Buoyant with the propensity to be volatile.’ Not a description of a
cheeky little claret but Brazil’s media landscape.
Brazil is home to a third of the South American population and more than
40 per cent of the wealth. This wealth, however, is extremely polarised
and there is a large rural economy: 24 per cent of the population work
in agriculture, 19 per cent are in the military forces, 13 per cent are
in the trade of goods and 12 per cent work in industry.
With a population of 160 million and an adspend representing 60 per cent
of the Latin American market, Brazil’s media is a force to be reckoned
with or, at least, fathomed. For example, the media giant Globo is the
fourth-largest broadcaster of TV programmes in the world.
Adam Smith, the head of knowledge at Zenith Media, says: ’Brazil’s
standard of living has improved materially since the economy was,
effectively, dollarised in 1994, extinguishing a bout of classic rampant
inflation brought on by classic government overspending. Wages more or
less retained their value from one year’s pay- bargaining round to the
next, rather than being annihilated in a vortex of price increases in
the shops. The percentage of the population in the poorest DE categories
fell from nearly a half in 1994 to a quarter in 1998. Households became
smaller and five million more bought a television.’
The circulation of daily newspapers in Brazil increased by 1.1 per cent
to 7,245,000 in 1999, from an average of 7,163,000 in 1998 (Instituto
Verificador de Circulacao). In 1999, the increase in circulation was
matched by a rise in advertising revenue when measured in Brazilian
dollars (reais).
Though the indigenous advertising market suffered a drop of 3.8 per cent
in 1999, newspaper ad expenditure rose 1.6 per cent. Advertisers spent
Rdollars 1.8 billion in 1999. A few years ago it was common for adspend
in newspapers to rise much more slowly than expenditure in other
media.
The opposite occurred in 1999, which increased newspapers’ share of the
whole to 23.8 per cent from 22.5 per cent in 1998.
Paulo Queiroz, the media director of the Brazilian agency DM9DDB, says:
’More than 1,000 magazines have launched in Brazil in the past two years
and there are three new newspapers for the C and D classes. This is
because of better distribution, more affordable prices and the fact that
literacy is improving: 95 per cent of children are studying and around a
quarter of the population can’t read, so illiteracy will soon
disappear.’
Paul Woolmington, the worldwide vice-chairman of the Media Edge, says:
’The literacy rate is around 85 per cent, but bear in mind that the
definition of a literate person is someone who can write a short
sentence.
’The figure differs considerably between rural and urban areas. The
penetration of newspapers amounts to only a 52 per cent reach of the
market, so TV is the top medium. TV is a consuming passion for
Brazilians: 86 per cent of the population have a set and the medium has
already been deregulated. While 60 per cent of adspend is on TV, only 4
per cent goes to radio.’
According to Smith: ’Pay TV is an expensive luxury. Typical packages are
sold at Western prices to a market largely confined to the 38 per cent
of the population in the top A1B2 income bracket. This amounts to a
potential market of 20 million households. By the end of last year, 3.4
million homes were subscribing to pay TV, equivalent to an annual
connection rate of 17 per cent among the target market.
This connection rate is, unsurprisingly, rather more polarised than this
average suggests. Nearly a third of A1A2 households are connected,
accounting for 40 per cent of all subscribing homes, though only 9 per
cent of households fall into this richest category. Pay TV suppliers
have started to segment the market with price tiers that middle-income
viewers can afford. The real question is whether pay TV will ever become
a mass-market commodity.’
Queiroz explains that a combination of hardware problems and geography
have plagued pay TV companies, resulting in the medium being more
concentrated in urban areas. The other notable constraint is the
legislation that limits overseas investment in the media. Article 222 of
the Federal Constitution states, among other numerous restrictions, that
newspaper, radio and television stations must be owned exclusively by
native Brazilians or those naturalised for more than ten years.
Revision of this bill, which may lead to some liberalisation, is making
its way at a snail’s pace through government.
Terrestrial television remains a worthy adversary to pay TV. It is free,
well financed by advertising and very popular, with a mean viewing of
three and a half hours a day. It broadcasts mainly telenovelas (soap
operas) and quiz shows featuring women in sequinned G-strings. Smith
says: ’The economy of these telenovelas - expensive local production,
massive reach, FMCG advertising - does not readily adapt to the global
model of pay TV. There are 14 daily screenings Monday to Saturday across
the six private channels, although the family-owned channels Globo and
Abvil still dominate the TV market.’
One medium where non-Brazilians are making inroads into the native media
is via the internet. ’The medium does bypass legalities,’ Woolmington
says. ’Star Media, UP, Terror, AOL and Microsoft have all tapped into
the market, but with local partners. It’s very exciting.
Telecommunications in Brazil are very difficult, yet so far there has
been almost universal internet take up by the affluent, against only 7.4
per cent of the rest of the population.’
Smith adds: ’North America regards South America as much closer for
investment than we do in the UK. A percentage of Latin Americans are
very heavy internet users, but you do have to be able to afford a PC to
get on the internet and that would shut out much of the population.’
Queiroz disagrees: ’Now we have free access, everyone (in a certain
class) is buying computers for the office and for the home. Brazil has 8
per cent of the e-commerce business in Latin America and we are
investing in it enormously. Globo is floating a new portal that will
bring the internet to the common people and WOW, our AOL, is
establishing a portal in Portuguese that will, ultimately, reach more
people than pay TV. Brazilians are very curious about new things - we
love to purchase and to be up to date with technology. I am talking
about the AB classes here, but their purchasing power can move this
country.’
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