Alberto Pecegueiro

This interview originally appeared in the MIPTV 2014 issue of World Screen.

When Globosat launched, in 1991, it introduced Brazilian viewers to an array of choice that had never been seen before on television. In Globosat’s early years, only affluent consumers could afford pay-TV offerings, but thanks to packages tailored to lower-income demos, a strong national economy and a growing middle class, CEO Alberto Pecegueiro has seen his business boom in the last decade.

WS: All major international media companies are very bullish about pay-TV growth in the Brazilian market. What is your view of the rate of growth, considering the economy has slowed down some?
PECEGUEIRO: It’s a matter of perspective. If you are coming from 25, 24, 23 percent growth a year, as we were between 2008 and 2012, going down to 13 percent, which was the rate of growth in 2012, looks a little frustrating. The overall subscriber base increased by 12 percent last year, which is nothing to be ashamed of and we expect the same rate for this year. When we talk to international media companies, I ask them, we are not the last Coca Cola in the desert anymore, why are you still so excited about Brazil? They say, if we want to increase our business in Russia, Russia is not for beginners. We cannot get into China. No one has figured out how to make money in India. Europe will take a long time to recover. The U.S. is a mature market. So, compared to the other emerging markets, the Brazil still seems, from an international perspective, like a market that is easy to reach and behaves according to known parameters. Regarding how much ROI an international company can have by enhancing its equity in Brazil is anyone’s guess. At this point it’s much harder to predict how Brazil will behave. We believe 2014 will largely be a repetition of 2013.

WS: Is Globosat still offering pricing and packages for lower-income consumers?
PECEGUEIRO: That has worked, but we shouldn’t forget that is not a decision that Globosat can make on its own—building those packages has to be done in conjunction with the DTH and cable operators. The growth of the market will depend on our joint capacity to provide solutions and the growth we have seen is a consequence of that. But there’s a limit to how much we can lower prices, especially considering that the cost of content continues to increase. That comes from intense competition on the international acquisitions market; there is a dogfight for good product in most categories. On the sports-rights side, the fact that the live sports events are so valuable to linear channels has increased the demand and the competition for sports rights. On all fronts we have escalating content prices and that is something to be put into perspective when we discuss how low can we go with the retail price of the industry. In the U.S., which is a mature market, programming companies have been passing their cost increases to the cable operators and of course the prime example is ESPN. In Brazil, because we have been riding the growth of the market, the operators have been able to deliver increasing revenues to the programming companies, and therefore it is unheard of passing escalating prices to the cable operators. That makes all of us a little more comfortable on both sides of the industry. So at this point, lowering the price of packages will be more difficult to do.

WS: In Brazil are linear channels still the main screen for viewers? How much viewing is taking place on demand or online?
PECEGUEIRO: We are still in a comfortable position with regards to linear channels because bandwidth, the use of credit cards and piracy still represent a challenge for pure OTT players. At the same time, the whole industry has been enhancing cable video-on-demand offerings as an alternative to the pure OTT players. The numbers are showing explosive growth in consumption through video on demand and OTT platforms because most of the programming companies have their own OTT services, although all of them are authenticated services—the content is only accessible to current subscribers. Our numbers are really amazing and none of this has been achieved at the expense of the ratings of the linear channels. Granted, this may change in the future, but the more content we make available on nonlinear platforms, and if that content is very popular, the more it benefits the linear channels.

WS: Are you continuing to invest in original productions?
PECEGUEIRO: Original productions have been one of our competitive edges in the last 15 years. The news is that in 2014 we will start a very ambitious program of co-producing with the broadcaster TV Globo, one of the top production companies in the world, and not only in terms of volume, but for the quality of its productions as well. While we are not diminishing the volume of our independent production commissioning, we will have additional content developed with TV Globo. That is a win-win formula because we are going to benefit from TV Globo’s know-how in scriptwriting, acting, directing and production. In return, we are going to open a new window for the development of the new talent. We already have a 13-episode series in pre-production called Animal and we have other product in development for 2015. By 2016 on we want to have a pipeline of production that will deliver content for our channels.

WS: The FIFA World Cup is in Brazil this year and the Summer Olympics will be in 2016. In covering these events, are you sharing resources with TV Globo?
PECEGUEIRO: Our level of investment in the coverage of the World Cup is huge. We are very engaged with TV Globo in order to make the best use of all the resources for everyone. TV Globo provides broad coverage in terms of ratings and reach and impact and we give the football fans in Brazil in-depth coverage that is unmatched. We currently have three sports channels, the flagship SporTV and SporTV2 and SporTV3. During the World Cup, Sport TV will broadcast live 24 hours a day. It will be the first time that we have a sports channel providing a 24/7 coverage for such a long period. And we are going to dedicate a good number of channels to covering the Olympics.