By Cesar Diaz*
As we navigate the turbulent waters of a pandemic, new world orders, new protocols, and safe working conditions, Latin America has become a hotspot for the COVID-19 virus. This is creating a whole new set of challenges in and around the television industry, which are impacting all areas of our business. Going back to a few weeks after NATPE Miami, many of us involved in the sale and distribution of content felt the immediacy of what was coming as broadcasters began to retract and delay commitments on shows being offered. As March settled in, agencies and advertisers were pulling out their budgets, causing a chain reaction in the suspension of local productions, including format acquisitions, freezes on foreign program buys, and minimizing expenditures.
Ironically, the stay-at-home mandates that gave way to a rise in audience stats have offered no real benefits in capturing more revenues. What many of us content distributors may have used as a sales pitch to convince TV outlets as to the need for more variety in content have been effectively turned down on account of the withdrawal of advertising money.
The decline of advertising revenues has to be the single biggest pandemic-related factor that has changed the face of local television in each LATAM territory. I had an acquisition executive admit that his channel lost 75 percent of its advertising revenues in the span of less than three months. Many of the program strategies now revolve around squeezing all the extra available license runs from shows that are still within their license periods and are sitting in the “film vault.” In addition, the powerhouse networks from LATAM that are also recognized as major content production houses (e.g., Brazil, Mexico, Colombia, Argentina, and Chile) are also utilizing their own catalogs of drama productions (novelas and series) to fill programming slots and help minimize expenses.
Faced with these challenges, many distributors have been forced to go into survival mode, meaning having to adjust and lower license fees. In these critical times there’s just no option other than to be adaptable. However, that puts an added burden in recouping costs on non-Spanish content, which needs to be dubbed to conform to the territory. That may even scare away the content owners as they lose interest in the region. There will also be the tail-end struggle that occurs once we fully get out of this nightmare. It’s probable that we’ll need to readjust the fees upwards next year — something that buyers will surely oppose. This will most likely lead to tug-of-war discussions. Although format sales may have also decreased, these will most likely pick up quickly as productions resume once again, something that many are hoping will happen sooner rather than later.
In the midst of all this action we cannot forget about the VoD platforms. They may very well be the ones that are benefiting from all the negatives created by the pandemic. The confinement has increased viewership. Netflix, Amazon, and other SVoDs are rooted on solid ground and AVoDs are on the rise. The AVoD buyers are strong enough to be able to offer a rev/share business rather than putting money up front for content. This model is more geared towards the content owner rather than an independent distributor, such as myself, as any of the revenues, depending of course on the content, will come farther down the line.
But, as people say, we will get through this. In the meantime, it’s an issue of keeping your head above water and maintaining your presence, which nowadays means virtual meetings and video conference calls.
*Cesar Diaz is a seasoned executive in the television distribution industry who now leads his own Miami-based company, 7A Media, which specializes in content development, international sales, and consulting. For over 30 years, Diaz has worked for various Latin American TV enterprises, including Radio Caracas TV (Venezuela), Telefe (Argentina), Telefónica de España (Spain), and had a 22-year career with Cisneros Media Distribution, formerly Venevision International (Venezuela).