Fiesta fizzles

'90s biz boom starts to slow

MADRID — It may be a Spanish contradiction in terms, but the party is over.

The future has caught up with Spain. The ’90s were a dazzling decade of gangling growth in various directions — in plex construction, new private TV, the emergence of mini-majors Sogecable and Telefonica Media (TM), consolidation in indie TV production and a plunge into English-lingo picmaking.

Only last year, then-Telefonica prexy Juan Villalonga brought off two daunting deals, buying up Dutch TV giant Endemol and U.S. Internet operator Lycos.

Modernization has seen many payoffs: the greatest, that business is often conducted for far more comprehensible commercial concerns than for politicalreasons.

So, Spain still hums.

“We are still lucky, our democracy is young,” said novelist Vazquez Montalban a few years back. “We haven’t yet got the cultural fatigue of the rest of Europe. Here there’s still a certain effervescence.” Any foreign exec visiting Spain would agree with that.

But unconscionable expansion has had its down side. Spain faces problems which — save for financing at arcane Spanish broadcaster RTVE — seem endemic across much of the rest of the Western world.

Spot the similarities:

  • The Spanish film industry has early boom-and-bust symptoms. Two years ago, TV finance began to sluice big time into production. Twenty-two Spanish pics, no less, bowed this June or July. Only three — Bigas Luna’s “Son de mar,” arty sleeper “Shameless” and slasher “Tuno Negro” — made any B.O. impression.

  • Coin-tight Spanish distribs are snuggling up to capital.

    Manga has spent months negotiating TM finance. Lauren says its seeking a minority financial partner.

  • Cinema construction is slowing down. Spain’s screen park grew just 5% — to 3,505 screens — in 2000. Exhib loops complain of first-phase major-city saturation and near-stagnating admissions.

  • Digital pay TV is growing, but too laboriously for some investors’ patience. Electricity utility Endesa has already made signs that it wants out of startup digital terrestrial TV net Quiero.

  • At 2.7%, Spain’s forecast gross domestic product growth this year remains one of the best in Europe. But Spanish TV ad revenues are sliding — Antena 3 reports a 6% year-on-year 6% dip in the first half of this year. Telecinco and RTVE have taken similar hits.

  • Ad-driven pubcaster RTVE still lives hand-to-mouth on government-guaranteed credit. Cumulative debt stood at $3.6 billion at the end of 2000. The government has recommended staff cuts. Never, say inhouse unions.

  • Two new digital terrestrial TV webs — Net TV and Veo TV — are skedded to launch 2002. But there is no agreement on common DTT standards, or who will pay Spain’s general transfer from analog to digital. Until there is they might as well screen test-cards. The strain in Spain galls mainly on the plain — in Madrid, home to its nationwide broadcasters.

“In Spain, four nets compete each day for maximum auds, compared to only three in New York — ABC, CBS, and NBC — and two in London, BBC 1 and ITV,” says Mikel Lejarza, an Arbol Group board member.

Digital pay TV is in a similar clutter. Germany and Italy have one major digital TV platform. Spain still supports three: TM’s Via Digital with 700,000 subs, Quiero with 240,000 and Sogecable’s Canal Satelite Digital with 1.2 million. Losses at Via could be bottoming out but still stood at $126.1 million for the first half of 2001. Quiero made a pre-tax $79 million loss last year.

Spain’s digital TV market “requires across-the-board restructuring … rational accords which allow players to buy at prices which the Spanish market can afford to pay,” says Sogecable CEO Javier Diez de Polanco.

This could mean further rights pooling between CSD and rivals.

How did Spain ever get into this fix?

One reason is sheer obduracy: Spain has overbuilt and overbought. Another is the worldwide economic turndown. And last is politics (as ever). As many conservative governments, Spain’s ruling Partido Popular, led by plodding Jose Maria Aznar, lives in god-felt fear of being pilloried as short-necked Philistines by Spain’s left-leaning intelligentsia.

Since taking power in 1996, the PP has godfathered Via Digital (in part to spoil take-up at socialist-leaning rival Sogecable); forced TV nets to finance Spanish film; and even got the jump on most of Europe, allowing the launch of DTT operator Quiero. Whether Spain’s market can maintain such moves is another matter.

