<B>The Media in Latin America under Scrutiny</B>

Isabelle Birambaux.

26 September 2005

The media in Latin America is undergoing far-reaching changes, as it grapples with globalisation, competition and concentration. Powerful local groups are seeking to forge alliances with international media giants in an effort to expand abroad and tighten their grip on their home markets. But one thing never seems to change: The cozy relationship between big Latin American media groups and the politicians in power.

"Let's speak the same language… let there be no differences between us," goes the song by the Cuban singer Gloria Estefan. This stanza could be applied to the recent history of Latin American media. On the one hand, there are the Spanish communication groups with their aspirations of establishing a strong presence in the Latin American market. On the other hand, there is Venezuelan President Hugo Chavez and his drive to create a TV platform in conjunction with other Latin American countries.

A closer look at the media in Latin America shows that if a foreign group wants to enter the market it needs to forge a link with one of big local communication conglomerates. Powerful families with strong political ties own these groups, which in turn have established alliances with international communication giants such as NBC, Newscorp, Pearsons, Time Warner, Bertelsmann and Vivendi Universal. Many enjoy even closer ties with Spanish groups such as Recoletos, Telefónica, Vocento, Zeta and Prisa. These alliances allow the participants to develop their technological and commercial strategies, while keeping apace with the changes wrought by globalization.

Throughout large swaths of Latin America, powerful families have created media empires through adapting to and taking advantage of the political change sweeping their countries. This was the case of the journalist and politician Roberto Noble, founder of the largest group in Argentina-- the publishing company Clarín. "When it appeared, Clarín was a simple tabloid newspaper with a director who lolled on the fringes of the political scene like a yoyo without a string," says Pablo Llonto, author of the book La Noble Ernestina. "Now no one can rule without the support of the Clarín group."

The same is true in Brazil, where the leading multimedia group is O Globo, owned by the Marinho family. The O Globo group has succeeded in overtaking its domestic competitors by capitalising on the political support it enjoys. Its TV station, TV Globo, was created during the dictatorship in 1964 and, despite limits on foreign investment, was still able to sign agreements with Time Life of the US. However, this sort of political connivance may come to an end under Lula's government, as the Brazilian leader does not seem very keen on maintaining a close friendship with the Marinho family.

In some countries, these influential family groups have gone so far as to openly manipulate political power. A case in point is that of Agustín Edwards Ross, the founder of El Mercurio, the leading Chilean communications group.

The political aspirations of these powerful families have led some to seek the presidency in their countries. Such is the case of Eduardo Santos, founder of the El Tiempo group in Colombia, and president of the country between 1938 and 1942. More recently, in Venezuela, Diego Cisneros, the owner of the Venevisión media empire, is making a bid to become the Latin American version of Italy’s Berlusconi. The Cisneros family is now leading the protests against Hugo Chavez and using its close connections with business leaders to influence Venezuelan politics.

Even individuals with links to these families can be of special interest to Spain. This was the case of the Mexican entrepreneur Emilio Azcárraga Milmo, owner of Televisa, which enjoyed a media monopoly until the sector's recent liberalisation. Mr. Azcárraga was also an influential figure in the Institutional Revolutionary Party (the PRI). His widow, Ariadna Abascal, a former actress in TV serials and a former Miss Mexico, became sentimentally involved with Juan de Villalonga, the former President of Telefónica and a personal childhood friend of José María Aznar, the former prime minister of Spain. According to an article by the journalist Ignacio Escolar, the relationship between the two childhood friends "began to deteriorate […] as a result of the break-up of Juan de Villalonga's marriage with Concha Tallada, a close friend of Aznar's wife, Ana Botella," This convoluted network of relationships provides a clear example of the close links between the media and political power.

Beyond the merely anecdotal, the existence of a conflict of interest between political power and the media business is evident in Latin America. This is particularly apparent when newcomers attempt to break into new markets. Indeed, Spanish media groups are seeking to link up with local groups to gain a foothold in Latin America and the United States, where the Spanish language holds out the promise of a lucrative new market. Today, the United States alone represents a market of more than 40 million Spanish speakers. In a sign that it appreciates the growth potential of this market, as well as its benefits for the Iberian Peninsula, the Spanish government has drafted a new foreign policy that calls for stronger cultural and linguistic ties among Spanish-speaking countries.

Since 1991, Spain has helped organise a series of Ibero-american summits and, last year, during the Third International Spanish Language Congress in Cost Rica, 22 institutions were invited to a debate on the creation of a common dictionary. Today, 350 million people speak Spanish all over the world--clearly a lucrative opportunity for the groups of different nationalities eager to cash in on such an important cultural link.

