Sergio García –president and CEO of the Excalibur Media Group, a company that has an office in Los Angeles and has created a video market with big distribution companies in the American Union– was interviewed by ONLY TELENOVELAS in a downtown restaurant in Miami city. The experience he gained throughout a more than 27 years’ career allows him to offer a wide and detailed vision on the current Hispanic TV in the United States. He speaks about the conflicts over royalties, the rush of the big chains to reach the first position, the advertisement and the steps to follow.

	“Telemundo and Univision have declared a war between them over the Hispanic audiences. And they bet on programming and entertainment products, such as music and great events.” -Sergio García.

he battles for royalties between co-production companies have turned into a huge obstacle for the industrial development. Everybody wants to sell their royalties individually, which has caused a decrease in the acquisition of certain products. The risks are serious and Sergio García explains: “In the United States the market is diminished by this problem. If Mexico doesn’t stop it somehow, it will put an end to the market.”
There are certain associations which have the specific task of looking after the activity of this sector and its members, but they seem to be asleep when they have to face these situations. Which would the solution be?
“First, the solution must be applied from the legal point of view and secondly, it’s necessary to establish the aspirations between the co-producers clearly in the contract and make them be obeyed. Another key point is being conscious that the market can be cancelled by those problems. In Mexico, the copyright should be verified by an organization such as the Los Angeles Film Producers Association so that we can get a clear image of the origin of the royalties,” he says, while he adds that there was a time when channel 22 from Los Angeles didn’t buy any Mexican movies due to the conflict. “Later, purchase restarted, but not because of the channel’s intentions but because of the significant ratings.”

Hispanic attraction
“Big American corporations show a greater interest in the integration of the Hispanic market to cable and air TV. They know that it’s a market of 486,000 billion dollars and they need a part of what they neglected before and now is so at hand. Regarding advertisement, 17% of it in the United States is turning to the Hispanic market, even though the percentage cake hasn’t exceed the 3% yet,” states the businessman.
From your point of view, what consequences did Telemundo’s purchase by NBC have on the Hispanic TV business?
“Very positive ones. They paid an exorbitant price for channel 22 from Los Angeles, so obviously all channels cost a very high price now, what proves that there’s a strong potential market. On the other hand, the Hispanic market is still a very recent one: in two years it will be a boom getting as big as the European and the American ones. The advertisement agencies that follow and understand this market are focusing on the Latin American cinema, which is of very strong value, mainly in times of crisis when the Latin people don’t stop spending money since they’re used to the crisis.

Latin American devaluation
advantages and disadvantages
This expert in the market states that it was the financial devaluation in countries like Mexico, Argentina, Colombia or Venezuela what created a specific production market, and he says that the company that knew how to make good use of this was Univision. “They only had to bring productions from Mexico. While in the United States a telenovela cost 10, 20 or 30 million dollars, in Mexico it cost 4. Nowadays, with global adjustment economies Mexico got to be a stable country, having a gradual devaluation that doesn’t affect the costs. Therefore, you can make plans basing on budgets and presentations of projects with Hispanic producers established in this country and who were left behind. Univision turned round towards local producers knowing that they not only can produce a telenovela in Mexico but also in the United States, because the ones paying for advertisement support the local production. We are going through a period in which the Latin production is starting to be enriched.
There are two giants fighting the same war, and in the short, medium or long term, one of them will win. We are talking about Telemundo, a company that has a financial strong corporation such as NBC, which produces actives that are already being sold and commercialized around the world, and Univision, which has not taken that step and has kept with the local production. What do you think about this?
“We can anticipate that the most aggressive one, both abroad and locally, will be Telemundo,” risks García. Univision is a conqueror and it’s settled as the founder of a great market, but it obviously lacks of presence in the rest of the world. In order to achieve that, it should include productions with other countries, besides what Televisa and Univision do.”

New players
Should this be so, a third chain comes into play: TV Azteca, which makes a good use worldwide with niches in Latin America and the rest of the continents. What is the future of this new player?

Sergio García with the director of ONLY TELENOVELAS in a downtown Italian restaurant in Miami city during the interview.

“They are fighting like any company that establishes in a new market. They were unable to show who they really were due to the exclusive contract they had with Direct TV and Dish-Network. But that’s ending in March and then they’ll show their strength,” says García and adds that this chain has a precious future ahead of it, not only because of the brilliant way in which its executives are making use of the opportunities, but also because of its amazing contents.”
How important are the news programs for the positioning of these niches in the United States?
“Even though their costs are the highest ones and sometimes with no earnings, they are the bait for attracting audiences because they are considered an investment in community.”
The truth is that it is precisely with these news programs that the great battle of the year 2005 will be fought. Telemundo focuses on strong and very important Mexican journalists to strengthen the news, and TV Azteca must be considering it. It is clear that Univision is leading that area. Another problem for 2005 is how to increase the income per advertisement, for which ONLY TELENOVELAS talked with another guest in this issue. To conclude this interview, we asked García what he thinks are the viewers’ expectations regarding the Hispanic TV in the United States and he gave us a tacit answer: “We are in the presence of something we don’t usually face up to: demand, which is the foundation of our transformation towards improvement. The audience’s attitude isn’t just receiving and keeping quiet anymore, but expressing their opinions and choosing.”

The music sector     Besides being in the television and movies distribution business, Excalibur Media Group also works in the music sector. Generally, this business is conducted throughout big companies such as Warner, Sony or BMG and traditionally, 75% of its sales and distribution earnings go to the companies and 25% of them go to the musician. But this entrepreneur has transformed the business. “We’re trying to implement a new idea. We already have the video market and the idea is not to waste it, link it with music and try to place there the DVD made by the artist himself, so that he can control his production and distribution and make sure that most of the money goes to the person who really makes the music.” When you said that people returned to home videos, why do you think they did it? “Basically because of the change in technology. There has been a change with the DVD and the digital TV.” Who should pay attention to this business? “The big Mexican industries, which must realize that they have to produce. This will mobilize other sectors such as the artistic one and will facilitate the opening of the market. All kinds of genre are welcome because the video grants freedom, while the television programming is sacred. So it’s time for good topics and good budgets.”