Nadav Palti

June 2008

The Israeli-based Dori Media Group has made huge strides in the telenovela market in the last few years. The company’s TV series, like Lalola, have made their way onto TV broadcasters around the world. Dori Media has also entered the channels space, operating successful telenovela networks, and is driving forward in the new-media arena, launching offerings on YouTube, developing made-for-online series, and recently teaming with Illusion Studios to bring state-of-the-art animation to new series like La Maga. Nadav Palti, the president and CEO, talks to TV Novelas about the progress made so far and his ambitious plans for the future.

TV NOVELAS: Dori Media Group’s financial performance in 2007 was very strong. What were the main factors that contributed to that success?

PALTI: In 2007 we increased revenues across the board. We sold more of our product, mainly because of the success of Lalola, but also because our library is growing very fast. We finished last year with 4,300 hours of telenovelas in our library, including those produced in Israel, but mostly from what we produce in Argentina. This year we are going to produce around 1,000 hours of telenovelas, so we should finish 2008 with some 5,300 hours. We increased our program sales dramatically, and this is due to the success of our distribution arm, Dori Media Distribution, which we launched only two years ago, at DISCOP in 2006.

This is one of the dramatic increases we’ve seen. Our other big success story is the two channels we launched in Indonesia in the middle of 2006, [the novela channel] Televiva Vision 2 [and BabyTV]. In 2007 the channels lost less money than in their first year, and in 2008 they will break even and move to a profit. We have a ten-year exclusivity deal with Indovision, the largest DBS platform in Indonesia, and the channels are growing very, very fast, with 10,000 to 15,000 and sometimes even 20,000 subscribers per month. The subscriber base increased greatly in 2007, and I believe it will continue to increase dramatically in 2008, 2009 and into the future. Indonesia is the fourth-largest country in the world, with 230 million people. It has 55 million households and cable and satellite penetration is only 1 percent. In a country this size with only 1-percent penetration, to get 15,000 new subscribers every month is really nothing. The market offers [a huge opportunity for growth]. Televiva Vision 2 in Indonesia is the number one rated channel, and both channels are very stable and very profitable.

In January of this year we launched nine channels with HOT, the biggest cable platform in Israel, reaching 65 or 66 percent of the population. According to the analysts, we will reach more than $60 million and more than double revenues in 2008 compared to 2007. And profit should be very good. So we have 13 channels on the air now, and I believe we’re going to launch at least another three to four channels in Latin America, in Europe and maybe in the Far East during 2008. I hope we will have 15 to 20 channels around the world before the end of the year.

TV NOVELAS: And you also have big plans for the Internet.

PALTI: The highlight of 2008 is going to be the Internet site that we will soft launch [in June] and hard launch around August. It will feature a telenovela that we are producing in Argentina starring Natalia Oreiro. It will also be interactive—the audience can influence what happens in the story line—and it will be cross platform. We are producing eight- to nine-minute episodes for the Internet and then cutting them down to one-and-a-half or two minutes for cell phones. So out of every episode for the Internet we are going to have five to six episodes for cell phones. And we are collaborating with one of the biggest cell-phone operators in Argentina and then will move to all of Latin America, country by country, from the south up to Miami in the north and then to the Hispanic market in the U.S. We want to work in Spanish and in English. And then if the site is a big success, as we expect it to be, then we will go to the rest of the world, country by country and language by language.

We are also going to have a huge database, an encyclopedia of telenovelas. It will launch with 1,000 items of telenovelas also with video. We will continue to add more and more information and also we want users to write new items themselves, [so the site will feature] user-generated content. It will also be a social network. And it will have six journalists that will broadcast 24 hours a day news about telenovelas from everywhere—Brazil, Mexico, Argentina, Colombia, Venezuela and Miami—including interviews with stars from each country, news, [behind the scenes]—what goes on before the shooting, after the shooting, what they are wearing, with whom they are going, and more.

