Argentina’s
Economic Crisis
Brings Boom to Production
By Dom Serafini
Nowadays, investing
in Argentina is not for the faint of heart. But ever since the convertibilidad,
the country offers enormous potential for investments, especially in
audiovisual production and co-production.
According to Ralph Haiek, president of Pay-TV at Claxson, Argentina is already
experiencing a shortage of technicians for TV spots and movie production. They
have recently been invaded by international producers - primarily from Puerto
Rico for TV commercials and from Spain for movies - thanks to the favorable exchange
rate, excellent technical facilities and the presence of skilled technicians.
Claxson, the Argentinian company whose major shareholder is Cisneros Group of
Venezuela, produces 11 TV cable and satellite channels, including three premium
ones.
VideoAge met Haiek during Jornadas de ATVC, the annual
trade show for cable TV programming held in conjunction with the Latin
America Conference of Promax (the Los Angeles-based Association of
marketing and promotion executives for international TV), which took
place in Buenos Aires last November.
Raul Lecouna, president
of Central Park Productions, one of the three largest production studios
in Argentina, stated that before the convertibilidad - when
the peso was tied with the U.S. dollar - Argentina produced six telenovelas
a year. Now, with the free exchange, the country produces 11. And,
from a cost of $40,000 per hour, telenovelas are now produced for $12,000
per episode, with $4,000 for below-the-line costs and the rest for
the artistic/creative portion. Usually, a telenovela consists of 120-150
episodes, while a miniseries is composed of 23 episodes. Miniseries
are more expensive, costing up to $40,000 per hour, because they receive
a "movie" treatment. Still, it is less expensive than producing
them in a place like Spain, where the cost is around $300,000 per hour.
Argentina's five terrestrial networks and the myriad of cable and satellite channels
prefer to produce their scripted programs locally instead of acquiring them from
abroad, even if the cost per hour is now about $2,000 versus the $8,000-$10,000
cost charged prior to the crisis. Local product is more popular with viewers
and brings in extra revenue through international distribution, especially in
Asia and Eastern Europe. In this case the producer gives the international rights
to the network's sales division in exchange for 75 percent of the revenue.
"The positive aspect of the crisis," said Haiek, "is that we purchased
our state-of-the-art production equipment when our currency was tied with the
U.S. dollar, and now we take advantage of all these technical facilities as well
as a favorable exchange rate." One of Claxson's TV channels, "Infinito," is
now made up of 90 percent local production, whereas prior to the crisis, local
production accounted for only 30 percent of its schedule. "It's more expensive
to produce than to purchase programs abroad, but we get to keep the content rights," said
Haiek. Content is now utilized for international sales as well as to expand the
channel throughout the entire Latin American area.
Today, "Infinito" has 10 million subscribers, including 3.4 million
in Argentina. Local product for "Infinito" (reality/documentaries),
costing about $2,000 per hour (versus $1,000 for a purchased reality-type program),
allows the channel to better compete in an Argentinian TV universe of 117 channels
(45 cable and 72 satellite). Furthermore, local programming is better appreciated
by cable TV systems competing within the same area (in Buenos Aires, for instance,
users can pick among three cable and one satellite TV system).
An additional consequence of the economic crisis is that TV networks, to lower
their overhead costs, farm out production to independent studios, sometimes bringing
in co-producers. Central Park is currently co-producing with Israel, Spain and
Russia. Italy, which is not involved in TV production, is active with theatrical
co-productions.
