Argentina’s Economic Crisis Brings Boom to Production

By Dom Serafini

Nowadays, investing in Argentina is not for the faint of heart. But ever since the convertibilidad, the country offers enormous potential for investments, especially in audiovisual production and co-production.

According to Ralph Haiek, president of Pay-TV at Claxson, Argentina is already experiencing a shortage of technicians for TV spots and movie production. They have recently been invaded by international producers - primarily from Puerto Rico for TV commercials and from Spain for movies - thanks to the favorable exchange rate, excellent technical facilities and the presence of skilled technicians.

Claxson, the Argentinian company whose major shareholder is Cisneros Group of Venezuela, produces 11 TV cable and satellite channels, including three premium ones.

VideoAge met Haiek during Jornadas de ATVC, the annual trade show for cable TV programming held in conjunction with the Latin America Conference of Promax (the Los Angeles-based Association of marketing and promotion executives for international TV), which took place in Buenos Aires last November.

Raul Lecouna, president of Central Park Productions, one of the three largest production studios in Argentina, stated that before the convertibilidad - when the peso was tied with the U.S. dollar - Argentina produced six telenovelas a year. Now, with the free exchange, the country produces 11. And, from a cost of $40,000 per hour, telenovelas are now produced for $12,000 per episode, with $4,000 for below-the-line costs and the rest for the artistic/creative portion. Usually, a telenovela consists of 120-150 episodes, while a miniseries is composed of 23 episodes. Miniseries are more expensive, costing up to $40,000 per hour, because they receive a "movie" treatment. Still, it is less expensive than producing them in a place like Spain, where the cost is around $300,000 per hour.

Argentina's five terrestrial networks and the myriad of cable and satellite channels prefer to produce their scripted programs locally instead of acquiring them from abroad, even if the cost per hour is now about $2,000 versus the $8,000-$10,000 cost charged prior to the crisis. Local product is more popular with viewers and brings in extra revenue through international distribution, especially in Asia and Eastern Europe. In this case the producer gives the international rights to the network's sales division in exchange for 75 percent of the revenue.

"The positive aspect of the crisis," said Haiek, "is that we purchased our state-of-the-art production equipment when our currency was tied with the U.S. dollar, and now we take advantage of all these technical facilities as well as a favorable exchange rate." One of Claxson's TV channels, "Infinito," is now made up of 90 percent local production, whereas prior to the crisis, local production accounted for only 30 percent of its schedule. "It's more expensive to produce than to purchase programs abroad, but we get to keep the content rights," said Haiek. Content is now utilized for international sales as well as to expand the channel throughout the entire Latin American area.

Today, "Infinito" has 10 million subscribers, including 3.4 million in Argentina. Local product for "Infinito" (reality/documentaries), costing about $2,000 per hour (versus $1,000 for a purchased reality-type program), allows the channel to better compete in an Argentinian TV universe of 117 channels (45 cable and 72 satellite). Furthermore, local programming is better appreciated by cable TV systems competing within the same area (in Buenos Aires, for instance, users can pick among three cable and one satellite TV system).

An additional consequence of the economic crisis is that TV networks, to lower their overhead costs, farm out production to independent studios, sometimes bringing in co-producers. Central Park is currently co-producing with Israel, Spain and Russia. Italy, which is not involved in TV production, is active with theatrical co-productions.