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Showtime For Televisa


International Business: MEXICO

SHOWTIME FOR TELEVISA

It must fend off a strong local rival as it takes on global giants

At Grupo Televisa, the Mexican media giant, work stopped one recent morning. For 20,000 employees, it was time to meet their new 29-year-old chairman. Speaking via closed-circuit TV, Emilio Azcarraga Jean got to the point: Televisa was going global, taking on heavyweights such as Walt Disney Co. and Time Warner Inc. "That is really our competition," he said.

Despite his baby-faced looks, Azcarraga has the ambitions of his father, hard-charging entrepreneur Emilio Azcarraga Milmo. Before his death in April at 66, "The Tiger," as he was known, had begun to transform Televisa, the world's largest Spanish-language media company, into a multinational. By offering Spanish speakers original programming produced in their language rather than dubbed Hollywood fare, Azcarraga believed Televisa could go directly up against English-language competitors with everything from its telenovelas, or soap operas, to business news.

Televisa's new boss will need more than inherited bravado, though, to conquer the $38 billion Spanish-language TV market. At home, an upstart rival network is grabbing market share. Future expansion will have to come overseas, where Azcarraga Jean is untested. And for the company, which posted 1996 sales of $1.5 billion, operating under the younger Azcarraga's collegial style will be a sharp break with his father's autocratic rule.

What's more, a boardroom power struggle has underscored Azcarraga's limited command. In July, his cousin, Alejandro Burillo, a major shareholder, forced the resignation of Chief Corporate Officer Guillermo Canedo White even though both Azcarragas had publicly supported him. By trimming costs, Canedo had helped lift Televisa's global depositary shares by 27% so far this year.

Televisa can't afford more such squabbling. For decades, it enjoyed a quasi-monopoly in return for supporting the ruling Institutional Revolutionary Party. But Television Azteca, a former state-owned network that was privatized in 1993, made serious market inroads last year--and raised $526 million this year from an Aug. 14 initial public offering. Azteca now claims one-third of Mexican TV ad revenues. Belatedly, Televisa is reacting. It promises new shows by fall and has brought in a savvy new chief operating officer: Jaime Davila, who was chairman of Univision, the flourishing Miami-based Spanish-language network in which Televisa owns a 19.8% stake.

TURF WAR. Potential may be greater abroad. In Latin America, Televisa is partnered with a group led by Rupert Murdoch's News Corp. to bring direct-to-home (DTH) satellite broadcasting to the region. The venture, Sky Entertainment Services, gives Televisa an outlet for what it does best: programming. Already, Televisa has rolled out new channels, including Conexion Financiera, which broadcasts business news from studios in Mexico City, Buenos Aires, Madrid, and New York. "This is the first example of the global Televisa," says Alejandro Reynoso del Valle, a former central bank economist who launched the channel.

Meanwhile, rival Galaxy Latin America, led by Hughes Electronics, has already introduced DTH in most of the region, while Sky is available in just Mexico and Brazil. Both groups are gambling that the Latin middle class is prosperous enough to make DTH pay off.

In Spain, Televisa has joined a venture led by Telefonica de Espana to launch DTH service in September. But a rival Spanish-French group has already begun broadcasting. In the U.S., Sky's plans to launch DTH are on the back burner. One problem is a potential conflict with Univision over broadcast rights to Televisa programming.

Azcarraga is determined to put his stamp on Televisa. Conceding that its managers had been high-handed, he pledged in his speech: "Arrogance from any boss at any level in this company is unacceptable." That's just the first of many expectations he must fulfill.By Elisabeth Malkin in Mexico CityReturn to top


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