At the recent presentation of DirecTv Latin America, a direct-to-home satellite service backed by Hughes Communications and three Latino TV companies, Venezuelan partner Gustavo Cisneros spoke of historical figures like Simon Bolivar, and those figures’ wish for a united Latin America.
“They always dreamed of an integrated hemisphere, but it simply wasn’t possible,” the CEO of broadcaster Venevision announced. “DirecTv Latin America is a powerful instrument to speed our dream of integration.”
His words may have sounded a little premature, as the service won’t launch for another 11 months, but Cisneros himself is already well-versed in the art of pan-regional integration.
Head of the Cisneros Group (known as ODC), the multibillion-dollar conglomerate founded by his father, Cisneros has spent the last year consolidating his empire around a central business: international communications. He’s sold a score of marginal companies and plowed the cash into expanding Venevision, the jewel in the ODC crown.
Already a 25% partner in top U.S. Spanish-language web Univision since December 1992, and a 49% owner of Chilean net RTU as of early 1993, Venevision has taken four big strides over the last year: initiating a 25% purchase of Puerto Rican broadcaster WAPA (pending FCC approval); buying a stake in Caribbean media group CCN; increasing its ownership of RTU (now “Chilevision”) to 100%; and signing with Hughes.
Production is Venevision’s most visible asset. Venevision’s programming export arm racked up more than $30 million in sales – chiefly telenovelas – in 1994, making it one of Latin America’s top three exporters. Altogether, only Mexico’s Televisa (a partner with ODC in Univision) has a comparable pan-regional presence.
In Caracas, ODC’s divestments – including, last month, the CADA supermarket chain for a reported $125 million – are sometimes criticized as signaling failure of confidence in Venezuela. Certainly the home-turf picture is not bright. Venezuelan GDP has been in decline for several years, and the forecast for 1995 is no better.
But Cisneros points out that while the ad market overall is stagnant, Venevision’s share is climbing. From an audience share of 30% in 1993, the company overtook domestic rival RCTV last July, and now claims 58.5%. For the first time, fall ad presales ($130 million) more than doubled those of RCTV.
Moreover, the CEO is planning to build a large TV facility in Caracas. Not only has Venevision’s broadcast production outgrown the current plant, the company also soon will begin to develop original programming for DirecTv.
Tentative plans for DirecTv include five to 10 channels that Venevision will develop independently or together with other programmers. Altogether, factoring in his 20% stake in the satellite hardware, and ground operations including marketing, distributing and creating new programming, Cisneros expects to invest up to $300 million during the next three years.
The most striking aspect of Cisneros’ deal with Hughes is that it will place him head-to-head in the direct-to-home market with his Univision partner Televisa, on whose board Cisneros sits. The Mexican company is committed to a rival project with PanAmSat that’s also set for 1996. Cisneros plays down the potential conflict: “If anything, we’ll collaborate more and more with Televisa… in production, sales, representation of artists in Latin America.”
The two companies may even provide programming for each others’ direct-to-home projects, Cisneros says. That may sound as likely as NBC and CBS agreeing to supply each other, but, for the time being, the two players are quite amicably dividing up Latin America between them.