By Edgar Lopez
Mexico City – According to Mexico’s most prominent investigative magazine Proceso, the country’s dominant television broadcaster and the world’s biggest producer of Spanish-language television programming, Televisa, is facing one of its worst financial challenges since 2001. That was the year Emilio Azcarraga Jean, convened a new board of directors after the death of his father and former chairman of Grupo Televisa, Emilio Azcarraga Milmo “El Tigre”. At that time Azcarraga Jean successfully re-organized the financial and administrative turbulence inherited from his father.
(top l-r) Asscarraga, Baston, de Angoitia & Gomez
Fifteen years later, Televisa is again at a financial crossroads. With the decline of ad sales of its free-to-air broadcast channels, the lack of credibility of its news programs, and the declining ratings of Televisa’s programming and content (telenovelas, sports shows and game shows) the company’s executive committee which consists of Chairman Azcarraga, President of Television and Content Jose Baston, Vice President Alfonso de Angoitia, and Vice President Bernardo Gomez got to work.
However, the outlook for Mexico’s dominant broadcaster does not look promising. In the second quarter of 2015, Grupo Televisa reported to the Mexican Stock Exchange a slump of 16% in its ad sales, and in the third quarter of the same year, a fall of 9% compared to the previous year.
As noted in Proceso’s article, Televisa se Tambalea (Televisa Wobbles) by Jenaro Villamil (October 2, 2015), at a Televisa advertiser up-front entitled “Televisa: Creating Connections”, more than 650 ad agency executives were courted to sponsor Televisa shows, with the assurance that it “connected” with 14 million viewers in prime time.
“We had stopped doing these up-fronts for a while, and I am proud to do them again,” Azcarraga declared. “Be assured, this is a re-launch of Televisa and our relationship with [you] our advertisers. We want to create these connections.”
Baston also chimed in addressing the advertisers, “This morning we are going to start a new commercial strategy. We are revaluing our inventory and content.”
After the “re-launch” the economic scenario for Televisa did not improve much. It had planned an increase of 40% to 50% on its advertising rates, at which the advertisers balked, citing the audience migration from their free-to-air broadcast channels to pay TV and other digital platforms, not to mention the decline in ratings of Televisa’s programming.
Publicly Televisa has attributed the decline of their ad sales on the Federal Institute of Telecommunications (IFT) as it no longer allows their purchase of exclusive rights to sporting events such as the World Cup and the domestic soccer playoff tournament. They also cited federal mid-term elections of 2015 wherein the government required Mexican broadcasters to give free advertising space to political parties. Additionally, the federal government requires broadcasters to decrease the amount of hours dedicated to advertising “junk food” during children programming.
The recent study “Entertainment and Media Outlook Mexico 2015-2019” conducted by Pricewaterhousecooper concluded that digital technology such as digital television, web TV and other mediums of content distribution are gaining strength. The amount of TV viewers using digital devices for their video content via the web by way of their smartphones, iPads and personal computers is increasing.
The increase in the number of internet users and the development of OTT apps (over-the-top), a term used for the delivery of film and TV content via the Internet, are a major factor.
According to the “Global Internet Report of 2015” conducted by the Internet Society, the increase of internet users from 2000 to 2015 rose to 3.17 billion from 2.94 billion in the previous year. The migration to the web by audiences when choosing to watch their favorite shows on Netflix or other digital platforms instead of the traditional broadcast channels is undeniable.
On February 21, 2016 Facebook released its 2nd annual study “State of Connectivity 2015: A Report on Global Internet Access” that showed that at the end of 2015, estimates showed that 3.2 billion people were online. This increase (up from 3 billion in 2014) is partly attributed to more affordable data and rising global incomes in 2014. Over the past 10 years, connectivity increased by approximately 200 to 300 million people per year.
In January of this year, Netflix, the world’s biggest streaming-video subscription provider announced it had more than 75 million subscribers around the world and projected an increase to 6 million new subscribers this quarter.
