Exclusive Interview: Saban Capital Group’s Haim Saban

September 13, 2012 World Screen
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PREMIUM: Haim Saban, the chairman and CEO of Saban Capital Group (SCG), tells World Screen Newsflash that SCG is open for business and interested in investing in content companies.

 

WS: You have a track record of investing in television entities, whether it was Fox Family or Keshet or ProSiebenSat.1 or Univision. Even though the television business is facing some challenges nowadays with the sluggish economy and fragmentation of the audience, what makes you believe so much in television as a medium?
SABAN: Because it has withstood every assault from any other medium. The fact of the matter is that networks and TV stations are still very profitable businesses. We just made a major investment in the number one broadcaster in Indonesia. We made the investment in October and that investment is up close to 100 percent. So our experience over the years with broadcasting has been very positive. ProSieben was a big success. Keshet was a big success. Univision is a magnificent company with magnificent management catering to the fastest-growing demographic in America. We believe it’s going to be a great success for us, too.
 
WS: Is Asia the area of the world right now where you feel there is a lot of potential and growth opportunities?
SABAN: We will continue obviously to look for investment opportunities both in the U.S. and Israel. We are concerned about Europe. There is a lot of uncertainty and volatility. There are too many unknowns in Europe and the prices of companies that we would be interested in are still not low enough despite the crisis. Therefore we have diverted our attention from Europe to Asia, while, on an on-going basis, we’re looking for opportunities in the U.S. and Israel.
 
WS: For many years, because of their dual revenue streams, satellite and cable were seen as having greater growth potential than broadcast television that was only advertising based. But broadcast is now diversifying its revenues, isn’t it?
SABAN: Broadcasters are now enjoying a dual revenue stream, retransmission fees as well as advertising. It is no longer a one-revenue-stream business, but if an advertiser or a marketer or an ad agency wants to reach masses, and reach is important to them, the best place to be is in broadcasting. I am not trying to minimize the importance or the penetration of cable, which is very significant. And as a matter of fact, we are looking for opportunities in satellite and cable in Asia. So we’re not limiting our interest just to broadcasting. Our interest is much broader than that.
 
WS: Certainly Univision has been very successful in its retransmission deals.
SABAN: We were the first ones out of the box, and I believe we came up with a successful formula—we had no disruptions [in service]. As the first one out of the box with no disruptions, I think it’s a significant achievement. The reason we were able to get there is simply because we came up with a formula that was a win-win for both us and the operators. There are ways that you can be paid for the signal that you supply and at the same time deliver to the operators certain items that are important to their growth. We came up with what very quickly became a win-win formula for both the operators and Univision.
 
WS: Contrary to other broadcast entities, your negotiations were relatively contention-free, weren’t they? They went rather smoothly.
SABAN: They were contention-free in the eye of the public, but if you were in the room you had to wear a shield. [Laughs]
 
WS: I guess every time you try something new, you have to deal with what comes up, right?
SABAN: We did OK, the operators are happy. It’s what we call a Bar Mitzvah! [Laughs]
 
WS: Saban Capital Group has invested in Taomee, China’s leading children’s online entertainment company. Even though the business models may not always be clear online, is digital media an area that also interests you?
SABAN: That the online world is unclear is the understatement of the year following the Facebook IPO. We are completely open to business for any form of media, or any form of business where we feel we can bring added value. As long as we can bring added value, we are interested. If you have a shoe-manufacturing company, don’t come to us. We wouldn’t know how to tell you where to go buy the leather to make the shoes. But if you have a business that is in the content area, merchandising, licensing, marketing, online, gaming, broadcasting, any and all forms of content, we are open for business. And we are actively looking for investments. It isn’t easy to put money to work these days. And we are very fortunate that we have been, during the crisis, pretty conservative in the way that we deploy our capital. So we do have a lot of dry powder and we’re ready and open for business.
 
WS: Univision is unquestionably a powerhouse. Televisa is no longer simply a supplier of programming, it now has a minority stake in the company. What plans do you have for building on the relationship with Televisa even further?
SABAN: The contentious relationship between Televisa and Univision is a relationship we inherited when we bought the company. Immediately after we got the keys to the house, we engaged with Televisa, and though it took longer than they or we would have liked, we got to a deal that they were satisfied with and so were we. And now the relationship is absolutely flourishing. We have a saying at both companies that Univision is Televisa and Televisa is Univision. So to have as a shareholder what is basically the exclusive supplier to our prime-time schedule, which is guaranteed as long as Televisa is a shareholder—at least for the next 15 years—is an achievement that no network anywhere in the world can [claim]. And we are proud of it. We are proud of it because we have programming that airs on Televisa in Mexico before it comes here, and we know upfront which programs are going to be hits and which are not going to be hits, because 65 percent of our audience is of Mexican descent. And 56 percent of Hispanic bilinguals only watch Univision, even though they speak English. So this is a powerhouse that has no other company you can compare it to. Because having secured for your prime time for multiple years programming that has been tested is just—well—it’s just unique in the world.
 
WS: And now you have the right to stream that programming online.
SABAN: We have exclusive all rights in this country.
 
