Latin America’s TV Buyers on $1.5 Billion Spree

By Dom Serafini

According to Nouriel Roubini, the New York University professor who gained prominence for predicting the global financial crisis, Latin America has been quick to make progress, with signs of economic upturn abounding, especially in Brazil. In fact, Roubini believes that recovery in emerging economies will outpace that of developed nations.

Televisa’s Alberto Ciurana
Televisa’s Alberto Ciurana

It is with this spirit that VideoAge undertook a massive study to determine the key Latin American territories and the major program buyers in each territory. We were not concerned with the genre of programs acquired or the volume of programs purchased, but simply with the annual acquisition budget allocated to each TV outlet. These budgets excluded sports rights such as football, the Olympic Games or Formula One car racing.

Latin America comprises 21 countries, plus 22 Caribbean islands, of which Puerto Rico and the Dominican Republic are the largest TV territories (Cuba is not yet a major TV territory, but many expect it soon will be). The millions of viewers in these territories don’t even take into account the 28 million Spanish-language (Hispanic) viewers in the U.S.

Latin America is a TV universe of 91 million TVHH served by 120 terrestrial TV networks requiring close to 700,000 hours of programming per year.

This vast area is also served by 150 Pan-American cable and satellite TV networks (the “Pan-regionals”) and has some 13 million pay-TVHH subscribers (through cable, MMDS, DTH and broadband).
In 1995, a VideoAge special report valued the global Latin American market (including pay-TV) at $500 million, a 48 percent increase from 1992. Of this, the U.S. studios’ (MPAA members’) share was $440 million, while members of the Independent Film & Television Alliance (IFTA is a U.S.-based international association) generated $31.5 million. The remainder was shared among the rest of the international producers and syndicators around the globe.

Currently, this program market is valued at $1.5 billion, meaning that it has tripled over a 14-year period, aided by the addition of telcos. The $1.5 billion represents 10 percent of world TV sales. Of that, 84.6 percent is taken by U.S. studios. Of the remaining 15.4 percent ($230 million a year), IFTA members take $173 million, Latin American producing countries get $48 million and the balance goes to the rest of the international sellers. Countries such as Spain and Italy, which share many cultural similarities with Latin American countries, have in essence lost Latin America to the U.S., the U.K. and Canada.

The top U.S. seller is Warner Bros., followed by Disney. Sony, NBC Universal and Fox all have an equal share of the market, with Paramount and MGM trailing.

Pan-regionals: $15,000 (low-end) $20,000(mid-range) $25,000 (high-end)
Brazil: $15,000 $20,000 $25,000
Mexico: $10,000 $15,000 $20,000
Argentina: $3,000 $4,000 $5,000
Chile: $3,000 $4,000 $5,000
Venezuela: $3,000 $4,000 $5,000
Columbia: $2,000 $3,000 $4,000
Ecuador: $1,000 $1,500 $2,000
Puerto Rico: $1,000 $1,200 $1,500

In terms of price range per one-hour of a television series or TV movie, the region is structured per the box above.For television product like documentaries and children’s shows, prices are at least 50 percent lower than those indicated above. License fees of non-commercial TV series and PBS-type TV movies are also lower.

For the U.S. studios, Puerto Rico is counted as part of English-language U.S. domestic sales, and only two TV outlets (see listings on page 20) buy Spanish-language rights.

For television product, the whole region (including the Pan-regionals) is worth up to $102,200 per hour (with a low of $55,900 and a middle range of $80,700).

For theatrical movies, the region is generally worth about 15 percent of its negative costs. Other price ranges for commercial movies are:

Brazil: $25,000 to $250,000
Mexico: $15,000 to $225,000
Argentina: $10,000 to $75,000
Chile: $5,000 to $40,000
Venezuela: $5,000 to $40,000
Colombia: $5,000 to $35,000
Ecuador: $5,000 to $20,000
Perú: $5,000 to $20,000

Some of the Pan-regionals operate under an artificial market — especially the studio partnerships –– and therefore the prices of movies are capped. The Atlanta, Georgia-based LAPTV, for example, is a partnership between Fox, MGM and Paramount. NBC Universal is no longer part of the LAPTV partnership, but still has an exclusive pay-TV deal with it. The Miami, Florida-based HBO Olé is a partnership between Warner Bros., Sony Pictures and Walt Disney. For the U.S. studios, the pay-TV market in Latin America is worth at least $225 million a year due to these partnerships and has two revenue streams: license fees and dividends.

