Pacific Media Watch
Surabaya Post, Observer close over financial problems

Title -- 3709 FIJI: Surabaya Post, Observer close over financial problems
Date -- 23 July 2002
Byline -- None
Origin -- Pacific Media Watch
Source -- via John M. Miller,,, 23/7/2
Copyright -- Laksamana.Net
Status -- Unabridged

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July 23, 2002


By the Editor

The Surabaya Post, a long-running daily newspaper published in East Java has
folded because of financial problems.

Family shareholders of PT Surabaya Post, the publisher of newspaper,
liquidated the company at a meeting on Monday (22/7/02).

"The meeting decided to liquidate PT Surabaya Post because management could
no longer finance the company's operations," PT Surabaya Post president
director Iwan Jaya Azis was quoted as saying by state news agency Antara.

The meeting did not discuss other matters, such as severance pay for
employees or reviving the publication under a new format.

Azis said the shareholders would meet in Jakarta on Wednesday to discuss
plans to sell the company's assets within three months, so that management
will be able to provide redundancy payouts.

"While awaiting the conclusion of the sale process, management will continue
to meet the employees' entitlements, specifically their salaries," he said.

Surabaya Post ceased publication in May 2002, prompting scores of the paper's
staff to stage rallies demanding a written guarantee of severance pay.

The paper's website still exists but is bereft of recent news updates.

The paper commenced publication in 1953 and had suffered flagging sales in
recent years because of competition from newspapers in the Jawa Post Group.


Another long-time newspaper that also kicked the bucket was Indonesia's
oldest English language daily, The Indonesian Observer.

The daily indefinitely "suspended operations" in June 2001 because of
financial problems. In a nutshell, the paper wasn't selling enough copies to
break even and couldn't afford to pay its printing costs.

Despite being taken over by affluent media baron Peter F. Gontha in 1996, the
Observer never came close to achieving the sales figures of its main rival,
The Jakarta Post.

The hapless paper tried many splashy tactics to boost its circulation over
1997-2001, such as color photos and filthy jokes, but it could rarely match
the quality of the Post. To be fair, the Observer never intentionally
included X-rated jokes - the problem was that the so-called "journalist"
filching the gags from an internet site usually had no idea that he was
putting disgustingly crude (but often hilarious) humor into the paper, as his
command of English was far from fluent. What's worse is that senior
management rarely bothered to read a lot of the stuff that was appearing in
the paper until they began receiving complaints.

The Observer was founded by the late Burhanuddin Muhammad Diah and his wife
Herawati Diah in 1955 to coincide with the first Asia-Africa Conference, in
Bandung, West Java. In a nation where English is not widely spoken, the paper
never set out to become a high-selling money spinner.

After appearing without fail for decades, the Observer's sales began to slump
after the Post was launched in 1983. By 1995 the Observer's circulation was
down to only 3,000, while the Post boasted a daily print run of 40,000.

Herawati put out an SOS for someone to help the paper meet its costs and
Indonesia's pioneering commercial television magnate Gontha came to the

It was unfortunate timing for Gontha - a close business associate of
ex-president Suharto's middle son Bambang Trihatmodjo - when he bought a
controlling stake in the Observer from Herawati in 1996. At that time, he
intended the Observer to become primarily a business newspaper, as his
connections to the Suharto clan would have made it impossible for the paper
to provide candid reports on social and political unrest.

A few months after the Observer's lavish relaunch bash at a five-star hotel,
the Asian financial crisis reached Indonesia in July 1997 and eventually led
to the fall of Suharto in May 1998.

The demise of the rupiah and the Suharto administration did not bring about
an instantaneous end to Gontha's fortunes. With a combination of charm,
charisma and business acumen, the former American Express and Citibank
executive managed to remain a major player in the Indonesian media industry
for a few more years, but ended up cutting his losses and sold most of his
interests in the media empire he had created. These days he's out of the
media loop and little is seen of him.

