Globo’s Roberto Irineu Marinho

January 2007

By Anna Carugati

Organizações Globo is a powerhouse in Brazil and its businesses stretch across numerous media, including the daily newspaper O Globo; radio; publishing; feature films; the pay-TV company Globosat; the cable operator Net Serviços; Central Globo de Produção, better known as Projac, the largest production facility in all of Latin America; and most important, TV Globo, the broadcasting behemoth. Since the network hit the airwaves in 1965, TV Globo has been giving viewers the best programs, actors and on-air graphics the Brazilian market has to offer, along with the most popular programs, sports and the TV newscast of record.

As a result, TV Globo enjoys nearly 60-percent share of the Brazilian TV audience—some 70 percent of the country’s advertising pie—and is watched by more than 100 million viewers every day. It is the largest network in Latin America and is one of the leading producers of content in the world.

Roberto Irineu Marinho is the president of Organizações Globo. He took over the reins of the company when his father, Roberto Marinho, passed away at the age of 98 in 2003. At one point in his career, the elder Marinho was arguably the most powerful man in Brazil. He left behind a legacy and a media empire. In these last three years, his son has had to restructure the debt Globo accumulated when it was adversely affected by the extreme devaluation of the country’s currency, the real, at a time when the company was investing heavily in cable. The Brazilian economy has stabilized and Organizações Globo has successfully negotiated with its creditors.

Marinho is looking at growing the company even further and reveals his vision in this exclusive interview.

WS: Now that the company’s debt has been restructured, what is the next step in terms of investments and expansion?

MARINHO: Following the successful financial restructuring of Organizações Globo, all our companies are well positioned for the next strategic steps. Early in the process of restructuring [the] debt, we established a fundamental commitment to the long-term strategies and to the current operations of the principal companies that constitute our group. TV Globo, for example, was not affected by this restructuring and maintained focused on its mission of attending to and surpassing the needs of its viewers and the advertising market.

Our strategy for expansion and investment was not altered, and it can be summarized by two basic concepts. The first is to serve the Brazilian public with quality and creativity in any place, at any time and in every platform—analog and digital, fixed or mobile, interactive or linear. The second concept is to contribute to the dissemination of Brazilian cultural production around the world, strengthening the Globo brand and expanding the presence of our product abroad.

WS: TV Globo has strengthened its leadership in the local market—what’s the secret of this success?

MARINHO: Each and every day, and with each and every program, it is essential for us to to capture the attention of the viewer, who, with the remote control in hand, selects minute by minute the broadcaster that best serves his needs. Leadership is a consequence of the public’s perception of one’s superior quality.

WS: How do you evaluate the competition with Rede Record and SBT?

MARINHO: For a long time now, the competition is no longer only with national broadcasters, such as SBT or Record. In pay TV, where we compete against the world’s major producers of content, TV Globo is the most watched channel, reaching more than 40 percent of the [national] audience, while the second most watched channel has about 5 percent. The more competent and professional the competition becomes, the more organized the market will be, and the easier it will be for a company with our values and characteristics to face this competition.

We welcome all companies that do business in Brazil and respect our legislation. They will increase the offer of quality content to the Brazilian public, and will do so responsibly.

WS: What do you think of the investment made by the Spanish telecommunications giant Telefónica in the Brazilian pay-TV platform TVA?

MARINHO: We also welcome the investment of telecommunications companies as long as they act legally. Nothing should be done with disrespect to the constitution and national laws. If the federal constitution explicitly separates “social communication” [mass media] from “telecommunication services,” and establishes rights and duties specific for each sector, those precepts must be respected by all. We defend the plurality of the media. We believe that the more players that want to act in the arena of Brazilian social communication, the better it will be for the public and for the market. But we respect, with equal conviction, the legal precepts created for those who want to engage in this or any other economic segment. It is an indispensable condition for guaranteeing national interests and for just and wide competition in the market.

WS: How will digital technology change the way people watch television in Brazil?

MARINHO: For decades, Brazil has had a broadcast industry whose quality is nationally and globally recognized and which communicates daily to 167 million people. No other service is so universal, so democratic and so loved by the Brazilian people. No other service contributes in such a decisive way for the strengthening of our national identity, economic development, social inclusion and democratic maturity. Digital television must preserve and expand all those benefits. And this will certainly happen as our broadcast industry becomes one of the few in the world capable of offering—free of charge to the entire population—the following services: image and sound in high-definition and pristine video quality which is comparable to feature films; simultaneous transmission on fixed receivers (at home, at work or at the club), mobile receivers (on the bus, train, car or boat) and portable devices (PDAs and cell phones); and interactive content on demand, which allows the viewer to choose what programs to watch, to obtain more information about a commercial spot, or review archived material about a favorite artist.

During the past 12 years, TV Globo has made a significant investment digitalizing its entertainment and news productions. Today, 100 percent of its production is digital, and a big part of its entertainment content is in high-definition.

WS: What is TV Globo doing to bring its content to other platforms, and what plans do you have to strengthen your brand?

