Turner Latin America’s Juan Carlos Urdaneta on LatAm Pay TV

NEW YORK: Juan Carlos Urdaneta, the president of Turner Broadcasting System Latin America, reflects on his 20 years with the company and the evolution of the Latin American pay-TV industry.

WS: How has the pay-TV market in the region evolved during your 20 years at Turner Latin America?
URDANETA: In these 20 years, I have seen three or four events that really marked turning points for our business. The first I would say was, since my arrival, the launch of CNN en Español. It was a very important step for the company to launch the first news channel in a language other than English, in ’97. I think it was something really important and that marked a milestone.

Another significant point for us, which came in 2004-05—because it changed our outlook in Latin America—was the moment that we stopped making entertainment channels in assembly, [that is to say, they stopped originating] from Atlanta and [they instead came] from Buenos Aires, and that gave the overall business in Latin America a different perspective. This put us in a position that in 2007 we were able to acquire the Claxson channels, which expanded the portfolio of channels at a time when there was a push for industry growth by the entry of telecommunication companies through cable and we were able to capitalize on that investment quickly.

The fourth important point was the acquisition of Chilevisión in 2010, because it marked our entrance into the area of broadcast television from a company that creates 90 percent of its content. To some extent, these are the four most important areas within Turner.

In these 20 years within the industry, we have gone from [a point] where it was important to be first, perhaps without really thinking about what you had to offer, to the next stage, where it was important to have more channels, because the market had already grown to a certain level. Now, the consumer has become more sophisticated and there is a lot of competition [to enter] the phase [where what] matters is the quality of the [channels]. So, there was an initial phase [where it was important] to be first, then it was about the amount [of channels] and we are now [focused on] the quality [of the channels]. This is how I see the evolution.

This leads us to be very focused at Turner…on making the channels better and [having] more knowledge of what the consumer wants. We used to sell what we had to sell and we are now thinking to first understand what [the consumers] want so we can produce it, buy it, program it and try to meet their needs. It’s all part of a natural process in the industry’s evolution.

WS: Turner’s channels in Latin America hold leadership positions throughout the region thanks to, for example, some of them being pioneers in the market. What other factors have influenced these results?
URDANETA: Having more time in the region helps in the sense that [these channels] were there first and that strengthens the overall brand. The brand is very [healthy] and this helps in the mind of the television consumer at the time [when they are choosing what to watch]. But that only lasts as long as you keep making successful investments in terms of programming. Obviously one of the most important things has been to continue to invest aggressively in more and more content. We are in a situation where technological capacity in terms of the number of channels and options available is much broader than the creative capacity of human beings to fill all these entertainment options, and that makes it very important for channel groups to be continually looking for more and better programming because it is a relatively scarce good.

WS: Where do you see opportunities for growth in the pay-TV market?
URDANETA: We are very optimistic. In Latin America we are a little beyond scratching the surface, but it’s not that we are close to saturating [the market] or with [a market] that’s too mature. Pay-TV penetration is still around 35 percent in all of Latin America; Brazil is still 25 percent or so; [and] there has been a lot of growth in Mexico, but there is still room to grow. Within the next five years, aiming to reach a penetration rate of 40 percent in Latin America is reasonable: it’s not too aggressive, but it’s not very conservative. It is possible, if you still have the conditions that previously succeeded in several markets, along with technological advances. On one side, the traditional pay-TV business still has stages to develop and [room] to grow. On the other hand, there will continue to be some consolidation of operators. In the future, operators that are big today will be even bigger, and maybe we’ll have fewer operators, as well as more multinational operators and fewer single-country operators. Along with that, they are also launching some of their own OTT apps that develop parallel to our TV Everywhere.

This market still has a lot of growing to do, both in the traditional pay-TV business as well as in these new [areas] that are being seen today. As often happens in markets that are a little behind, sometimes steps are skipped, there’s not the same growth as in other markets, but certainly all indicators [say that] in Latin America, we still have plenty of room to grow within pay TV and, generally, for all distributors and content creators.