CANNES — Few executives are better positioned to pinpoint the vast changes sweeping over Latin American TV than Pierluigi Gazzolo, president of Viacom Intl. Media Networks – Americas.
VIMN – America’s purchase of Telefe, Argentina’s highest-rating broadcast network, and then investment in Porta dos Fundos, Brazil’s second-biggest YouTube channel, have been milestones in the region’s recent entertainment business history. But in some ways, rather than a change of direction, the moves merely hastened VIMN down a road it had long been treading. In an extended interview, Gazzolo survey many of the drivers for changes, challenges and strategies VIMN is pursuing in the region. Many are felt by other companies. Few can put them into practice, however, with such scale and force.
Viacom’s purchase of Telefé and indeed Porta dos Fundos is seen as part of a transformation of the company from a distribution to a content creation company…Could you comment?
Pierluigi Gazzolo: Yes, a little bit of history. Viacom’s founder, Sumner Redstone, always talked about content being king. Our principles have always been to own content. Of course, in the ‘80s and the ‘90s we were very strong on the network front. And we were mostly known in Latin America as a network company. But the reality is that we have always made sure that we own at least 90% of our content. We have always had the vision that the industry is ever changing because consumer habits are also always changing. We have always had the ability to not only work as a network company but utilize that content to do VOD packages to MVPDs or to change our windowing strategy depending on a particular intellectual property. For example with kids, I might give a first window to Televisa, because I know it would be better for consumer products, before it comes to pay TV. And now with Viacom International Studios, we have the ability to play with our windowing strategy even further.
So what does Telefe give you?
We bought it for three reasons. To grow in scale and expand on the strategy of owning content to monetize it. Telefé also helps us complete our portfolio. We were mostly owners of either kids content or young adult demographic content coming out of MTV and Comedy Central. But we were lacking prime time content which Telefé, being one of the biggest producers in Argentina, is providing for us. Now our portfolio covers everything from kids to adults. In addition, we also bought Porta dos Fundos, the second largest YouTube channel in Brazil. They are great creators of comedy content which has a lot of universality. The first strategy was to learn from them about the non-linear world, including their amazing ability to sell branded content. Secondly, it is producing thousands of hours of shorts that we can turn into long-form scripted content to add to our portfolio. With Telefé and the majority acquisition of Porta dos Fundos, plus our existing VIMN Americas slate, we were able to create a division we’re now calling Viacom International Studios to become one of the top producers and distributors to third parties of Spanish-originated formats and content around the world.
What have been the immediate consequences of the purchases?
The hunger for original content gets greater every year. Our revenues have increased across the board. In the case of Telefé, the content sales revenues have more than doubled from what they were when we bought them in 2016. In the case of Porta do Fondos, their revenues are five times what they were when we bought them in 2017. In the case of Viacom networks in Latin America – MTV, Comedy Central, Nickelodeon, for example – the original content earnings are almost 20% up.
Is that just from sales or are other factors at work?
When we bought Telefé we reduced the rights given to third parties outside Argentina. We now fully fund almost all of our shows and now monetize them fully, via the International Studios, which also include MTV, Comedy Central, Nickelodeon and Porta dos Fundos. Viacom International Studios Latin America is also increasing production, up to nearly 1000 hours [a year].
With Telefe, in 2018 we produced 80 hours more of long-form content for a total of 800+ hours, mostly scripted, which is a 23% increase from last year. We are producing in total about a hundred hours more between all the networks and Telefé, this year. Of those 100 hours, about 70% to 80% will also air on the network, some of them will go first window for example to a client, either broadcast, OTT or SVOD, or will have joint premieres with other broadcasters from other regions.
What about development?
On top of that – and this is the part that matters when you have a studio in this day and age – we are developing more hours of originals. In other words, we started [at Telefe] with four developments per year – ideas and concepts to shop around to third parties. Now we’re up to eight, so we are doubling the new shows that we are developing and that we are offering to third parties regardless of their networks. So, for example, at the L.A. Screenings last May we presented seven shows. Of these shows only one aired on Telefé, “100 Days to Fall in Love” that has averaged a 45.5% SOV since launch. The rest might air on Telefé or might premiere with a third party, or be produced as an “original” for a third party, or might be done in a different language for a European partner. It’s the studio model. So that’s the new part of this, we’re not only doing content so that we can air on the network and sell it after that. Now we’re making content to maximize it the best way possible regardless of the network.
What market factors are driving the ramp-up in production?
The demand is huge. The entrance of VOD players has encouraged people to consume and [altered] the expectation of consumption and the volume that is required now for consumption. Also, you have advanced MVPDs, pay TV operators which own OTT platforms and are looking to provide content. And Latin American authors, creators, developers are capable of doing Hollywood level original content. New Latin American originated series are traveling around the world.
Could you mention some deals?
With regard to deals closed, with an MVPD partner in Argentina, a big one, Cablevision, we’re going to be airing a format co-produced straight from Comedy Central, “Drunk History” that will air first with them and on Telefe, and then on Comedy Central, and then “Morir de Amor” which is a Telefe show that will premiere on the network weekly but Cablevisión will carry the full series on its OTT platform, Flow. Nickelodeon tween telenovela “Noobees” will be premiering on both Nickelodeon Latin America and the broadcaster RCN in Colombia. And the most recently announced sale of the “100 Days to Fall in Love” format to Mega in Chile.
What about digital platforms?
With Porta dos Fundos, we took their shorts format and created a half-hour show called “Borges,“ about an import export company, that goes broke and to survive creates a YouTube channel making shorts. That has been licensed to Netflix. Viacom International Studios is also negotiating a big SVOD deal in Latin America with VIS and Porta dos Fundos titles in development and new originals.
And outside Latin America?
“Club 57,” which is another Nickelodeon tween telenovela, has been pre-sold to Rainbow in Italy. They’re going to make it Italianesque and Argentina with characters in Italy and in Argentina. It will air on a major broadcaster in Italy and on Nickelodeon in Latin America. Internationally, daily scripted “Amar después de amar” has been re-versioned in Mexico and Middle East and North Africa. Along with “Sres. Papis,” it has discovered a market in the Middle East.