One month from now, South America’s largest TV company, Rede Globo, will give itself a massive 30th birthday present: a $120 million TV complex called Projac, nestled in the park land above Rio de Janeiro.

Roberto Marinho, the 90-year-old patriarch and sole owner of Globo, will preside over the opening. Twelve years in the planning, Projac (Projeto Jacarepagua) will concentrate the company’s scattered production facilities onto a 1.3 million-square-meter lot.

Marinho’s three sons will be situated there, including heir apparent Roberto Ireneu Marinho. So will Jose Bonifacio de Oliveira Sobrinho, known to all as Boni, and widely perceived as the operational brains behind Rede Globo.

Outside and inside Globo, the April 26 celebration will point up several questions about the company’s future. Will the day mark the dawn of a new era of TV dominance? Or will it prove to be the hubristic roar of a media dinosaur, destined to lose ground to a batch of smaller, fitter predators, beneath the gaze of an impartial government?

The company is fast approaching a crossroads, as ownership passes from one generation to the next, and there are signs the transition will be troubled. Globo has lost 10% of its audience share in the last year, as competitors have spent more and innovated more.

And in January, communications minister Sergio Motta caused a stir when he declared that concessions for TV, radio and pay TV would no longer be administered as political favors – a declaration widely viewed as a public act of self-distancing from Globo, a past beneficiary of copious concessions.

Most probably, Globo will continue to rule the media landscape for decades to come. Publisher of O Globo, one of Brazil’s biggest papers, operator of 20 radio stations and one of two principal pay TV companies, Globo counts as its chief asset a single broadcast channel that still claims an audience share of 60% (and more than 70% in primetime) among 32 million TV homes.

Such figures earned Globo two-thirds of the 1994 TV ad pie – about $1.1 billion – according to advertising agency J. Walter Thompson. The formula rests in Globo’s prowess as a producer of telenovelas. Including overheads, Globo spends more than $100,000 per 50-minute episode on tales of love, murder and sexual intrigue – about twice the budget of the average Latino telenovela.

Globo is also – much like Mexico’s Televisa – the kind of company that inspires vitriolic comment among competitors, academics and journalists, who often disdain its alleged monopolistic practices and historically cozy relations with the government. As such, these foes of Globo frequently exaggerate perceived cracks in the empire’s power base.

The parallels are indeed many with Televisa, a conglomerate whose TV revenues Globo may exceed this year, due to the devaluation of the Mexican peso. Both consistently score 20 out of 20 in monthly top-rated shows, both are family-run and neither much likes talking to the press.

Yet Globo is starting to open up. “We are now trying to make Globo better known to the public, (including) the work we do in the communities,” Roberto Irineu Marinho notes, referring to the company’s various charities.

Globo, unlike Televisa, is not a publicly traded company and only focuses on its domestic market. International pretensions don’t go far beyond programming sales, where Globo does quite well ($26 million in 1994), though Roberto Irineu Marinho says the company is contemplating alliances (perhaps in pay TV) with Argentine media conglomerate Clarin.

But the crucial difference between the two congloms is the fact that Televisa is firmly in the grip of CEO and majority owner Emilio El Tigre Azcarraga, whose age – 65 – makes him a youth among Latin patriarchs. Globo, however, teeters on the brink of an uneasy, possibly ugly, succession.

While each of Marinho’s sons has settled for his own corner (in TV, radio and the newspaper), relations between them are thought to be tense. More worrying still is the friction between Boni, the programming wizard, and Roberto Irineu, who’s said to be more honest than his father but not quite as sharp or politically astute.

Boni has long wanted a stake in the company as reward for masterminding long-standing ratings dominance, and while the old man has always refused, Boni’s loyalty to him has not flagged. But when Roberto Irineu assumes control of the empire, that loyalty could quickly fade, insiders say.

The loyalty issue is not confined to upper management. A morale problem has permeated Globo for some time, with highhandedness among execs alienating some producers and talent.

Qualified people are just not being promoted, and there’s a complacency in middle management, says Joe Wallach, a former Globo exec who is still involved in Brazilian telecommunications. When producers and writers have some place else to go, they don’t need much inducement.

Marinho Sr., who has hired consultants to look at the morale problem, could yet smooth these troubles. He may be old, but he’s savvy. In 1993, when Globo was bogged down by infighting over a costly and mishandled attempt to enter pay TV, the patriarch issued a memo instructing all staffers to watch Globo at 6:30 the next morning.

