The “new prosperity” heralded last year in all but a couple of Latin American countries has shown signs of wavering since Mexico’s December peso devaluation, which prompted a negative effect in several major markets.
But many U.S. investors are continuing to look at the region’s long-term growth potential and are still committing to new theaters, cable and satellite investments, and pan-regional network launches.
In early March, cabler TCI reiterated its commitment to an 80% purchase of major Argentine MSO CableVision, which has more than 450,000 subscribers. TCI Intl. president Fred Vierra said the deal would be signed by the end of March.
“Hundreds of million of dollars will be invested in the next few years, both to expand CableVision and to prepare it to compete with the telcos when deregulation starts here in either 1997 or 2000,” Vierra announced.
Vierra would not comment on the amount he’ll be committing. A sum of $700 million was mentioned when the deal was first announced, and though the figure will be adjusted to take a weakening of the Argentine peso into account, TCI will still probably commit at least $500 million.
Princeton-based C-TEC, majority-owned by Peter Kiewit & Sons, made a similar statement of confidence in late January, when it announced an $84 million investment in Megacable, Mexico’s second-largest MSO. The company revealed it had been ready to pay $120 million for its 40% stake, but renegotiated after the peso’s fall.
Still, with millions of dollars riding on fluctuations in Latin American exchange rates, some investors are understandably cautious. Falcon Cable, which last year became the first U.S. cabler to enter Mexico, was about to seal an investment in Argentina when the devaluation of Mexican currency brought pressure upon the Argentine peso.
In pay TV programming, both Warner Bros, and Sony announced new channels during NATPE, again well after the devaluation. WBTV-The Warner Channel will be a general entertainment, family-oriented service. That, and Sony’s new service, are expected to launch within a few months.
Another new channel, the Reuters-Telemundo news network TeleNoticias, was launched just before the crisis struck, but is already claiming 2.2 million Latino subscribers, as well as viewers on UHF channels in Mexico City and Caracas.
In the longer term, two major U.S. satellite companies, Hughes Communications and PanAmSat, have committed to direct-to-home (DTH) projects budgeted at several hundred million dollars each. Both are due to launch in early 1996.
As a provider of services to broadcasters and U.S. and Latino pay TV channels for 10 years, PanAmSat is not troubled by recent negative economic developments, Landman says. “Mexico is not going to sink into a hole, nor is Venezuela. We know how to roll with these things,” he says.
In the theatrical arena, Cinemark has opened four multiplexes in Mexico and is increasing its presence in Chile. The company will inaugurate the first purpose-built multiplex in Mexico City, the world’s largest metropolis, in early May.
Brazil, whose economy is set to grow by 5% this year, as it did last year, is prime candidate for investment. “The potential of that country is absolutely enormous,” says Harold Blank, development VP for Hoyts, which is also looking at Argentina.