Europe Dissed By Latin America TV

By Giovanni Verlini

Latin America is a remarkable opportunity for European media groups. Cultural and, in some cases, linguistic affinity with many nations of the old world makes the South American continent a somewhat natural area of expansion for European media companies.

Yet the history of European media presence in Latin America is patchy at best. While foreign media companies in general have had a love-hate relationship with a continent long characterised by the damming combination of protectionism, piracy and economic volatility, it’s the huge conglomerates of North America – mainly the U.S. and to a certain extent, Canada and Mexico — that have historically dominated the scene and continue to do so.

In addition, Latin America’s profile as a hub for content creation and export has also significantly grown in recent years. In other words, the margins of maneuver for European content exporters are shrinking, though opportunities still abound. After all, the Latin American TV market is made up of 100 million TV households generating approximately U.S.$18 billion a year in revenues from advertising and subscriptions combined. Not all countries appear to be equally accessible to foreign companies, though.

“Countries such as Mexico, Argentina, Brazil and Colombia are important markets for European products,” said Sesto Cifola, sales director for RAI Trade, the international marketing arm of Italian state broadcaster RAI. “In addition, satellite broadcasters covering the entire Latin American continent are growing in importance for us. The issue is that when it comes to generalist TV, competition from local productions and North American imports is strong. Latin America, however, remains an important market for us, especially when it comes to cable or satellite TV,” he said.

According to a 2010 report by media research specialists SNL Kagan, over the past two years, the Latin American pay-TV subscriber base has grown at a compound rate of 10.6 percent. As of the second quarter of 2009, the continent’s top 10 operators had a combined subscriber base of over 16 million, a number not particularly impressive when compared to markets such as the U.K., where satellite operator BSkyB alone has around 10 million subscribers. In addition, operators across Latin America command lower average revenues per customer than their counterparts in the developed markets of Europe and North America. One thing is not missing from Latin America, though: potential for growth.

As new platforms emerge and develop in the region, there is an increase in demand for digital media content. Latin America has also seen a rise in the number of HD channels, with broadcasters requesting more HD programming.

But how big is the Latin American media cake, and how much of it is in European hands? Despite the traditional reluctance of market players to disclose numbers, it is possible to estimate that mainland European distributors command a slice worth around U.S.$9 million per year. To this, add the further U.S.$40 million in British hands. Not much when compared to the $1.27 billion gulped up by U.S. studios and the $230 million taken by U.S. independent companies. Even so, there are opportunities for well-crafted European products.

“The market is particularly favourable for fiction product, especially short series and TV movies, the so-called drama genre,” commented RAI Trade’s Cifola.

The issue of presence in the market, however, seems to be crucial for the success of media exports. “It is of paramount importance to be represented in the market,” said Cifola.

This is where Spanish and Italian operators are lagging behind, while others, such as the BBC, have taken the initiative with results to show for. In fact, the “British auntie” has held an annual sales event to market its products to Latin America and the U.S. Hispanic market for the past six years — the BBC claims this to be the region’s only television market hosted by a single distributor.

In 2009, the catalog presented to the market was remarkable in terms of both size and variety: a total of more than 35,000 hours of programming covering a wide range of genres from natural history to drama, as well as science and children’s shows. In particular, it included 6,000 hours available for digital distribution, over 575 hours of content in Spanish and 825 hours of high definition programming. The programs sold span all genres.
“Natural history, science, and factual entertainment are among the most popular genres we sell in the region, though a demand for drama as well as music and comedy has emerged as of late,” said Helen Jurado, vice president of Sales and Distribution for BBC Worldwide Latin America.

The corporation has been building a wide client base in the region. “We work with clients across Latin America, including TV Azteca (Mexico), Globo TV (Brazil), Canal 12 (El Salvador), Telefuturo (Paraguay), TBS Latin America, and HBO Latin America. We also have output deals with Globo TV (Brazil) and Ecuavisa (Ecuador),” said Jurado. The most recent additions to the client list include LAPTV and TV Brazil.
Interestingly, while BBC Worldwide seems to be promoting strong global brands such as Top Gear and Dancing with the Stars, the presence of locally-produced content is still limited — the U.S. version of the Secret Millionaire being one of the few exceptions. Other companies, on the other hand, see locally-produced content as the way forward.

It was when U.S. corporations such as Disney and Sony Pictures began remaking U.S. shows for the local market a few years ago that the move towards locally-produced content in Latin America began to emerge. European companies soon followed the example of their American counterparts, setting up offices and franchises in the region.

Leading format creator Endemol is a good example of this trend. In 2001, Endemol made forays into the leading Latin American markets of Argentina and Brazil, followed by Mexico the following year. More recently, Endemol has continued its regional expansion with the launch of domestic companies in Chile and Colombia.

The formula is a relatively simple one: combining local content and international formats to meet the demand of local audiences. However, what started as localization of foreign productions soon turned into a rather different business.

Take the often-cited example of ABC Studios’ Ugly Betty. What was marketed as a North American global series, really began as Betty La Fea, a Colombian telenovela first aired in 1999 that was exported or repackaged for over 70 markets. Only then did ABC produce a version for the U.S. market and export it to over 130 countries. This is a clear sign that Latin American content is finally being franchised all over the world, even through U.S. media behemoths.

What’s next for European media exports in Latin America, then? If past is prologue, the market promises to become an increasingly competitive environment for them.

“In the ‘70s and ‘80s, Latin America was a much bigger market for us because at that time there was little or no local production,” explained RAI’s Cifola.

To buck the trend European companies need to take action now. The future is in their hands.