Post by Moses on Apr 5, 2004 10:22:33 GMT -5
Globo: Death of a Brazilian Media Empire?
by Carlos Castilho
published by MediaChannel.org (http://www.mediachannel.org/)
Think media ownership problems are limited to the U.S.? Think again. An on-going struggle in Brazil makes disputes over American-owned Big Media look like a game of Monopoly.
Known as the Platinum Venus, Globo holds a market position that even Time Warner bosses could envy: 60 percent of the television audience and as much as 80 percent of broadcast advertising in Latin America's largest media market. Its television production operations, centered around novelas, or soap operas, rank as the world's most prolific.
Holdings include papers, weekly magazines, radio stations, a television network, an Internet presence, cable, movies, telecommunications, records and books. Its brand is so omnipresent that many ordinary Brazilians assume that Globo is, in fact, a branch of Time Warner, meant to support that US media giant's interests in Brazil.
But now, after years of super-sizing its empire with foreign loans, Globo's golden age is coming to an end.
Single-handedly, Globo accounts for 55 percent of the global debt of all Brazilian media corporations -- some $ 3.2 billion. Most of that money is concentrated in cable investments that haven't paid off. Brazil's recession has hit its media sector hard, and Globo is no exception. Since October 2002, the media conglomerate started to delay payments and is anxiously looking to reschedule its debt payments. With the real undervalued relative to the dollar, the company is finding it increasingly difficult to meet loan payments.
Globo's solution? Get a low-interest loan from the government that will let it pay at least half of its short-term interest payments.
But, so far, despite Globo's political muscle, President Luiz Inacio Lula da Silva has proved reluctant to play along. 2004 is an election year in Brazil and Silva's poll numbers are less than favorable: An Ibope poll conducted in March showed that only 34 percent of Brazilians consider his government's performance "good" or "excellent." Not wishing to press his luck with voters hard hit by economic recession, Sliva has placed the burden for a final decision on Brazil's congress.
Other television companies are split on what the desirable outcome of the government's Globo decision should be. Four networks have resigned from the Brazilian Association of Television and Radio Broadcasters after the organization began to negotiate with the state- controlled National Bank for Social and Economic Development for help in tiding over Globo.
Three of the networks (SBT, Rede TV and Record Television) are in favor of the loan being used only for new investments and not for debt payments. Rede Bandeirantes (based in the city of Sao Paulo) labels the possible government assistance immoral.
This is not a disinterested opposition. Globo is not the only Brazilian media company dogged by financial disaster. Never before have so many media companies in Brazil owed so much money. According to figures gathered by the newspaper Folha de São Paulo, the joint debt of all major Brazilian media groups sums up to $3.2 billion. Eighty percent of that amount is dollar-denominated debt, short-term debts make up 83.5 percent of the total, according to the media watchdog organization Observatório da Imprensa .
The issue takes on an outsized importance in Brazil, where television dominates daily life to an extent unrivalled elsewhere in the world, expect, perhaps, in the United States. In a recent issue of the monthly magazine Brazzil, Sao Paulo University Professor Renato Janine Ribeiro wrote that "
Already, the press senses a kill is within range. Media outlets, which have provided ammunition for opposition to Silva, have added Globo's financial worries to their stable of stories. In particular, the Rio de Janeiro-based daily Jornal do Brasil has seized the opportunity to settle old scores with the Globo-owned newspaper O Globo, Rio de Janeiro's best-selling paper.
The 2006 Soccer World Cup could prove a crucial test case for this struggle. Exclusive broadcast rights for this event -- the most profitable in Brazilian television -- could allow Globo to gain estimated revenues of around $300 million and would severely weaken the ability of other Brazilian television groups to get a share in the huge World Soccer Cup advertising market. If Globo fails to get the cash injection from Brazil's congress, though, the company's chances for securing exclusive broadcast rights for the most profitable event in Brazilian television will suffer a severe setback.
Will it prove enough to push Globo from its television throne? And if Globo falls, will Brazil's television content benefit? Opinions are split. But as the debate surrounding this media mammoth continues apace, Brazil's 170 million television viewers are at last learning that the choice could be theirs to make.
-- Carlos Castilho is a Brazilian journalist and MediaChannel advisor based in Florianopolis.