Erick Thohir (48) holds a lot of titles, to name a few: media and entertainment mogul, sports teams owner and, lately, chief of President Joko “Jokowi” Widodo’s reelection campaign team. But when Forbes Indonesia asked him what he thought to be his biggest achievement so far, it didn’t take him long to answer: the Asian Games 2018.
Erick was brought in to lead the Asian Games national committee in 2015 amid some concerns over the Games’ small budget and slow venue preparation. However, the successful two-week international sports event –the second biggest after the Olympics – revealed Erick’s mettle: expertise and experience in sports and the entertainment business. No less than Jokowi credited Erick’s success in pulling off the Games when he appointed him as chief of his reelection campaign for April’s presidential election.
“Our national campaign team chief, Erick Thohir, as many of you know, is a successful businessman. He owns media channels, soccer clubs, a basketball club and many others,” Jokowi said in a press briefing in September, just a few days after the Asian Games ended. “It is clear that anything he leads will be a success.”
Erick was born in a family of businessmen. His father, the late Mochamad Teddy Thohir, was the highest-ranking Indonesian in Union Carbide's country office before becoming one of the founders of Astra International, which grew into the nation's largest car dealer and conglomerate (now part of Hong Kong's Jardine Group). His brother Garibaldi “Boy” Thohir, who runs coal miner Adaro Energy as president director, is one of the largest shareholders in the company. Boy is ranked #16 with $1.67 billion of net worth in Forbes Indonesia’s Richest 2018.
However, like his father and brother, Erick built his business from the bottom. He had parlayed his savings from what he earned in the family’s restaurant business Hanamasa into the Mahaka Group in 1999, with Muhammad Lutfi, Wisnu Wardhana and Harry Zulnardy as his partners. He doesn't live under the shadow of his late father or brother either, choosing media and sports as his core business, indeed a rarity in Indonesia.
“Media and sports are businesses that I really like; they make me wake up early in the morning and go home late. It’s exhausting but also rewarding. From media people I can learn others’ success stories and from sports one can learn sportiveness,” says Erick, adding that “business teaches you to create synergy and value.”
“Unlike music or movies, people prefer to watch sports ‘live’, which make sports contents sometimes more expensive.”
Erick made his debut in the media business by acquiring PT Abdi Bangsa, which runs the daily newspaper Republika with Moslem readers as its biggest market, from former President B.J. Habibie’s family in 2001. He helped rebuild the troubled firm and made it a public company the year after, the first newspaper company listed at the Jakarta Stock Exchange. Erick admitted his family was a bit worried with the decision, fearing that it would lead him to a political career. In 2010, Abdi Bangsa was renamed to Mahaka Media and is now the holding multimedia company that publishes a newspaper, magazines, books, and operates TV and radio stations, outdoor and digital media with over 1,000 employees. Erick also partnered with Anindya Bakrie in PT Visi Media Asia where he is the president director in the company’s over-the-air television subsidiary ANTV.
In sports, prior to the Asian Games, Erick made huge international headlines when he and his partners Rosan Roeslani and Handy Soetedjo through International Sports Capital HK Limited in October 2013 bought 70% shares in Italian soccer club F.C. Internazionale Milano (Inter Milan) for a reported €250 million from Massimo Moratti. Erick soon became Inter’s president, replacing Moratti. Erick stepped down from the position in October and was replaced by the new majority shareholder representative Steven Zhang of Suning Group, who entered in 2016 after buying Moratti’s remaining shares and some of Erick’s. The soccer team’s performance under Erick’s leadership is debatable.
On the downside, some blamed Inter’s poor performance on Erick’s poor attendance during matches and arguably bad decision on coaches and players. Inter’s peak performance was in 2010, when the club under coach Jose Mourinho had the greatest season in its history by booking an unprecedented achievement: champion of the Treble of Serie A, Coppa Italia and the UEFA Champions League. It became the sixth European club to accomplish the treble and to date the only Italian club to ever achieved this feat.
Last year, however, Erick managed to bring back Inter to the Champions League, fulfilling his target five years ago after building a new management team, appointing a new coach, and rejuvenating the team’s players.
