Telemundo to Enter TV Production Deal With Mexican Firm

Telemundo Network, the nation’s second-largest Spanish-language television network, is partnering with one of Mexico’s edgiest and most successful producers of telenovelas to develop a vast array of new programming for the U.S. market.

The deal, to be announced today in Mexico City, positions Miami-based Telemundo to better compete against Los Angeles-based Univision. For the Mexican production company, Argos Comunicacion, the deal marks a declaration of independence from Mexican network television and is a bet on the growing U.S. Latino market.

Telemundo lags far behind Univision in the race between the two Spanish-speaking U.S. networks. But its ratings have increased by nearly 100% in the last year after bottoming out two years ago. The three-year deal with Argos could propel a continued comeback. It builds on Telemundo Chief Executive James McNamara’s efforts to rebuild his audience with time-honored novelas, or soap operas. The shows were pulled from the air in a misguided strategy by his predecessor to lure bilingual viewers, in part with bad remakes of “Charlie’s Angels” and “Starsky and Hutch.”

McNamara said his network had already purchased the strongest novelas available and wanted more programming tailored to their audience, 70% of which is Mexican-born.

“We thought we really should be co-producing in Mexico, and the largest and the best independent production company is Argos,” said McNamara. “The bottom line is when they became available, we jumped on the opportunity.”

Today’s scheduled announcement is also testament to the lively battle now intensifying for the more than 30 million Latino television viewers in the U.S., many of them Spanish speakers.

Mexico’s second-largest network, Television Azteca, last month announced its push into the U.S. market with Los Angeles-based Azteca America. The latter, expected to compete aggressively with Telemundo, will draw its content from Mexico’s TV Azteca.

Market leader Univision draws much of its programming from top Mexican network Televisa. That left Telemundo--which has purchased Azteca content in the past--without a steady source of programming.

By partnering with Argos, the network has “gone directly to the source,” said Carl Kravetz, CEO of Los Angeles advertising firm Cruz/Kravetz Ideas. “It’s a very sensible decision. It put a plug in what was potentially a serious leak in their programming supply.”

Kravetz said the deal, along with wrestling and other improved sports coverage introduced by McNamara, should heighten industry competition.

“We’ve been functioning for years in a near-monopoly situation, caused in part by Univision’s strength but in part by Telemundo’s weakness,” he said. “We’re very excited to see them beginning to turn around. It’s been a long time coming.”

Under the three-year contract, Argos will produce more than 1200 hours of tailored telenovelas, comedy, news, drama and reality programming for Telemundo.

Argos CEO Epigmenio Ibarra, a former journalist who has two U.S.-born daughters, said his team is already developing some of the content with the unique demographics and cultural tastes of the U.S. audience in mind. A dramatic series, for example, will be filmed in Tijuana with locations in East Los Angeles; El Salvador; Puebla, Mexico; and New York.

Argos-produced telenovelas have helped to transform the genre in Mexico, dealing with hard-edged topics of political corruption, drug trafficking and changing gender roles, instead of the Cinderella stories of old.

The company has produced some recent work for the Disney and Discovery channels, and also co-produced the film “Sexo, Pudor y Lagrimas” (“Sex, Shame and Tears”), which became Mexico’s biggest-ever home-grown box-office hit last year. Telemundo will now have television distribution rights to that and other Argos film projects, the companies said.

Until now, Argos has produced exclusively for TV Azteca, helping to create the blockbuster hits “Mirada de Mujer” and “El Candidato,” among others. But the relationship between Argos and its patron network broke down in recent months. Ibarra said his company craved greater independence, while TV Azteca Chief Financial Officer Luis Echarte said Argos made unrealistic demands for more air time.

The deal between Telemundo and Argos, hammered out in quiet talks over the last month, means Azteca America--a joint venture of TV Azteca and Visalia-based Pappas Telecasting Inc.--will not have access to Argos-produced content.

Echarte played down the rift, saying Argos produced only seven of its 36 novelas over the last four years. Much of Azteca’s programming is produced in-house, he added, so the network will not want for content.

Azteca America Chairman and Chief Executive Harry Pappas, agreed, saying the loss of Argos content was “not a material event. . . . The fair way to characterize Argos is--like they say in Texas--all hat and no cattle,” Pappas said.

But the Argos move to break ranks with Azteca and move alone into the U.S. market is a radical one for a Mexican production company.

“We are abandoning the maquiladora model and asserting our rights,” Ibarra said. “It’s a big risk, but we have the alliance with Telemundo, a short and intense experience in production, and the infrastructure, the talent and the capacity to succeed. . . . Content is king, and we are offering our content to the world.”