Cisneros TV Group Busy Filling Gaps in Latin Programming

Carlos Cisneros has seen the future. And, he says, it looks just like the past.

“Wouldn’t it be wonderful to be able to go back 10 years with all of the information I have today? Well, that’s exactly what’s happening in Latin America,” he says. “The same way you saw the United States develop over the last 10 years--the same way it became cabled, the same way that everybody moved to pay TV, the same way that pay TV channels became slowly but surely very successful, the same way they were able to derive all of this revenue--that exact exercise is happening in Latin America.

“But it’s happening faster.”

For all its economic problems, Latin America is already the world’s fourth-largest television market--and it continues to expand, making it an irresistible target for global media entrepreneurs. From Mexico to the southern cone, there are more than 452 million potential viewers, including a growing minority with the ability to afford such middle-class comforts as pay television and the Internet.

All they need is something to watch, which is where Carlos Cisneros comes in. As the chairman and chief executive of Cisneros Television Group, one of the region’s fastest-growing media companies, the boyish-looking 33-year-old is responsible for programming CTG’s 12 pay TV channels and developing enough additional content to keep pace with the company’s insatiable appetite for acquisitions.

In the last year alone, CTG has spent $300 million to broker half a dozen deals with companies such as Playboy, international music channel HTV, MuchMusic Argentina and other production groups in Latin America, Spain, Portugal and the U.S.

“There’s tremendous appetite for programming,” says Jay Scharer, CTG’s chief operating officer. “And I think rather than giving the consumer more choices, you need to give the consumer better choices.”

Cisneros Television Group is one arm of the many-tentacled Cisneros Group of Companies, a broad-based global conglomerate that posted $3.6 billion in revenue last year through stakes in about 70 companies spread throughout 39 countries. The New York-based company was founded in the 1920s in Venezuela by Diego Cisneros, a Cuban immigrant who started out in Caracas as a truck driver. He built his fortune by first investing in a PepsiCo bottling concession and then making Pepsi Venezuela’s national drink.

By 1993, the company had diversified its holdings to include Spalding & Evenflo Cos., makers of sports equipment and baby products; PuebloXtra International, a chain of 56 supermarkets in Puerto Rico, the Virgin Islands and Florida; and part ownership of Univision, the dominant Spanish-language television network in the U.S.

The company has a long and successful pedigree in broadcasting, dating back to the founding of Venevision, Venezuela’s primary television network, in 1961.

In recent years, the parent company--run by Cisneros’ uncles, Gustavo and Ricardo--has retrenched, selling off a series of assets outside its core media holdings to position itself as the fifth-largest privately held media company in the world.

Among its investments is Galaxy Latin America, a complex multinational partnership Cisneros launched three years ago to provide 144 channels of DirecTV service throughout Latin America. The project was a $1-billion joint venture with El Segundo-based DirecTV, Mexico’s MVS Multivision and Brazil’s Televisao Abril. Initially, the companies’ goal was to get 3 million subscribers by the end of 2000.

With just 15 months to go, Galaxy can claim a bit more than 600,000 homes. Still, that beats its chief rival--Sky Latin America, a pan-regional satellite partnership backed by Rupert Murdoch’s News Corp.

While both ventures are struggling, a pan-regional television service that can easily cross borders is still widely believed to be the best way to reach a large audience in Latin America.

“The expense of acquiring [broadcasters] country by country, the expense of cabling country by country, the amount of time it requires . . . and then the regulatory restrictions . . . country by country: When you combine all of those, we decided the fastest, most cost-efficient way to reach the entire territory . . . was satellite,” says Cisneros, who helped put the Galaxy deal together.

But a distribution platform was just one part of the equation. “Now that we had the distribution,” Cisneros says, “we had to provide content.”

So the Cisneros Television Group was born to develop, acquire and manage content for the satellite distribution platform DirecTV, as well as other cable systems and Internet platforms worldwide--ultimately including America Online, which last December signed a $100-million deal with Cisneros to bring the Internet service provider to Latin America.

The company has built around what it considers to be un-addressed niches in its Latin American target audience. Its Locomotion cartoon channel is the only full-time adult animation channel in the region, for example, and its Jupiter Comic is Latin America’s only comedy channel. CTG also owns Space, one of Latin America’s few movie channels, and the paranormal/documentary channel Infinito and has an exclusive deal to distribute Playboy TV worldwide.

“We’re trying to break the mind-set of Spanish programming as only campy telenovelas,” says Locomotion chief Rodrigo Piza, 27.

In fact, campy telenovelas draw huge ratings, which is why they’re the most profitable and most watched form of programming in Spanish- and Portuguese-language television--a status that has largely gone unchallenged for decades. Rather than trying to lure viewers from telenovelas, CTG has set out to develop its own audience.

“It’s infinitely better at the end of the day to do stuff that is really the best it can be for a segment of the population and let the general public bend to find it, [rather] than to dilute it to such an extent that it pleases everybody,” Cisneros says.

Cisneros takes delight in ignoring convention, and CTG’s airy, 18,000-square-foot Miami Beach office reflects that philosophy. The only doors among the maze of workstations are the ones to the elevators and the bathrooms, and the millionaire boss’ well-known penchant for Gap khakis, shoes without socks and shirts without ties underscores the low-key environment.

That informality, plus CTG’s location just a few hundred yards from ultra-chic South Beach, has made it easier to recruit talent. The staff is overwhelmingly young, and each of the company’s 93 employees--who come from 17 countries--speak at least two languages, while many, like Maria Ignacia Arcaya, the 27-year-old head of CTG’s educational channel Cl@se and the daughter of a Venezuelan diplomat, were raised in more than one country.

“We’re kind of like the Switzerland of Latin America,” says one employee. “We’re not too closely aligned with one culture. We’re kind of neutral.”

Cisneros is trying to come to grips with the ways television, the Internet and telephone services will converge.

“You can sit in a room with 20 people and ask them where they think convergence will come, and you will probably end up with 20 different answers,” Cisneros says. “[But] included and in common, all those answers will have the following ingredients: satellite, broadcast, radio, cable, Internet, telephony. And we have them all.

“So while everybody gets into agreement and figures out where convergence is going to come from and develops the technology for convergence to happen, we have gone about making sure that the Cisneros Group [has] all the pieces of the puzzle.”

In the meantime, CTG is continuing its expansion by securing distribution for its 12 channels in key markets, including those beyond Latin America, as the recent launch of a satellite-delivered Spanish-language TV service in the U.S. and Japan demonstrated.

CTG refuses to discuss its financial results, but it’s clear that CTG is still deep in the red and could be years from turning a profit. Despite the rapid growth of the subscription television audience, the percentage of pay TV subscribers in Latin America is small. In Argentina, for example, home to half the pay television subscribers in the region, just a third of homes have access to non-broadcast programming.

But a look back into history provides some solace for the company: Although it took years for the cable sports network ESPN to get out of the red, 20 years later, it’s the most profitable cable network in the U.S.

And CTG’s parent company certainly has the deep pockets to await a similar return on its investments in Latin America. “Yes, they’ve lost some money, but I don’t think they really view it as having lost money,” says James M. McNamara, the new president and chief executive of the competing Spanish-language network Telemundo. “They see it as having invested money.”

“I knock on wood every day,” Cisneros says. “But I don’t think you can get very far without taking chances. I certainly don’t think you can be original without taking chances.”