Erick also undeniably helped the historic club to stay afloat when the Nerazzurris were around €180 million in the red in 2013. Erick’s purchase took this debt in account and Inter’s finances were given the required lifesaver, turning around the club’s dire financial performance. Inter is now worth $606 million, according to Forbes Most Valuable Soccer Teams list, compared to $401 million in 2013. Erick also managed to grow Inter’s revenue from €164 million in 2013 to €220.
His success in the sports business was not achieved in a short period. An avid basketball fan, Erick’s investment in sports started as a CSR in a local basketball team in Jakarta, Satria Muda, nearly two decades ago. The Mahaka Foundation took over the club in 1999 and did a drastic turnaround in making Satria Muda win first place in the national league from being in last position a year before.
Later, Erick invested in the American basketball team Philadelphia 76ers, which he sold after a couple of years. He also bought shares in an American soccer club DC United and built a stadium to jack up its value, invested in Inter, and recently in September, along with Anindya Bakrie, invested in Oxford United – a soccer club that competes in England’s third tier league.
“It was all similar to the way we handled Satria Muda, which was changing the management from personal to corporate and from individual management to team management, while at the same time fixing it’s business side. We grew it and raised its income. In sports, it’s all about the team, we need to improve the players. We may also have to restructure the financing, inject fresh capital and strengthen the financial side. Last but not least is infrastructure as it adds value to the club. We don't want our assets to be harmed,” Erick says on his ways and means of doing business.
However, Erick also noted that the sports business has different characteristics from other businesses, and that appeals to him. Firstly, business deals a lot with an intangible asset: people. And secondly, the business has what Erick called a “monopolistic” nature.
“There’s only one Inter Milan in the world, this monopolistic nature made the valuation higher. In other businesses they used multiple EBITDA (earnings before interest, taxes, depreciation, and amortization), but in sports the valuation is based on revenue. Its business nature also has an enormous impact on profiling: the name Indonesia is now famous in Italy,” Erick said with a smile.
Another aspect is financing, which is challenging as local financial institutions don’t have the capacity or experience in the sector. As such, Erick has so far relied on international financing to underwrite all his investments. His impeccable reputation and well-prepared business plans play a major role in this case. He says he would never have gotten bankers’ backing without it.
On the future of his media business, Erick surprisingly says he will still focus on radio stations and out-of-home media like billboards and LED screens. Erick controls 10 radio stations under Mahaka Media and its subsidiary PT Mahaka Radio Integra with over 50% market share in Jakarta. Despite more and more new digital media entering the market, Indonesians still listen to radios quite often. Yet, Erick is also expanding into digital radio, which allows radio stations to reach a larger audience digitally. A research by Trimegah Securities showed that radio broadcasting is a capex-light business, with acquisition costs ranging from Rp 10 billion to Rp 30 billion (depending on location), which is a competitive advantage over other media.
On out-of-home, end of 2017 saw Mahaka Advertising through its subsidiary PT Avabanindo Perkasa win the tender for ads services from PT MRT Jakarta. Along with strategic partners PT Alternative Media Group, Puncak Berlian Sdn. Bhd., dan VGI Global Media Sdn. Bhd., Avabanindo will manage ads services in MRT stations in Jakarta and inside the MRT cars under 20-year contracts. Also, Mahaka is currently participating in ads service tender for the Jakarta Commuter Line railway.
“We beat 40 other competitors in the MRT tender process. Our consortium involves experts from other countries and are more experienced than us. So, this has nothing to do with politics,” Erick states.
As for his current political role, Erick pledged to put his best efforts for Jokowi. However, he is not prepared to take measures that would see his candidate win but at the same time jeopardizes his reputation as a businessman.
“The elections will end in April. I’m only 48 and still have a long way to go. My father taught me that money is not everything and that reputation is more valuable. Reputation means business. During the Asian Games none of my companies participated in tenders despite the fact we’re the experts. We have an event company, a ticketing company, even a basketball stadium, but none of them were involved.”