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Battling billionaire powers Azteca’s success

Net now looking for foothold in U.S. Hispanic market

MEXICO CITY — A decade ago, Ricardo Salinas was an obscure businessman and Mexico was a land of monopolies, from one political party hogging power to one commercial broadcaster dominating the airwaves.

Now the country has its first democratically elected president in Vicente Fox and Salinas’ upstart TV Azteca is the No. 2 broadcaster, reveling in its profitable David-and-Goliath battle with Televisa, the world’s largest Spanish-lingo TV company.

“Mexico has become a much more competitive country,” Salinas tells Variety. “This means more brands and higher ad spend. It is an excellent environment for us.”

Azteca aims to repeat its success north of the Rio Grande by gaining a meaningful slice of the U.S. Hispanic market for its low-budget, fledgling Spanish-lingo network, Azteca America, in the face of stiff competition from Univision and NBC-backed Telemundo.

Azteca America bowed in 2001 with one station in Los Angeles — now it reaches more than half of the U.S.’s 33 million Latinos through its 24 low-power affiliates and cable outlets.

It celebrated another milestone on May 13 by launching its first up-front presentation to advertisers in New York.

This is a tribute to 47-year-old Salinas’ tenacity.

He is soft-spoken and humorous in person, showing the easygoing confidence that comes from turning his inherited household goods chain Elektra, which had annual revenues of $400 million 10 years ago, into a television-telephony-retail empire with 2002 revenues of $2 billion.

But he has not been scared of a fight since splashing out $640 million to take two TV networks off the government’s hands back in 1993 and turning them into TV Azteca.

Invariably described as brash, his spats with former partners are legendary, including NBC with which he feudedin 1997 three years into a programming deal.

“I am only confrontational if someone threatens the interest of the company,” Salinas insists.

Last December, that aggressive approach came to the fore when TV Azteca employees seized the transmission tower of Canal 40, a tiny, indy news station and closed it down following the bitter end of another programming deal, this time with Azteca providing the content.

Azteca was widely blasted for taking the law into its own hands before the government intervened to allow Canal 40 back on air. The dispute between Azteca and Canal 40 remains before the courts.

An unrepentant Salinas refuses to concede that the rumpus might have damaged Azteca’s image. “What was a mistake was how we handled it afterwards, trusting that the authorities would act in accordance with the law,” he says.

Indeed, he also fell out with Pappas Telecasting, which was to provide local affiliates Stateside, over its failure to come up with the coin to purchase more stations. Because of this, Azteca America operates under a different format, splitting revenue 50-50 with affils and avoiding capital investments.

Salinas’ next battle is to improve ratings in Mexico, stuck in a rut since 2000. Azteca has a 30% national audience share, although, as the company likes to point out, that can approach 40% for higher-income primetime auds.

Salinas notes with pride that Azteca takes 33% of Mexican TV ad spend — $127 million in the first quarter.

Programming breakthroughs have included less romantic, more realistic novelas purchased from indy producer Argos in a now-defunct deal, especially “Mirada de Mujer” (A Woman’s Gaze) and breezier news bulletins, both of which bested Televisa ratings in the 1990s.

Reality show “La Academia,” which Televisa claims is a rip-off of its “Operacion Triunfo,” has easily been Azteca’s most successful show of the last 12 months, nearly matching Televisa’s “Big Brother.”

“Azteca has less technical quality and worse content than Televisa,” says TV critic Florence Tousaint. “It is more basic and populist.”

The Azteca formula makes money — Salinas isn’t complaining.