We have a lot of experience with what people like on the Internet—which is different from what they want from TV—from the channels we launched on YouTube in August 2007. More than 25 million people watch our clips on YouTube today, and it’s growing very fast. We also have a library of 1,500 three-minute clips that we prepared especially for YouTube, because we produce 160 clips per month—five per day—according to the agreement that we have with YouTube and Google. We can use all of this library on our Internet site. And we can use the joint-venture channel with YouTube as advertising and promotion for our Internet site.

TV NOVELAS: What can you tell us about the deal with Televisa, and do you envision making other such agreements with other broadcasters?

PALTI: Yes, of course. At MIPTV we closed more deals, not only with Televisa, and in the future we will announce them. The Televisa deal is great for us and for Televisa. This deal is worth $9.5 million and I believe we are going to do much more with Televisa, they will buy more this year and maybe we will do more joint ventures. We like them and they like us. They are very aggressive and smart—similar to our operation—they work around the clock, always want to develop new things and aren’t afraid to take a risk.

And we buy a lot from Televisa, every year around 600 to 800 hours for our channels, so it’s not only that they buy from us, we buy from them. And we are doing a lot of joint ventures. We already made the telenovela Patito Feo with them [and it was a financial success for both of us]. So we are a partner, a supplier and a client of Televisa, and I think in the future there will be much more.

TV NOVELAS: You also sell telenovela formats. Is that a growing part of your business?

PALTI: I believe the whole world is moving to formats because cable channels and satellite channels need much more content. The big free-TV channels cannot allow themselves to take risks because if they put a show on the air that is not so good they lose money, they lose goodwill and they lose audience. The audience will move immediately to the other channels because they have a lot of options and before a broadcaster can air a new show, it loses a lot of time.

Big channels today do not want to take risks, so what do they do? They look at what is working well in other markets. Even if a show works in other markets, it’s not to say it will work in my market 100 percent, but 90 percent it will work in my market. So I reduce the risk from 100 percent to 10 percent. And then I have to adapt it correctly and I have to hope that I made the right decision to buy this telenovela. And what is a telenovela? It’s a drama—a daily drama or a weekly drama, but it’s part of the drama family, and this is why I believe that in the future people will buy more and more formats. Most of the business we write is with the big channels because they have to invest a lot of money to reproduce formats as local versions.

Drama is not a fashion, unlike reality, which is going down these days. People will always want to watch drama, drama is sophisticated and sexy and all the developments you have in drama you also have in telenovelas.

And I think formats will grow and grow, and we have seen our formats business increase dramatically in the last three years.

TV NOVELAS: What do you enjoy most about your work, and what keeps you going?

PALTI: I would like to find inspiration to conquer the world, not in a imperialistic way but in a good way. By this I mean we want to lead in the telenovela market. We think that our business model is unique and different from all our competitors. Companies like Telefe, TV Azteca, Globo and Televisa—although Televisa is not our competitor, Televisa is a partner—all concentrate on their local markets. And 50 to 80 percent of their revenue comes from their local markets. Unlike them, our business model is to produce for the world, to sell to the world, to penetrate new markets, to sell to South Africa, to Africa, to the Far East, the Middle East, and to penetrate the Western European countries. It takes a lot of time and patience to sell to Europe, it’s a different mentality, it requires a different approach, but we took it. Israel is [close] to Europe. It’s in the same time zone; the culture is really more suitable than Latin America. So we use everything to penetrate the global market. Unlike Telefe and Globo and the rest who look first at their local markets, our local market is the whole world, and this is a really different approach.

And then I want a channel for telenovelas around the world, like MTV is for music. Five years from now I want to launch in Latin America, Europe, in the United States, in the Far East, a channel for telenovelas worldwide plus the Internet site. So I enjoy inventing, and always come to the market with new things, whether it’s a new telenovela like Lalola, with a new approach, or a 24-hour channel dedicated to telenovelas. With the Internet we are coming with a really unique approach. We are not looking at a local market. We look to the world.

We produce a telenovela Internet site for the 2 billion people in the world who watch telenovelas every day, ranging from China and Indonesia and India across Europe to the Hispanic U.S. and into Latin America.