Argentina’s pay TV pain

Gov't plans to restrict ad sales while allowing more players in cable sector

BUENOS AIRES — Argentina’s pay TV sector is facing greater competition and a huge cut in revenue because of measures allowing more operators and restricting ad sales.

In late August, the federal treasury’s legal department urged broadcasting regulator Comfer to limit ad time on feevees with 49% or more foreign programming: That’s 70 of the channels in Argentina, including Cartoon Network, CNN, Disney Channel, Discovery Kids, Fox and Sony Entertainment Television.

While feevees can air 12 minutes an hour of ads, the treasury’s proposal is that foreign channels on cable or satellite divvy up these 12 minutes. If there are 60 feevees, that would equate to 20 seconds an hour of ad time for each channel. Nets with at least 51% local programming would be exempt.

“This would mean millions in lost revenue,” says one cable ad broker. “It would be terrible for the market.”

The proposal comes after a two-year study found that broadcasters are losing ad sales to feevees, which charge lower rates because they are subsidized by monthly carriage fees.

Companies have stepped up spending on cable as a cheaper and broader way of advertising. It reaches more than half of the nation’s 10 million TV homes, making it the biggest pay TV market in Latin America.

As a result, feevees have more than tripled their share of TV ad revenue to 20% over the past decade. About 40% of a feevee’s revenue comes from ad sales.

Industryites expect Comfer to seek industry input before enacting the ad-time limit.

Jorge Gandolfo, a cable ad broker, says he didn’t expect a decision until after the Oct. 23 congressional elections for fear of upsetting voters, many of whom are also pay TV subscribers. The restriction could mean higher fees for subs because feevees would raise carriage fees to compensate for lost ad coin; otherwise channels could shutter.

Gandolfo expects Comfer to seek an alternative solution, such as imposing taxes on cable ads to bring rates more in line with those of broadcasters.

Meanwhile, cablers are facing greater competition. In mid-August, the Senate voted to allow the hundreds of public service cooperatives and nonprofit organizations to provide TV services, a bid to broaden the reach of TV to markets without cablers.

Cablers have long opposed co-ops, saying they have an unfair advantage. Co-ops pay lower taxes so they can charge lower prices, and their networks are already laid to many homes to provide electricity, gas and telephony, a barrier for cablers to enter these small but possibly profitable communities.

To appease these concerns, lawmakers have barred co-ops from entering areas already serviced by cablers. And if a cabler wants to enter a co-op’s market later, the co-op must make its infrastructure available.

The leading cabler with 1.3 million subscribers is Cablevision, which is 50% owned by Texas buyout fund Hicks, Muse, Tate & Furst. Grupo Clarin’s Multicanal trails with 863,000 subs, and No. 3 Supercanal Holding has 500,000. DirecTV has some 250,000 subs.

Want to read more articles like this one? SUBSCRIBE TO VARIETY TODAY.
Post A Comment 0

Leave a Reply

No Comments

Comments are moderated. They may be edited for clarity and reprinting in whole or in part in Variety publications.

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

More Biz News from Variety

Loading