Although Gontha pulled through the post-Suharto transition without becoming a
pauper, he was unwilling to continue throwing his money down the plughole at
the virtually bankrupt Observer.

There are some fundamental reasons why the Observer never achieved the
success of the Post.

The Observer under Gontha's control never had a list of objectives or goals
that were spelled out to its editorial staff. The Post, on the other hand,
aimed to "improve the standard of English language media in Indonesia" and
"produce a quality newspaper with an Indonesian perspective". Other goals
were to "present to the public a newspaper of the highest quality that would
provide readers with all the news that was not only fit to print, but that
would deepen their insight into the very workings [of Indonesia]".

The Post set out to bring together some of the best Indonesian journalists
and editors in order to be able to produce a quality newspaper of
international standards. It also aimed to represent the different factions of
the broad, sociopolitical spectrum of the nation to be able to nurture a
truly Indonesian perspective.

The relaunched Observer did not have such lofty ideals. Its main goal was to
aggressively target members of the business community by providing more
comprehensive financial news than was available in the Post.

Instead of being given a philosophy or even a style book, the Observer
received a fresh new look and layout design. The old-fashioned masthead was
replaced with a slick design that looked just a little too much like that of
The International Herald Tribune.

Editorial staff who had in the past filed relatively impartial reports on
political events, such as the 1996 ouster of Megawati Sukarnoputri from the
leadership of the Indonesian Democratic Party (PDI) and subsequent mass riots
in Jakarta, were no longer permitted to highlight the "bad news" of

For example, when reporter Kafil Yamin went to Tasikmalaya, West Java, to
report on anti-Chinese riots in December 1996, his trenchant article was not
published. Managing Editor Taufik Darusman, who just happens to be the
brother of former attorney general Marzuki Darusman, dismissively wrote on
the submitted article that it was fine for AFP newswires, but not for the

Undeterred by Taufik's lack of enthusiasm for going after a good story, Kafil
stuck to his principles and was promptly sacked after writing an article that
pointed out the nation's top legislative body, the People's Consultative
(MPR), was not filled with genuine representatives of the public, but
actually contained corrupt members of the ruling elite, including a few
senior gangsters who provided thugs-for-hire services.

These days Kafil lives in his hometown in Bandung, West Java, and writes
articles for international wire agency Inter Press Service. As for Taufik, he
recently edited a glossy coffee table book on Indonesia that retails for
Rp689,000. Reviewers denounced the book as "flawed" and said "don't consider
it anything of substance".

Under Taufik's aloof style of leadership, staff at the Observer were strongly
encouraged to tone down any news that was considered contrary to the
interests of the Suharto family and its cronies. This was the case at almost
all Indonesian newspapers in the Suharto era, but the Observer's fastidious
reluctance to tell readers the full story resulted in the paper's lack of

Gontha came into the Observer's old office in Kebon Jeruk, West Jakarta, one
evening in 1997 to inform staff that he no longer wanted to see photos of
poor people in the paper because that sort of thing gave people a negative
impression of Indonesia.

Taufik soon told reporters that Suharto's children were no longer to be
referred to as Suharto's children. Instead they had to be described as
businesspersons. And every time Suharto's name was mentioned, it had to be
preceded with the title "President", no matter how many times Suharto was
mentioned in any given article.

Several media experts were brought in to help strengthen the paper, but many
left - disappointed after disagreements with management. Respected journalist
Yuli Ismartono and eloquent television presenter-reporter Desi Anwar were
recruited to contribute regular columns. Yuli ended up leaving the paper to
become vice president for community relations at Freeport Indonesia (she has
since left Freeport and is now with Tempo news magazine). As for Desi, she
left the Observer to join Astaga!com and then Metro TV.

Also recruited was veteran journalist Keith Loveard, former Jakarta bureau
chief for Asiaweek magazine, which folded a few years after his departure.
Frustrated that his common sense suggestions on how to improve the paper were
accepted in meetings but then ignored in practice, Loveard also left the
Observer and Gontha's Datakom Asia group. He went on to start up his
home-grown news analysis website and later joined
to kick this portal's two original staff into action.