In Latin Anerica, media groups are seeking to take advantage of the growing trend towards concentration--both at home and abroad--to tighten their control over their domestic markets. As a result, they have crafted alliances with North American and European giants in an attempt to carve out a growing share of the international market. Expanding outside their home borders provides them with the financial muscle to maintain a strong grip on their own regional markets.

In many cases, the family groups in Latin America started out in sectors that had nothing to do with the media. Such is the case of the Mexican television station Televisión Azteca, which was created from the industrial group Elektra, a firm that once sold domestic appliances and furniture and is owned by multimillionaire Ricardo Salinas Pliego.

Latin American media groups have rapidly adapted to globalisation, liberalisation and privatisation. They have set up new commercial networks and have undergone both vertical and horizontal concentration—a process that requires incorporating into their business all kinds of information services such as TV, radio, newspapers and the Internet,etc.

In Colombia, for example, Bavaria Holding is currently the largest media group in the country. It has joined forces with the Cisneros group of Venezuela to create the country's leading television station, Caracol TV. It also jointly owns the leading radio station in Colombia, Radio Caracol, in conjunction with the Spanish group Prisa.

Its competitor, El Tiempo, whose Chairman is Luis Fernando Santos, has cast its tentacles beyond Latin America and now holds stakes in the North American television stations Sky and TV Cable, as well as in the activities of the German group Bertelsmann in Colombia. It also became the strategic partner of Internet Terra, a unit of Spain’s Telefónica.

In Mexico, the first country in Latin America to have its own television station, the Televisa group, owned by Emilio Azcárraga, is one of the largest audiovisual group’s in Latin America. The group forms part of an alliance of international companies, along with News Corporation and Liberty Media. In the radio sector, Televisa sold 50% of its shares to the Prisa group in order to incorporate the Sistema Radiopolis radio group. Televisa's owner, Emilio Azcárraga Milmo, is also looking to expand both in Spain and the United States. The entrepreneur considers that the Spanish market offers great business potential, following moves to open-up analogical television to competition. "The Spanish-speaking market in the US has huge potential. That's why we are looking for partners…….35 million Spanish-speakers live here; 20 million of them are Mexican and we want to share our culture with them," the Mexican entrepreneur explains.

Consequently, since 1976, Televisa owns a stake in Univision, the first Hispanic station in the United States.

With its enormous population, Brazil represents the largest multimedia market in Latin America. O Globo, the leading Brazilian group in the sector, with widespread presence in the written press, the publishing business, television and the Internet, has acquired participations in Time Life and Sky Brazil, together with Rupert Murdoch and Televisa. Its television subsidiary, TV Globo, has gained a foothold in the international market with the sale of its TV serials. It has continued to expand in the domestic market as well, through its links with companies providing telecommunications services.

In Argentina, the progress of the media was hindered by the ban on foreign investment imposed during the dictatorship. The Clarín group dominates the Argentine market. It was able to use the political situation to its advantage and strengthen its position, eventually becoming the largest press group in Latin America.

Today in Venezuela, the media company Cisneros is one of the largest media groups in Latin America. The group was founded in 1960, when the Cuban-Venezuelan entrepreneur Diego Cisneros acquired the station Canal 4. At that time, the company was a diversified holding with a licence to manufacture Pepsi Cola. More recently, it has expanded internationally through the sale of its shares to ABC and Paramount. It has formed an alliance with AOL, thus creating AOL Latin America. At the same time it became the leading shareholder of Univision of the US.

Political power and international alliances seem to go hand-in-hand within Latin America’s media. Recently, Hugo Chavez proposed a project to create a television station for the south called Telesur. With this project, the Venezuelan President is attempting to counter the current trends in Latin America’s media market; mainly it seeks to challenge the growing influence of the US channels in the region. By building up an economic alliance with other Latin American countries, such as Cuba, Argentina, Brazil and Uruguay, Chavez hopes the new station will offer a different view of the world from stations such as CNN, Univision and the BBC.

However, the key question lies in how to reconcile such divergent interests. On the one hand, there are Spanish and North American companies seeking to dominate a market with enormous lucrative potential; on the other hand, there are the regional groups which are looking to increase their own influence through political networking and the use of new technologies. Are these divergent groups truly seeking to join together to speak with a single voice able to stand out from the general cacophony? Or will they just add to the noise?


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