Along with L.A. Screenings, NATPE is the key to Latin America. Over the past decade, the region has evolved into a viable financial alternative to Europe and Asia – provided it’s tackled correctly. ‘Expect to be confused,’ says Max Weiner, international sales and new business director of Belgium-based distributor, and Latin American specialists, CDC United Network.

Paris-based distributor Gaumont classifies potential sales regions with an abc rating system. While top honours are reserved for the U.S., Germany and the other major regions, four Latin territories rate a b – the same given to Australia, Canada, The Netherlands and Belgium.

There are essentially three delivery systems in place to get to those viewers. The mostly foreign-owned satellite systems are pan-regional and offer the greatest exposure. Terrestrially, the area also has extensive pay-tv outlets which cater to the entire region, as well as localized cable outlets reaching specific areas free of charge.

In theory, this seems straightforward enough, but the market is in a constant state of flux. In terms of broadcast ownership, a large group of players each owns a small percentage of different delivery systems in order to hedge their bets in case one becomes standard over another. For unsuspecting distributors, this translates into convoluted deals which see broadcasters asking for odd rights and exclusivity combinations.

‘It’s an extremely sophisticated market,’ explains Weiner. ‘You have a lot of different groups doing a lot of different things. There is a cost-benefit question that has to be asked. I think, for the novice, the best bet would be to start with the satellites, because they are the first window. They demand exclusivity against free tv and against local cable.’

While broadcast is strictly in neutral Spanish, foreign satellite owners are mostly based in Miami. That outside influence is also helping to speed the region’s development, streamlining systems into something more recognizable to outside distributors.

Pay tv is perhaps the fastest growing delivery system. About 50 channels have migrated from free cable to pay tv in the last few years, making the jump from regional to Pan-Latin broadcast. This has spawned a carriage problem in some regions – there simply isn’t enough room for the signal. Distributors should be wary when making deals, and not give up rights to a broadcaster which doesn’t carry in that region.

The popularity of the pay tv stations has risen with the emergence of a large middle class in some Latin American countries, such as Mexico, Argentina and Brazil. With disposable income and better education, this class has chosen en masse to make the switch from free television to the more sophisticated offerings of pay tv. This is not true of countries such as Peru and Ecuador, who still have an illiteracy rate of over 50%, and prefer the reality programming free television provides.

Although cable in Latin America, like other places, does not represent the apex of creative genius, the region is beginning to stem the tide of pay-tv switchovers by aiming at a better-educated audience. As one programmer put it, Latin American cable has traditionally only been interested in ‘blood and guts’ – anything with shock value that will pull in a large group of viewers.

Competition is a legitimate concern. Ecuador, for example, has a population of about six million, and has six cable stations. With ad dollars spread that thin, corralling viewers becomes all-important. A recognizable brand name, supported by reliable product and regional partners, will make headway in the Latin market. Many international players like Warner and Discovery have done well in the region. Discovery has made significant inroads with their five stations (Discovery, Animal Planet, Discovery Kids, the Travel Channel and, with the BBC, People and Arts). Expect National Geographic and a few others to follow suit soon, complicating the broadcast landscape that much more.

Even with the rush for space, most international broadcasters are quick to point out that the market is still developing and, because of that, will offer deals at one-tenth to one-half the going rate in traditional regions.

Local operators are just as bad, both for pay and regular cable. For example, one Argentinean pay station with 3.3 million subscribers, broadcasting to three countries, will offer US$250 an hour for programming, with no guarantee they will handle the dub. Offers such as US$800 for the whole of Latin America except Brazil are common. Deals like that are what make Tom Devlin, senior vp at Hearst Entertainment in New York, remark: ‘The money is there. There’s just not enough of it.’

Distributors should also be aware of the withholding tax levied on international business. Ranging from 16.5% in Argentina to 24% in Columbia, the tax is taken off transactions before the money leaves the country. The way to make money in Latin America is in small parcels over a length of time.

‘If you’re going to work in Latin America,’ cautions Weiner, ‘you better be damn sure you want to work in Latin America, and you have to justify it in terms of how much programming you have, and whether or not you can afford to have someone take after it full time, because it’s a full-time job.’

Dire warnings aside, Weiner is positive about the region. ‘It’s a developing market. If you get in early, you’re going to get less in real terms, but chances are you’re going to strike up those relationships and build on them over time.’ His cautious optimism is shared by most others. The patience to build the relationships and learn the culture will be what pays dividends in the long run.

In this Report:
-Notes on NATPE
-Unravelling the Latin Puzzle