Viacom made headlines in November 2016 when news broke that it was paying US$345m to acquire Latin American broadcaster Telefe.
The deal gives the US giant control of Argentina’s dominant national broadcaster, along with 12 production studios, a news operation, an international pay TV service that operates in 17 countries, and a library of some 33,000 hours of content.
“Viacom is a big supporter of the notion that content is king,” explains Pierluigi Gazzolo, President of Viacom International Media Networks Americas and Executive Vice President (EVP) of Nickelodeon International. “Telefe is not just a big broadcaster, it’s a studio as well, and one that produces and owns a lot of content. Having assets that can give us more content to own and exploit around the world is a key part of our strategy.”
The acquisition also gives Viacom a significant step-up in scale in the region. “Viacom is very niche in Latin America, we have these niche brands – Nickelodeon, MTV and Comedy Central,” Gazzolo adds. “We were looking for an expansion of our demographic and portfolio to be able to exploit the market better, and Telefe is a great example of that.
“Not only because of its size and magnitude, in terms of reach and share, but also because it caters to a more general audience. Having a more complete portfolio will allow us to grow our overall pay and free TV businesses in Latin America.”
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Argentina is not the only Latin American country Viacom sees as having potential – Brazil, Colombia and Mexico could also be future targets for takeovers. “Latin America is a region we want to bet on internationally because of the growth it still has and the scale we still need,” says Gazzolo. “Mexico and Brazil are evolving quickly, offering bigger opportunities above and beyond linear pay TV. There are a lot of OTT opportunities within those markets.”
As for Colombia, “pay TV penetration is high, but the ratio of investment in ad companies, broadcast and pay TV is significantly under-indexed, so there’s a great opportunity there to grow.”
And despite November’s deal, there could be further scope for Argentinian growth. “Argentina is one of the most advanced production markets and content markets, because it is highly competitive,” Gazzolo says. “It’s the only market in Latin America where pay TV penetration is almost 90%, just like the US. It’s not a competition there between the telco broadcasters, it’s a competition between the 250 channels, pay TV and broadcast. And the competition creates a lot of good talent, development and production capabilities. They have a good future in terms of IP development.”
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The Telefe takeover marked the first major acquisition deal to be struck under Bob Bakish, who became president and CEO of Viacom in December, having spent just over a month as acting president and CEO after replacing interim CEO Tom Dooley.
“Bob understands international,” Gazzolo says. “He understands the complexities of international; as such, his support and continual investment in international growth will only strengthen. Second, he’s the type of manager who empowers and then supports. He’s a risk taker, and Latin America requires risk taking.”
Outside of acquisition potential, Gazzolo also feels positive about the future opportunities for Nickelodeon International, particularly with the growth of new shows such as PAW Patrol and The Loud House. Not that Gazzolo is prepared to accept SpongeBob SquarePants as a ‘old’ show just yet. “SpongeBob is not old, it’s an evergreen,” he argues. “Finding an evergreen is the hardest thing in the world. In the development world, of every 10 properties you pick up, one becomes a hit. Out of 50 properties you pick up, only one becomes an evergreen.”
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