

The company is on track to generate Rp2.8 trillion (US$200 million) Ebitda for its FY 2015 on Rp6.7 trillion in gross sales.

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