Global media groups negotiating stakes in local b'casters

RIO DE JANIERO — Brazil’s broadcast sector is on the verge of deep change thanks to the adoption of landmark regulation allowing Brazilian media groups to carry out initial public offerings.

Foreign groups and investors will be able to take stakes of up to 30% in local broadcasters through the IPOs (Congress still must pass complementary legislation to the new regulation in order for it to become law). Previously, a company’s ownership was limited to Brazilian citizens.

Even though many analysts believe that the 30% restriction will prevent foreigners from investing in Brazil, a number of global media groups are negotiating the purchase of stakes in local broadcasters. Disney, AOL Time Warner, Sony, Mexico’s Televisa, Venezuela’s Cisneros Group, U.K.’s Pearson and Spain’s Prisa are reportedly sniffing around.

Cash infusion is much needed as local broadcasters have thin wallets. Some groups, such as market leader Organizacoes Globo, which owns TV Globo and Globosat,are in a difficult debt situation, aggravated by a 57% accumulated depreciation of local currency in the January 2001-September 2002 period.

Broadcasters also have suffered an overall fall in ad spending in 2001.

But the sector showed signs of recovery in the first four months of this year, when TV ad spending rose 8.67% to 1.58 billion reais ($505 million) vs. the same period last year.

The currency devaluation and the general economic slowdown have reduced local broadcasters’ appetite for international programming. SBT and TV Record, the country’s second- and third-largest nets, respectively, will not send buyers to Mipcom.

Fourth-ranked web TV Bandeirantes will be present with a sales team headed by programming director Rogerio Gallo and acquisitions director Elisa Ayub, but will limit purchases to reality shows.

“The idea is to go to Mipcom and check what is new in terms of formats. We will not be looking for films or series,” Ayub says.

On the sales side, its international sales director Nono Saad, will offer the net’s library of telenovelas, series and docs.

Globo will be making the biggest splash at the market, but sales seems to be the priority, not buys.

“Globo has a 20,000-hour library of telenovelas and series, (in addition) to documentaries and footage from our news agency,” says Helena Bernardi, director of marketing and sales.

Bernardi also says TV Globo for the first time will be offering rights for features from the company’s theatrical division, Globo Filmes.

Despite the local pay TV sector stagnation, OG’s Globosat continues to be a strong buyer of all types of programming for its 21 channels.

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