Spain could have it a lot worse, however. Its Nuevo Mercado media/high-tech bourse has held up far better than the Neuer Market. Sogecable posted first-half 2001 net profits of 7.5 million euros ($6.9 million), the best margins of any major pay TV operator in Europe outside the U.K. and France.

With Endemol counting toward financial results, per prexy Juan Jose Nieto, TM’s 2001 revenues should reach $2.3 billion-$2.7 billion, putting it in the top 30 media companies in the world.

the Spanish cinema has had its hits, including its two highest-grossing pics ever at home: Santiago Segura’s “Torrente 2” and its first commercial U.S. hit, Alejandro Amenabar’s “The Others.”

New international-minded production/sales companies have bowed: Prisa’s Plural, consortium Pi, Das Werk’s 42nd Street, Francisco Ramos’ Alquimia and Canal Plus Espana’s Produce Plus — joining the ranks of Lolafilms, Filmax and Sogecine/Sogepaq. Animation and indie TV production are roaring.

Spain’s ’90s fiesta may be finished, but a more sober sector has energy to burn.

More Biz

  • Jeremy Piven

    'Entourage' Extra Claims Jeremy Piven Assaulted Her in New Allegation

    MADRID — It may be a Spanish contradiction in terms, but the party is over. The future has caught up with Spain. The ’90s were a dazzling decade of gangling growth in various directions — in plex construction, new private TV, the emergence of mini-majors Sogecable and Telefonica Media (TM), consolidation in indie TV production […]

  • This, photo shows the 21st Century

    Comcast, Disney Keep Focus on 21st Century Fox Assets Despite AT&T-Time Warner Battle

    MADRID — It may be a Spanish contradiction in terms, but the party is over. The future has caught up with Spain. The ’90s were a dazzling decade of gangling growth in various directions — in plex construction, new private TV, the emergence of mini-majors Sogecable and Telefonica Media (TM), consolidation in indie TV production […]

  • Scorpion-cbs TV Show

    How Scooter Braun Turned Luck With First Series 'Scorpion' Into Prolific TV Business

    MADRID — It may be a Spanish contradiction in terms, but the party is over. The future has caught up with Spain. The ’90s were a dazzling decade of gangling growth in various directions — in plex construction, new private TV, the emergence of mini-majors Sogecable and Telefonica Media (TM), consolidation in indie TV production […]

  • Peter Thiel

    Billionaire Peter Thiel Sells Majority of Facebook Stake, Pocketing $29 Million

    MADRID — It may be a Spanish contradiction in terms, but the party is over. The future has caught up with Spain. The ’90s were a dazzling decade of gangling growth in various directions — in plex construction, new private TV, the emergence of mini-majors Sogecable and Telefonica Media (TM), consolidation in indie TV production […]

  • Justin Bieber Ariana Grande Kanye West

    From Ariana to Watt: Catching Up With Scooter Braun's 20 Clients as SB Projects Turns 10

    MADRID — It may be a Spanish contradiction in terms, but the party is over. The future has caught up with Spain. The ’90s were a dazzling decade of gangling growth in various directions — in plex construction, new private TV, the emergence of mini-majors Sogecable and Telefonica Media (TM), consolidation in indie TV production […]

  • Scooter Braun Team

    Meet the Six Key Execs Who Help Scooter Braun Care for Roster of Clients

    MADRID — It may be a Spanish contradiction in terms, but the party is over. The future has caught up with Spain. The ’90s were a dazzling decade of gangling growth in various directions — in plex construction, new private TV, the emergence of mini-majors Sogecable and Telefonica Media (TM), consolidation in indie TV production […]

  • New Media old media shakeup

    Murdoch Sale Talks Underscore Digital's Effect in Disrupting Hollywood

    MADRID — It may be a Spanish contradiction in terms, but the party is over. The future has caught up with Spain. The ’90s were a dazzling decade of gangling growth in various directions — in plex construction, new private TV, the emergence of mini-majors Sogecable and Telefonica Media (TM), consolidation in indie TV production […]

More From Our Brands

Access exclusive content