One of the many reasons for the Observer's failure under Taufik Darusman was
that it failed to emerge from the old mentality of the Suharto era that
everything would be all right as long as the authorities were kept happy.
There was never an esprit des corps among staff to produce the best newspaper
possible. In fact, it often appeared that some staff were competing to see
who could do as little possible. Perhaps they were just trying to emulate the
managing editor.

Journalistic integrity was sometimes compromised when non-newsworthy articles
- in other words, corporate press releases - were published under the guise
of being news.

Employees occasionally received "gifts" from major conglomerates such as
Indofood and Texmaco. Others had no qualms about pocketing envelopes stuffed
with money. Staff of Jakarta Governor Sutiyoso provided funds that kept at
least two of the Observer's staff quite happy.

Any gluttons for punishment with the misfortune to possess a pile of back
issues of the Observer should flick through and look at all the photos of
Sutiyoso (usually appearing on page four). They were printed not because of
the governor being the most photogenic guy in the city, but simply because
money had changed hands.

Some senior staff took the attitude that "the boss and his friends are rich"
so nothing else matters, least of all the quality of the articles in the

A basic problem faced by the Observer was that it was more expensive than the
Post. When it froze its operations on June 6, 2001, the Observer was selling
for Rp3,500 a copy, while the Post cost Rp2,500. Soon after the Observer's
demise, the Post decided to take full advantage of its sudden monopoly on the
English language daily press and whacked its price up to Rp4,000.

Nonetheless, according to Taufik, the Observer never really closed down. In
June 2001 he told the Post that the Observer had resorted to temporarily
suspending publication.

"The primary reason? The printer has just refused to print the newspaper.
There are certain financial obligations that we need to honor, which to date,
we have not," he said.

"It is not that we are closing down, just freezing our operations
temporarily," he claimed.

"We have informed our employees that this situation is temporary...they have
decided to stick with us," he added.

Well, that's all actually very far from the truth. Gontha had previously
warned the paper's staff that if circulation didn't improve he would pull the

And a few days before Taufik's comments to the Post, Gontha had told him of
his intention to close the Observer. A reliable source who was present at the
meeting says Taufik responded that closing a newspaper and making staff
redundant was a "very sensitive issue". Gontha allegedly replied that Taufik
should have thought of that during his years at the helm of the paper.

What's interesting is that this meeting took place around the time that
Taufik's brother Marzuki Darusman was dismissed as attorney general over his
failure to prosecute crooked tycoons. Cynics said the fall of Marzuki may
have been what prompted Gontha to decide that it was time to call it a day
with Taufik and the Observer.

Taufik's claim that the Observer's staff had agreed to stay on at the paper
was met with great incredulity.

The fact was, most of them had their feelers out for new jobs and many ended
up moving to none other than The Jakarta Post. Among those who made the shift
(you can look for their names in the Post) were reporters Kurniawan Hari,
Nafik Abdurrahman, Bambang Nurbianto, Musthofid, Dadan Wijaksana, Adianto

Also making the move to the Post were three of the Observer's layout
operators: Kustriono, Sunaryo and Nur Aziz (alas their names don't get a
mention in the Post, whereas the Observer listed just about all of its staff,
naturally with the exception of office boys and illegally hired foreigners).
Even an American subeditor, Rich Simons, jumped from the sinking ship to the

So who were these people staying on at the Observer? Okay, there were a
couple of office boys who stayed put. But interestingly, an expatriate
subeditor who had been shown the door by Taufik over disagreements on
editorial policy was brought back into the fold by Gontha to maintain an
online edition of the Observer, which lasted until a few weeks ago.

That expatriate, the somewhat curmudgeonly Bill Guerin, now runs his own news
portal The Jakarta Eye and writes a weekly column for The Asia Times.

Editor's note: This article was written by a disgruntled former employee of
the Observer who happily quit the newspaper in January 2001 to take on a job


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