Market transition aids growth in Argentina

BUENOS AIRES — Argentina’s production market is getting more competitive, prompting independent outfits to develop new ways to keep up growth.

“There is a lot of competition. It is hard to get on primetime,” Central Park prexy Raul Lecouna tells Variety.

To get telenovela “Collar de esmeraldas” (Emerald Necklace) on Artear-Canal 13, the company teamed up with rival Ideas del Sur. That ensured it a slot because the net’s parent company, Clarin, owns 30% of Ideas.

“Primetime now tends to be reserved for producers associated with a broadcaster,” says Hugo Di Guglielmo, a consultant and ex-programming boss at Canal 13.

In the 1990s, broadcasters began outsourcing production to indie producers which built top-notch studios thanks to a strong currency.

After the country’s 2001-02 economic collapse and devaluation, indies again proliferated.

Ironically, demand rose as cash-strapped broadcasters slashed foreign acquisitions and international buyers turned to Argentina for cheaper programming. The peso is 70% weaker than the dollar.

However, despite a growing economy, broadcasters are now cutting content spending and keeping a lid on programming prices to try to repay debt. While in the 1990s they paid 100% of production costs, they’re currently paying 50%-65% of the average cost of a show.

And they have consolidated purchases.

Telefe, which along with Canal 13 controls 80% of ad coin and audience, produces much of its content inhouse and struck a supply deal this year with indie outfit Cuatro Cabezas.

America TV has a five-year deal with GP Prods., and Canal 9 has a similar deal with Underground Contenidos.

 This leaves little room — and little money — for unaligned producers.

So they are diversifying into the production of commercials, expos, film and theater, exporting formats and branching into sports marketing and radio broadcasting.

“You have to be alert for opportunities and diversify. This is a dynamic market,” says Alfonso Rodriguez Saumell, commercial manager of GP.

“Broadcasters are continually cutting the amount they pay for programs and arranging deals that share more risk and costs with the producer,” he says.

Nets now offer technical services, studio time, ad revenue-sharing deals and even the salary of a celebrity host as part of the purchase of a program. And they’ve shifted product placement to producers, which rely on it to cover 20% of production costs.

This makes production riskier, particularly if a program flops. But it can also expand the 20% average gross margin on programs.

 In an effort to make a profit, producers increasingly are targeting programs in non-primetime segments. Teen shows in late afternoon slots are booming, as are morning magazines and late-night talkers and gamers.

GP produces “El Portal de las Mascotas” for America on Sunday afternoons, the only pet program on terrestrial TV.

Its comic newsmagazine “RSM” has a small but captive audience thanks in part to the fact it is an alternative to the fiction on rival nets at 9 p.m. weeknights.

“All the niches are good. The challenge is to slot the right program there,” says Rodriguez Saumell.

 Advertisers are keen on the movement.

“For lower rates than primetime, they can reach their target consumers,” says Victor Gonzalez, prexy of RGB Entertainment, a big producer of kiddie and teen telenovelas like “Rebelde Way” (Rebel’s Way) about a teen band.

The loyal audience, too, makes it easier to spin off businesses that make it possible to finance costlier productions than are normal for non-primetime slots, he says.

RGB and Cris Morena Group have spun off albums, live concerts and theater, merchandising, print magazines, electronic games and feature films from telenovelas “Rebelde,” Cinderella-like “Floricienta” and orphan tale “Chiquititas.”

The biggest growth is with exports as producers offset limited earnings at home by nailing down sales in stronger foreign currencies.

Programs like “Rebelde,” private eye drama “Los simuladores” (The Pretenders) and comedy “Los Roldan” (The Roldans) have been remade for India, Mexico and Russia. Fox is lensing a U.S. version of telenovela “Resistire” (Forever Julia).

A fresh focus is on Western Europe, where producers are targeting a growing feevee sector with finished products and terrestrial nets with formats.

Cuatro Cabezas plans to open a New York beachhead for producing English-lingo programs for U.S. TV.

Meanwhile, Discovery Channel, Fox, History Channel and other cablers are stepping up purchases of original programming for their Latin American channels from Argentina, attracted by its low prices, talent, and cultural and geographic diversity, says Damian Kirzner, a managing partner of production company Fatto in Casa.

There are risks to the new models.

Canal 13’s shareholdings in Ideas and Pol-ka means it controls prices and requires exclusivity. This could limit their growth. And the net must keep the producers afloat even if programs bomb, says Di Guglielmo.

Argentina is “a market in transition, and some may lose,” he says.

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