TV Azteca’s Ricardo B. Salinas

January 2007

In 1993, Ricardo B.
Salinas, one of Mexico’s most successful entrepreneurs, bought two national
licenses and some run-down broadcasting equipment from the Mexican government.
What resulted were Azteca 13 and Azteca 7, two networks that turned the Mexican
broadcasting landscape on its head, toppling Televisa’s long-held monopoly in
the market. Since then, TV Azteca has exported programming to more than 140
countries around the world, and has also launched Azteca America in the U.S.
and the channel Azteca 13 Internacional in various international markets.
Salinas serves as the chairman of Grupo Salinas, which, besides owning TV
Azteca, has holdings in retail stores, as well as financial, telecommunications
and Internet companies. In this exclusive interview with World Screen, Salinas
talks about his plans for the future.

WS: How would
you describe the free-TV and advertising markets in Mexico?

SALINAS: Free
television is the dominant medium in Mexico and garners 70 percent of the
country’s advertising, which amounts to some $4 billion. Free TV has national
reach and is the primary source of information and entertainment for the
majority of Mexican families.

Advertising expenditure in
Mexico, as a percentage of the total economy, is among the lowest in the world,
which is why the potential for growth is so dynamic. Advertising investments
have grown more than the country’s GNP. TV Azteca captures nearly one-third of
all advertising spending in Mexico and 40 percent of the audience.

WS: Do you
plan on expanding Azteca 13 Internacional into new markets?

SALINAS: We
are increasing our presence into more countries and plan to grow further in the
next few years. A few months ago TV Azteca obtained a license to transmit Azteca
13 Internacional in Canada via pay-TV platforms. We are taking advantage of our
programming in order to generate greater revenues and profitability.

The Spanish-speaking
population is rapidly increasing in many countries, as is its purchasing power,
and Azteca 13 Internacional caters to its interests and in the process creates
value for advertisers.

In the future, we will
enter the pay-TV market but with a different strategy from our current one.

WS: What
opportunities are new media, such as mobile and the Internet, offering?

SALINAS: We are
one of the largest producers of Spanish-language product in the world, with
more than 10,000 hours of programming a year. This content appeals to a
high-end socioeconomic demographic in Mexico, which is the target audience of
the great majority of advertisers. Because of that, our content is attractive
to the free-TV market as well as to any other distribution system. It’s only a
matter of adapting this content to the various platforms. We are already
successfully commercializing our content on the TV Azteca website and we are
continually seeking new business opportunities on new-media outlets.

WS: What is
your strategy for growth in the Hispanic market in the U.S.?

SALINAS: This
year we secured a necessary condition in order to continue our growth in the
U.S.—we increased our coverage. Currently we are present in 55 markets,
which represents some 88 percent of the Hispanic population in the U.S. and is
equivalent to national coverage according to Nielsen criteria. This is very
important in order to be able to attract national advertisers.

We are now focusing our
attention on increasing our audience in prime time and access prime, as well as
fine-tuning our advertising sales strategy. We have a clear advantage over our
competitors and that will allow us to continue our dynamic growth. In the first
nine months of 2006, Azteca America’s sales were up 40 percent, outpacing the
growth of the Hispanic free-TV advertising market in the U.S. We plan on
continuing to increase our share of the advertising in one of the most dynamic
markets in the world.

WS: How will
digital television have an impact on the Mexican market?

SALINAS: In
Mexico, as in most of the world, digital television will be a reality in a few
years—a reality that will substantially benefit consumers by offering
more distribution options and a superior picture quality.

TV Azteca has been a
pioneer in Mexico, in migrating from analog to digital. Currently the company
is switching its transmitters to digital in order to offer digital broadcasts
to the households that receive TV Azteca. The decision reflects our interest in
replicating in our country a worldwide trend to improve the quality of
television. At the end of 2006, we were transmitting digitally in ten cities in
Mexico.

WS: As new
technologies open the way to new distribution platforms, is free tele­vision
still a good business to be in?

SALINAS: Free-TV
content in Mexico is very popular even among pay-TV subscribers. Programming produced
in our country resonates with the majority of
the population. The audience recognizes itself in the situations depicted in
our TV shows, and in the way of thinking, feeling and behaving that is
reflected in our programming. Mexican viewers can identify with our programs,
as can Hispanic audiences around the world. We follow developments in
technology in order to adapt our content to alternative distribution outlets.