MARINHO: We understand that our content will increasingly be distributed in Brazil and around the world through multiple platforms. We are present in more than 100 countries, and new distribution platforms will not only increase the potential of reaching additional markets, but also increase the exposure of Globo’s content in countries where we are already present.

We are increasingly attempting to develop product that, from its conception, is designed for distribution on free TV, pay TV, cinema, video, DVD, radio, print and the Internet. With this strategy in place, we speak to the general public. We reach communities and we create conditions for direct interaction with each individual.

In Brazil, we have record ratings for interactivity via the cell phone and the Internet from programs such as Big Brother Brasil. And abroad, a program like Cidade dos Homens had its distribution enhanced by a strong multimedia strategy that reached 78 countries.

WS: Tell us about TV Globo Internacional’s expansion in Europe since you made the decision to operate it yourselves.

MARINHO: Since March of 2006, we assumed the operation of TV Globo Internacional in Europe—the channel is distributed by our own DTH platform in Europe—and it became the first operator with pan-European coverage. TV Globo Internacional is the only channel available in all the European countries (with the exception of Portugal) and part of the Middle East. This unique and pioneering project is a global operation. The decoders are sent from Korea, the center of logistic distribution [where the feed goes out from] is located in Rome. The central operations office is in London. The sales are performed by authorized agents who are responsible for the installation of dishes and are present in all the places where the channel is available, and the customer service is bilingual and originates from a call center in Brazil.

In its first year, this model of operation surpassed our most optimistic estimates, especially in countries like Italy, Spain, Switzerland, Germany and France. We hope that the subscriber base for TV Globo Internacional will continue to grow, and we plan to offer other channels produced by us or co-produced with national and international partners.

WS: The programming of your international channel is composed of original Globo productions. Does this affect the sale of this content?

MARINHO: TV Globo Internacional was launched in 1999 and is currently present in 66 countries on five continents, with an average revenue growth of 30 percent a year. The programming of the international channel consists of TV Globo productions such as novelas, sports, live news, mini-series, children’s programs and variety programs. The channel airs totally in Portuguese and is targeted to Brazilians abroad and people who enjoy the Portuguese language and culture, so it does not directly affect the sale of content to countries with another official language.

WS: Are the sales of scripts adversely affecting international sales of finished product?

MARINHO: It is heartening that more and more countries believe and invest in local productions. As the world becomes more globalized, the greater is the necessity to maintain one’s roots and national identity. This trend in the global audiovisual markets opens new opportunities for a company like ours. We have a tradition and a vocation for drama productions with [universal] content.

We are the biggest producers of drama in the world, as registered in the Guinness World Records 2005 and 2006. TV Globo produces 2,500 hours of programming a year, maintaining one of the best cost-to-quality ratios in the world. We have the biggest studio complex in Latin America, which occupies an area of 1.65 million square meters in Rio de Janeiro. We have one of the biggest libraries of formats that can be adapted to different market realities. All these factors give Globo the status of a preferred production partner of media companies around the world for co-production projects and format sales with production support.

In 2002, we co-produced with Telemundo the novela Vale Todo, a remake of the Brazilian hit novela from the ’80s. During the last three years, we co-produced with European broadcasters reality shows tailored for international markets in extraordinary locations in Brazil. We just closed a contract for the transmission of the Carnaval with Fashion TV, a cable channel that is present in 202 countries with a reach of more than 300 million households. The basic rule for success in the international market is to create content that respects the tastes of the audience in each country, and the competence of each partner.

WS: What success have you derived from the launch of PFC international?

MARINHO: PFC International is the first sports channel from Brazil with a focus on the international market. It is targeted to football lovers and Brazilians living overseas. This month, it will be available in the U.S., and the goal is to extend the service to markets in Latin America, Europe, Asia and Africa. The transmissions will always be done in Portuguese. There will be more than 300 live games during the year in addition to highlights of the most important competitions in Brazil. The channel is produced by Globosat and Organizações Globo, and international distribution deals will be conducted by the international business division of TV Globo.

WS: Is the pay-TV unit a profitable business in Brazil, where the household penetration only reaches 10 percent?

MARINHO: Yes. In a country with Brazil’s size, a product can be economically viable even if it only reaches 10 percent of the households—especially if these households have greater purchasing power, as is the case of the pay-TV market.

Independently of the market potential, evidently, only the strategically well-positioned and competently managed businesses will be profitable. Globosat, which was founded in 1991, today is the leader in the Brazilian pay-TV market, thanks to its strategy of investing in quality content, and by offering the advertising community options to reach different segments of the audience with vehicles that increase the value of their brands.

WS: Can you derive synergy promoting the channels from Globosat on the leading platforms of Brazil: Net Serviços and Sky/DIRECTV?

MARINHO: We strongly believe that our actions must create value for everyone: the public, the partners and society in general. This credo makes us look for efficient and enduring relationships among Globosat, Net Serviços, Sky/DIRECTV and all the other operators that distribute our channels. We do this by looking for synergies that increase the value for all companies involved in the process of providing pay-TV services, but above all, attempting to generate a greater value for our audiences because they are the only ones that can effectively guarantee the promotion and continuous use of our product.