$400 mil deal: From free TV to feevee

MIAMI — For broadcasters in six Spanish-lingo markets, the World Cup is a different ball game now that satcaster DirecTV Latin America is playing. For years, Latam rights to soccer’s top tourney had been the bailiwick of the Iber-American Television Assn. (OTI), buying collectively on behalf of its members, who then reaped an ad windfall.

Free-to-air broadcasters in Argentina and Mexico together anted up almost $20 million for the 1998 cup, but the extra ad spend was worth roughly $100 million to Mexico alone that year.

But in December, DirecTV Latin America scored the exclusive TV and radio rights for those two countries as well as Chile, Colombia, Uruguay and Venezuela to the 2002 and 2006 World Cup finals, and some other Federation Internationale de Football Assn. (FIFA) tourneys. The deal is being valued at $400 million.

“This is a very strategic deal for us,” says Milton Torres, DirecTV Latin America senior veep of programming, marketing and sales, who handled the FIFA negotiations. The World Cup will help drive sales, but also boost subscriber satisfaction — and the DirecTV brand.

At year’s end 2000, DirecTV had 712,000 subs in Mexico, Argentina, Colombia and Venezuela. It does not release its Chile number and has yet to launch in Uruguay.

DirecTV had an additional 470,000 subs in Brazil as of Dec. 31. However, media conglom Organizaoes Globo nabbed Brazil rights for $500 million, and can spread the World Cup matches around to its free TV broadcaster, TV Globo; its pay TV channels; and its direct-to-home platform, NetSat, which operates Sky Brazil.

Over the past few years, many Latin American free TV broadcasters have been priced out of key sports events as the deeper-pocketed sports feevees have snapped up rights, particularly to coveted soccer matches. Yet World Cup fervor is such the Argentine government sought to mandate free TV access even before DirecTV announced its deal.

As part of the FIFA accord, DirecTV will sublicense free TV and radio rights for the opening match, the semifinals and finals of both the 2002 and 2006 cups, plus national team matches in their home countries, and daily match and tape-delay results.

“I need a certain amount of World Cup out there on free-to-air TV,” says Torres.

DirecTV subscribers will be able to watch all 64 matches of the 2002 World Cup live. But the sports channels likely will be shut out, since their signals go to all pay TV systems, including rival DTH operator Sky.

The games will demand a major investment in production, and DirecTV will seek a cooperative relationship with local broadcast partners, according to Torres. “Our intention … is to share resources.”

There are some logical candidates for such cooperation: Venezuela’s Venevision is owned by the Cisneros Group, a minority partner in DirecTV Latin America, and Argentina’s Artear, a subsid of conglom Clarin, the local partner in the Argentine platform that is acquiring a 5% stake in the panregional operation.

Torres, who will initiate talks soon with the broadcasters, has pledged to deal with one and all, and indicated multiple accords in a given country are likely.

Even Mexico’s Televisa will get consideration, even though DirecTV is embroiled in a battle with the broadcaster, which refuses to allow the satcaster to carry its four free-to-air channels.

“We are not discriminating against anyone,” says Torres.

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