In spite of decades of being the world’s largest provider of Spanish-language content and Mexico’s dominant broadcaster, it seems Televisa is slow in realizing the importance of adapting an online streaming and OTT platform, but that might not be its only problem.
Credibility of the company
In 2012, the prestigious newspaper The Guardian revealed in an investigative report, that Televisa had “set up and funded” a campaign to promote former governor of the state of Mexico, and now President of the Republic, Enrique Peña Nieto and other politicians in Mexico. The documents published by The Guardian suggested that Televisa contracted external suppliers to distribute pro PRI (the Institutional Revolutionary Party) campaign videos on different media, and to mock Nieto’s political enemies. Subsequently, the Mexican network denied these allegations and demanded an apology from The Guardian.
Televisa has also been under constant scrutiny for the favorable coverage of Peña Nieto’s career before and after he became the president of Mexico in their news and entertainment TV shows
More recently Televisa viewers expressed anger and frustration on social media when the host Andrea Legarreta of the popular morning show Hoy, commented on the economy telling viewers that Mexicans should not worry about the tumbling peso. “Just because the dollar goes up, that doesn’t mean the price of everything we buy goes up. The world economy has to do with what is going on with the Chinese economy.” Her co-host Raul Araiza also chimed in, “One of the effects in Mexico is that the dollar costs just a bit more than it did”. Later, Legarreta backtracked on her twitter account explaining that she only said what advertisers want them to share. The Mexican peso has fallen more than 30 percent against the dollar over the past year.
Another scandal involving the broadcaster company revolves around its main news anchor Joaquin Lopez Doriga and one of Mexico’s wealthiest women Maria Asuncion Arambuzabala who accused Lopez Doriga and his wife Adriana Perez Romo of extortion. Apparently, Lopez Doriga and his wife had asked the businesswoman’s construction company for $5 million dollars in order to not stop the construction of her housing complex project named “Ruben Dario 225” in Polanco, one of the richest neighborhoods in Mexico City.
According to Proceso magazine Lopez Doriga, who is also a radio host at Grupo Radioformula, has received more than $14 million dollars in contracts from the federal government from 2001 to 2015. The investigation concluded that the news anchor received huge amounts of money to speak favorably about the ruling party, Institutional Revolutionary Party (PRI) and the federal government. All of this was brokered through Lopez Doriga and his wife’s companies Acron and Ancla, which provide consulting and promotional services, run political campaigns, and interviews of top government officials in Mexico.
These revelations have lead to Televisa making changes in its programming and TV content. The company has put out a directive that directors and TV writers focus on high-quality content audiences can enjoy on various digital platforms. They also plan to hire new talent including hosts and actors from TV Azteca, which is no longer in the telenovela business, and many of the talent is now migrating to Televisa. But their most aggressive move, which was announced on February 22nd, is their first VOD and OTT platform.
Televisa’s new OTT platform, “Blim” is said to compete with Netflix in Mexico and Latin America. The catalogue includes popular and vintage Mexican soap operas (telenovelas), Mexican classic films like La Risa en Vacaciones and the popular TV show Chespirito, and other movies originally distributed by Televisa’s distribution arm Videocine as well as U.S. films. The latest Bond movie Spectre will premiere on Blim later this year in May.
It would seem Televisa did not anticipate the digital deluge, never imagining technology would one day surpass traditional media. The big Gorilla was not prepared for the new challenges, which require new ways to urgently attract more viewers, now it finds itself playing catch up.
To put it into perspective, Netflix digital content includes 3,525 videos, 2,869 films and 656 TV series from all over the world, eons ahead of Blim’s initial 13,000 hours of programming and a projected year-end estimate of 18,000 to 20,000 hours. After Baston announced the launch of Blim, Mexican TV viewers took to social media to criticize the programming for being old, repetitive and obsolete, content lacking in any appeal to millennials.
But will Televisa’s efforts to redirect the course of the company be enough? Will decades of being the big TV broadcasting Kahuna in Mexico whose complacency and lack of vision of the streaming digital age be a detriment to the survival of Televisa? All this might hinge on the success of Blim.
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