The five leading Latin American production countries (Mexico, Brazil, Argentina, Colombia and Venezuela) mostly air their own homemade content on their flagship stations, but do tend to buy content for their other TV channels. For example, programming on Mexico-based Televisa’s flagship station, Canal 2, is fully home-grown, but the group buys shows for its three additional channels — Canal 4, Canal 5 and Canal 9 — in addition to its pay-TV services. Brazil’s Globo TV, on the other hand, has one channel that it typically programs with homemade fare, and one pay service. Brazil’s SBT only buys for its own channel and has a long-standing output deal with Warner Bros., which is now estimated to be worth at least $80 million for a four-year period.

With their home-grown productions, the five leading Latin American countries generate an estimated total of $95 million per year from program sales in the international TV market. Recently, some of the Pan-regionals, like Fox, have started producing original content.

Of the 21 countries in the LatAm region, nine key Latin American territories plus the Pan-regionals represent about 90 percent of the region’s total TV program acquisition investments. They are: Brazil, Mexico and Argentina, followed by Chile and Colombia, Venezuela, Ecuador, Puerto Rico and Perú.
However, in terms of volume, some smaller territories such as Chile and Ecuador — which do not produce much local fare — buy many more programming hours than larger countries, just at much lower license fees. Other high-volume/low-fee buyers include Panama, Costa Rica, El Salvador and Honduras.

Rede Globo, Disney Pump Up The Volume

The invitation to the announcement of an agreement between Disney Media Network Latin America (DMNLA) and Brazil’s Rede Globo promised something special. And indeed it delivered. The setting selected was the 15th floor of the Viceroy Hotel in downtown Miami, Florida. Guests passed the rooftop pool and reached the spa below where DMNLA had set up two rooms: one for the announcement, the other for refreshments.

A delegation of four people came from Brazil, including Suzy Ubing from the legal department and Roberto Buzzoni, Rede Globo’s program director.

The Disney delegation was headed by Fernando Barbosa, svp of Production and Distribution at DMNLA, and assisted by Henri Ringel, Jack Morera and Fabiola Bovino.

The press corps was out in full force, with journalists flying in from London, New York, Montevideo, Uruguay and Brazil, as well as a large number of local media.

Barbosa would not disclose the dollar value nor how many hours per year the agreement would cover, simply stating that is was a “volume deal,” and not an “output deal.”

In a “volume deal,” the station has a limit on how much product they have to take. For example, say, four one-hour series, two half-hour series, or 200 films per year. The studio can then go to other networks and make an additional “volume deal”.

But Barbosa explained that programs Globo doesn’t take may be sold to other FTA networks in Brazil, but because of the special relationship with Globo, this would be done only in accordance and with approval from the network.

In an “output deal,” the network must take everything that a studio produces. This means the studio only has one customer in the market.

Basically, the agreement between DMNLA and Globo is a renewal of a similar deal that started in 2005. The new one will be in force for the next four years and include exclusive free-to-air (FTA) rights for animation and other series and movies, including those from Disney’s divisions: Touchstone, Hollywood Pictures, Miravista, and Pixar, as well as product from Lionsgate that Disney distributes. The agreement also covers FTA rights for the Academy Awards broadcast.

According to Buzzoni, Disney’s product will fill schedules of all dayparts, taking into consideration that close to 90 percent of Globo’s programming is produced in-house.

Official figures put this in-house annual programming output at 2,500 hours of telenovelas and 1,800 hours of news programs, which still leaves an estimated 1,500 hours a year to outside acquisitions.

In addition, Buzzoni said that all dubbing into Portuguese is done by Disney, which maintains a full office in Brazil for those kinds of operations. DMNLA also maintains regional offices in Argentina, Chile, Mexico and Venezuela, with the headquarters in Miami.

Thus, Disney had a great time this November, gaining China’s approval for a theme park in Shanghai on top of this program volume deal with Brazil.

Full reports with charts, expenditures by territory and each network's acquisition budgets are featured in the PDF version of this issue.