Media redux: despite high illiteracy rates, Bolivian media magnate Gonzalo Canelas is pushing old-fashioned newspapers. And a few Internet cafes

Latin CEO: Executive Strategies for the Americas, Sept, 2000 by Mike Ceaser

IN A NATION WHERE HUGE portions of the population neither have electricity nor read Spanish, what established businessman would place his bet on cutting edge technology? Bolivian newspaper publisher Gouzalo Canelas.

Canelas is president of Editorial Canelas S.A., which owns four newspapers, part of a television network, a textbook publishing company a dialup Internet service provider and a chain of Internet cafes. He sees in Bolivia's daunting demographics not discouragement, but potential.

"Bolivia may be among the nations with the lowest Internet consumption," he says, "but I believe that our idea of [accelerating] Internet consumption through cafes is helping Internet use grow" Since its launch last year, Canelas' Cyberland Cafe Internet--a chain of roomy comfortable cafes bustling with students and tourists--has expanded to 12 locations. "The result has been incredible among high school and university students, since the schools don't have their own computers," he says.

This is a huge shift for the Bolivian media family which during its almost-century-long history (the family founded its first newspaper in 1908) has concentrated on traditional media. Indeed, though the Canelas clan is keen on joining the global Internet boom, it is still expanding its newspaper chain.

One Canelas paper, Los Tiempos, dominates Cochabamba, Bolivia's third-largest city, while the new La Prensa is gaining readership and prestige in La Paz. A third Canelas paper, El Correo del Sur, thrives in the historical capital of Sucre, while the populist daily Gente may be the nation's best seller (Bolivian newspaper publishers keep circulation figures secret).

However, in a poor, heavily rural nation with high illiteracy (about 25 percent) and intense competition--six dailies vie for La Paz readers alone--the Bolivian newspaper market offers limited growth potential. That is one reason Canelas is developing new media. The family owns 40 percent of the year-old P.A.T. national television network. Its news broadcasts have the largest marketshare in both La Paz and Cochabamba, and the network is popularizing itself by broadcasting World Cup playoffs.

Canelas' most ambitious new media idea is a project with IBM, which plans to build an e-commerce infrastructure from scratch through cooperative agreements with banks, phone companies and other businesses. According to IBM spokesman Julio Soria, the Cyberland cafes will double as "business centers" for the project, providing training and technical support locations. At the same time, Canelas' newspapers will be e-business clients; already Los Tiempos is online--the first Bolivian paper in cyber-space. The Canelas family also owns an ISP called Digital World Services, with about 2,300 subscribers.

Nonetheless, the Canelas family continues to push its traditional publishing ventures. Los Tiempos and La Prensa are attracting new readers with investigative, sometimes controversial stories. In March Los Tiempos reported that 22 Cochabamba journalists were on the mayor's payroll, some listed as gardeners or menial laborers. Many were consequently fired. "We were able to make enemies of all the other journalists," Canelas quips.

Meanwhile, the newest addition to the Canelas group--the newspaper Gente--is part of a wave of sensationalist journalism in Bolivia. One month after Gente's January 1999 debut, Bolivia's other large publishing family the Garafulics, launched a similar rival, Extra. Gente costs only one peso and generally headlines a brutal crime, complimented by a photo of a topless woman. While nobody calls Gente great journalism, Canelas believes it meets a need for the low-income people who read it. "It is a paper which examines social issues which are very, very important for the people," he says.

Two more papers are in the works as well: one in the small southern city of Tarija and another in the famed, but grindingly poor, mining town of Potosi, which has no newspaper. "They are small markets, but we believe it is important to have a presence," Canelas says. The family is also entering two new publishing markets: telephone directories and school textbooks. The latter was previously dominated by Santillana de Ediciones, a Spanish company with near-monopoly control and pricing.

But even though conventional media remain the company's foundation, Gonzalo Canelas sees no alternative to expanding into cyberspace. "In a few years, newspaper sales could decline. It will be more comfortable to have a computer and read only what interests you," says Canelas. "We are trying to enter both extremes [Gente and the Internet] while still preserving a little of our tradition."