Hughes Communications, together with three major Latino players, unveiled an ambitious pan-Latin American pay TV network March 9, and forecast the $300 million-$400 million project would need only 1.3 million subscribers from the region’s 70 million or so TV homes to reach operational break-even.
Unfazed by the economic crisis in Mexico, and its negative “tequila effect” upon several other Latino economies, the partners said DirecTV Latin America – as the direct-to-home satellite service will be known – should reach break-even within a year of the slated February 1996 startup.
Hughes’ partners in the Galaxy Latin America operating company are the Cisneros Group, which owns top Venezuelan network Venevision; leading Mexican pay TV operator Multivision; and major Brazilian paybox TVA. Venevision has committed to a 20% stake in GLA and Multivision and TVA are in for 10% each, while Hughes retains 60%, Cisneros Group CEO Gustavo Cisneros told Variety.
The GLA partners made the surprising claim that DirecTV’s long-term market potential in Latin America is 30 million TV homes – a penetration of about 40%. Consultants and analysts have typically put the region’s pay TV potential at 25%-30%. DirecTV execs said they would be targeting well-heeled viewers who do not currently have access to cable.
Backers were vague about the specific programming that would be offered on the satellite, but they said talks were under way with HBO Ole and other major U.S.-based players that have programming services already on cable in Latin America.
Multivision VP Ernesto Vargas stressed that DirecTV Latin America, with 72 channels targeted at Spanish-speaking countries and 72 at Portuguese-speaking Brazil, would not be simply a new conduit for existing programmers. The project will spawn new channels by the partners, including signals comprising the best of broadcast fare or showing live events, Vargas said.
“We’re thinking of creating five to 10 channels, either by ourselves or with partners,” said Cisneros, adding that Venevision plans to build a major production facility this year, in part to feed the DirecTV service.