Competition in the
Broadcast Television Marketplace
Latin America is going through a liberalization process in which many government institutions are being privatized and competition is being phased into previously regulated arenas. Liberalization has not been restricted just to the telecommunications, petroleum, mineral, airline and automotive industries. Just as visible are the effects of the opening of the broadcast television.
Obviously, these developments differ across countries because of pre-existing situational differences. In some countries, the broadcast television market has always been primarily commercial in nature and highly competitive (e.g. Puerto Rico). In other cases, previously government-owned channels were auctioned off (e.g. TV Azteca in Mexico) to raise funds and to encourage competition. Still, in other cases, new licenses were issued (e.g. Rock y Pop in Chile; and, in 1998, the new RCN and Caracol networks in Colombia). Finally, media ownership regulations have been relaxed so that foreign investors can enter (e.g. Chilevisión and Megavisión in Chile).
Yet, the infusion of new players does not automatically guarantee a competitive and viable marketplace. First of all, can the marketplace support all the players, both old and new? Is there enough revenue (primarily from advertising, plus some government subsidy) to support everybody? Second, can the new players compete effectively against the established players? Will they be caught in a vicious cycle between lower revenues and poorer programming?
In Table 1 below, we show the share of viewing for broadcast networks in seven Latin American countries. These data came from the Los Medios y Mercados de Latinoamérica study. The reader can find out more about these networks through their links on our Broadcast TV page.
Table 1. Average weekly share of viewing for broadcast networks
among Persons 12-64
|Country/Network||Share of Viewing|
Universidad Católica de Chile
Rock y Pop
Canal Tres (now Señal Colombia)
Canal 2 (Televisa)
Canal 13 (TV Azteca)
Canal 5 (Televisa)
Canal 7 (TV Azteca)
Canal 9 (Televisa)
Canal 4 (Televisa)
(Source: Los Medios y Mercados de Latinoamérica 1997)
On a country-by-country basis, we make the following observations:
Argentina --- The market Telefé is highly successful. The least popular network ATC is operated by the government, and may be auctioned off in the future.
Brazil --- The market is dominated by TV Globo, with SBT offering some competition. But the country probably has an advertising revenue base that is large enough to support even the smaller niche networks (the cultural channel TV Cultura, the women's channel Rede Mulher, the religious channel Rede Record).
Chile --- The two market leaders (UCC and TVN) are successful and profitable operations. The next two channels, Megavisión and Chilevisión, are not exactly profitable, but are supported so far by their foreign partners. The other players are in precarious positions, since the total advertising revenue base in this country is relatively small.
Colombia --- All three broadcast networks are government-owned and enjoyed a competition-free oligopoly except for the other government-owned regional networks. They will be challenged by the arrival of the private RCN and Caracol networks in 1998.
Mexico --- This is outright war between the two behemoths, Televisa and TV Azteca, and is perhaps the best demonstration that competition works.
Venezuela --- The two market leaders (Venevisión and RCTV) are successful and profitable operations. Recently, there have been a number of UHF licenses issued (Bravo, CMT, Globovisión, Puma TV), so that there may be hard times ahead for the smaller players who are forced to run low-cost, efficient operations.
We recognize that competition does not have to be defined narrowly as a head-on battle for the total audience. Sometimes, it is much easier and more profitable to target specific segments of the population. For example, in Brazil, SBT has more successes among teens (with a 33% share), helped by its business relationship with the Disney company. Similarly, in Mexico, Televisa's Canal 5 is targeted towards youngsters and has a 22% share among teens, compared to 17% in the general population. In Brazil, TV Cultura has a 5% share among persons in SES Level A, compared to 2% in the general population.
Technical note: We note that our share estimates may be somewhat different from those implied by the ratings services, for a number of reasons. Our numbers are based upon survey data taken during a specific time period (August to October, 1997). As such, there may be memory effects as well as seasonal differences. More importantly, our surveys are based upon national samples, whereas the ratings services tend to be done only in the major cities.
(by Roland Soong, 8/17/98)
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