WS: And Venevision continues to be a supplier as well? Their novelas are also rating well on Univision.
SABAN: Venevision is a very respectable company. They have been around for a long time. They are Venezuela- and Miami-based. But obviously their output is smaller than Televisa’s. But they have produced a couple of hits for us, so it’s also working well.
 
WS: Tell us about the agreement between Univision and ABC News for a news and information channel that will debut later this year.
SABAN: It’s a fifty-fifty joint venture where we will share the content that goes on the channel and Disney is in charge of distribution and ad sales.
 
WS: In the area of advertising, has Univision been working to draw more English-language advertisers into the Spanish-speaking world? How has that effort been going?
SABAN: It’s an on-going effort, but it is an effort that yields very positive results for us on a yearly basis. Much of our growth is due to the fact that more and more marketers realize that to reach Hispanics you need to be on Univision—period, over and out.
 
WS: What is Hispanic purchasing power, $1.3 trillion by the year 2015?
SABAN: It’s $1 trillion now and growing by leaps and bounds.
 
WS: Do you plan on offering more product placement and product-integration opportunities to advertisers?
SABAN: Well obviously before the deal with Televisa, product integration was pretty rare on Univision, but in view of the very close cooperation between Televisa and Univision, we’re seeing more and more of it, and we are working hand in hand with Televisa to increase the marketing solutions that we offer our clients.
 
WS: The Hispanic TV market is getting more crowded now with the arrival of News Corp’s MundoFOX. You don’t strike me as a person who is ever scared by competition, but how do you see MundoFOX impacting the market?
SABAN: Look, I will never discount [News Corp. COO] Chase Carey! [Laughs] So I will say I would have preferred that they stay in English-language media without coming into Spanish! I tried to convince Chase to do that, but he just laughed when I told him that. But it is what it is. There is competition and there will be more competition. When you have purchasing power of $1.3 trillion coming down the line and the fastest-growing population, you are going to have people looking to cater to that population. We are not surprised by it. We are not oblivious to it, but we are also not scared of it. It is what it is; it is competition.
 
WS: Another form of competition has come in this past TV season from some of the Telemundo novelas, which got good ratings. Is there room in the Hispanic market for so many players?
SABAN: I think everybody should get out of the Spanish-language business! That’s what I think!
 
WS: That is a very clear goal!
SABAN: There is a lot of growth in Korean-language media and Hindi-language. There are many dialects in the [Indian] language. They should go focus on something else and leave the Spanish audience to us; we’ll take care of them!
 
WS: Speaking again about the power of the Hispanic population, this is an election year and the Hispanics could turn the election one way or another. Talk to me about the role that Univision’s news has by broadcasting the debates and why it is important for both candidates to take the Hispanic population seriously.
SABAN: There are two facts that I would like to highlight. Fact number one is that Univision News, under the leadership of Isaac Lee, is a very balanced news division, allowing the right, the left and the center to express their views on all matters. At the moment, Hispanics are more with the Democrats, primarily President Obama, than they are with the Republicans. In order to get the nomination, Romney has had to take very extreme positions on immigration that are incompatible with the interests of the Hispanic community. Like every respected politician, once he has the nomination, he’s going to move more to the center. How will that impact the Hispanic vote? Your guess is as good as mine, but we’ll be able to know much more once he clarifies with finality what his position is on immigration. So that’s where we are.
 
WS: Given all that is happening in the Middle East right now, I imagine there is quite a lot going on at the Saban Center for Middle East Policy at Brookings.
SABAN: We have about 40 people working, looking to supply elected and appointed officials with enough data and information so they can make educated decisions.
 
WS: We hear so much about job creation and about the need to turn the economy around. You have led successful businesses; you have created jobs. What advice would you have for the next president?
SABAN: On the economy, it’s above my pay grade. I will tell you of a dinner I attended about a year and a half ago where Alan Greenspan [former chairman of the Federal Reserve] was present and I asked him if he believes there will be inflation. And he gave me a very long answer, which could have been summarized in one word, yes. And then I asked him at what level, and he gave me another very long-winded answer, which could have been summarized in one number, 25 percent. I heard that and I wanted to jump off a cliff. I happened to be in New York. I went to sleep and I woke up the next morning and I opened The New York Times and Paul Krugman, a Nobel Laureate in economy, predicted deflation. So when you have Greenspan predicting inflation and Paul Krugman predicting deflation, I will answer your question by telling you it’s way above my pay grade, to predict what the economy will do, because nobody knows what Greece will do, nobody knows how Germany will react to what Greece will do. Nobody knows whether there will be a run on the banks in Spain and what Greece will do about that. Nobody knows what the new president of France will face going for “growth” versus “austerity.” So the bottom line is, nobody knows. But I don’t like, on a personal level, what I see happening in Europe. Europe is our biggest trading partner. The way Europe goes, we go.
 
WS: With the persistent sluggish economy and high unemployment rate, is your Saban Family Foundation even more active and getting involved in even more charitable work?
SABAN: We have identified about 10 or 12 charities that we are focused on. That doesn’t mean that when we are solicited we don’t contribute—if something touches our heart, we do. But for the most part, my wife, Cheryl, and I like to contribute narrowly but deeply as opposed to broad and shallow. That’s the way we believe we can impact good causes in a very aggressive and constructive way. We are not, under any circumstance, cutting down on our giving. We are examining on a case-by-case basis and contributing accordingly. 

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