When they did, they were treated to a lecture by Marinho and top execs on participation management and the need to be serious about pay TV. Boni bade them to read Ken Auletta’s book “Three Blind Mice,” about complacency among U.S. webs toward cable. Globo’s pay TV operation, NET Brasil, is now competing in earnest against rival operator TV A, a division of publishing empire Abril.

Yet both parties wasted tens of millions of dollars in start-up, pay TV analysts say. (It was not the first time that Globo has taken a bath. In the 1980s the company dipped a foot in foreign waters – buying Italian network TV Monte Carlo – and had it bitten off by Italian media magnate Silvio Berlusconi. Globo finally bailed in 1992, counting losses of $120 million.)

But both companies have wised up to the need for an array of delivery systems: cable, MMDS (or wireless cable), and both C-band and Kuband direct-to-home satellite delivery.

To better exploit the latter system, TVA has already partnered with Hughes Communications in its DirecTV Latin America project, while Globo will likely team up with Televisa and PanAmSat. With domestic pay TV penetration at less than 2%, yet projected at a potential 15%-25%, both Globo and TVA are poised to reap an abundant harvest.

Where Globo may encounter a tougher struggle is in broadcast programming. Over the last year, Sistema Brasiliero de TV (SBT), one of the seven dwarfs that round out Brazil’s broadcast spectrum, has been stepping on Globo’s turf.

SBT’s own audience slice is now 20%-22%. Founded and owned by Silvio Santos, a onetime street vendor who became a TV personality, SBT is an oddball competitor. The station’s cornerstone is an 11-hour Sunday variety show, co-hosted by Santos himself, which averages a 20 rating and prompted Globo to launch a (shorter) equivalent.

SBT has also ventured into telenovelas, a genre it had shied away from because of the expense. The web’s first attempt, “Eramos Seis,” gained decent ratings and was recently sold to Portugal. A follow-up is faring less well, but exec VP Guilherme Stoliar says SBT will continue to produce the soaps.

This year, SBT has announced several coups, robbing Globo of the Oscarcast and spending heavily on sports for the first time. Santos paid $2.5 million for Formula Indy rights and $1.5 million for Brazilian soccer cup matches.

But there’s debate as to how serious a competitor SBT really is. Santos often proudly speaks of his network as Brazil’s second best, and has been known, surprisingly, to hype Globo’s Monday night movie during his Sunday show. A self-made man, Santos is said to give short-shrift to the consultants he occasionally hires.

But Santos is eager to have SBT grow. As well as the soaps and rights acquisitions, he’s investing another $1.5 million in a joint venture with Nielsen, to introduce a second ratings monitor to Brazil. Stoliar says national ratings firm Ibope is slanted towards Globo, and predicts SBT will entice more advertisers – and so spend more to lure stars – when Nielsen results start up this spring.

Making things work

Santos is a “Viet Cong” type of operator, observes Wallach. There’s no large organization there, but he’s got an uncanny ability to do things that work. Still, if SBT is growing, Globo is growing bigger still. The Projac facility will include four sound stages, and that’s just in the first stage. Another four studios, plus a theater for live shows, are included in the project’s second phase, to be completed in late 1996. Globo execs have also mooted building a second network, although President Fernando Henrique Cardoso – who’s not as close to Marinho as his predecessors – would probably deny Globo the go-ahead.

When Globo has seen ratings challenges in the past, it has usually been swift to respond. In 1990, the web Manchete caused panic at Globo by topping the ratings with “Pantanal,” a soap that set new parameters in glossy location shooting and female nudity. Globo promptly hired the novela’s stars and scriptwriter, denying Manchete the chance of a second strike.

Future challenges

This kind of reaction is usually credited to Boni. Consequently, whether Boni will still be around to meet future challenges from SBT when Roberto Marinho Sr. dies is a crucial issue.

Should he fail to smooth relations between his eldest and Boni, there are several possible scenarios: Most likely, Roberto Irineu Marinho will take an operational back seat, encouraging Boni to continue in his pivotal position, perhaps with the incentive of a big pay hike.

The problem with this scenario is that Boni’s known unwillingness to delegate may create problems for Globo when the programming chief eventually retires.

If Roberto Irineu were to take Globo public, admittedly a legally complex move for a Brazilian media group, he could bring an accountability to company operations that might in turn compel Boni to train successors.

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