Local Motion

Latin Trade, May, 1999 by Sergio R. Bustos

ALVARO GONZALEZ has been in the film and TV-production business for five years, yet the owner of StoneTree Inc. won't forget any time soon his 15 minutes trying to convince a host of network executives to invest in his project.

"It was like speaking before a U.S. Senate committee," says the Miami-based producer, who successfully pitched a one-hour show called Primicia, which will take a behind-the-scenes look at a major news event in Latin America.

Gonzalez was one of 150 hopefuls who were in Miami attending a two-day workshop organized by Miami-based Discovery Networks Latin America/ Iberia. The best were invited to pitch ideas to generate more TV shows about the region.

The drive to localize stems from the wishes of the channel's 11 million subscribers, who say they want to see more of themselves and more of Latin America on the screen.

Latin nature lovers. Discovery can afford to spend some of its money on original programming. A recent survey by Audits & Surveys ranked the TV channel as the most-watched in Latin America for the fifth year in a row, ahead of the Cartoon Network, Canal Fox, ESPN and TNT. And revenues have risen more than 25% a year over the past three years. The network, which was launched in 1994, broke even in 1997, say executives.

Those results have come by broadcasting a heavy diet of translated reruns, shows originally developed and financed by other Discovery business units--principally the United States. Additional revenue from Latin America is gravy.

Still, investing in original TV production is not cheap. Increasing costs come at a time when networks are being squeezed. A glut of channels--at last count there were more than 100 hundred beaming into the region--lets cable TV companies pick, choose and drive hard bargains on how much they are willing to pay for any given channel.

At the same time, Ad sales--the network's alternative to subscriber revenue--are much weaker than the industry expected and boosting rates on the strength of increased programming costs is likely to fail. MTV Latin America invested heavily in local content, only to find that advertising failed to cover the investment. "Everyone is putting out great product," says former MTV regional sales executive Harry Neuhaus. "The question is how do you pay for it?"

Discovery may have found the answer: It puts a limit on local flavor. Rick Rodriguez, the regional network's vice president for programming, says that no more than 20% of programming will be original, Latin America-based content. "We need to find the right balance of programming because we could air a show about Mexico and lose viewers from Argentina," says Rodriguez. "We don't want to sacrifice Discovery's global mission." Nor its regional profit.

By bringing together independent producers and like-minded networks, such as the BBC and PBS, Discovery may find a unique way to sate Latin American's demands without busting the bottom line. Instead of bearing the entire financial brunt individually, the networks together could create a deeper pool of resources for local programming. The solution may eventually make viewers and networks happy, but independents like StoneTree's Gonzalez are not likely to forget any time soon the fearsome nature of pitching to not just one network executive hut a roomful.