Two gang members duel on motorcycles, an executive is kidnapped, a “sexy nurse” appears for no reason, a Swat team abseils from the ceiling, and shoulder-padded American footballers rush in to join the fray.
The over-the-top show was laid on in Time Warner’s New York headquarters by its Turner Media division last month, as part of a pitch to advertisers about the potential it saw in Latin America for channels such as Cartoon Network, CNN, TBS, TNT and Turner Classic Movies.
The group flew in 500 advertisers for an event that was as much an insight into US media companies’ evolving international strategies as a display of coming onscreen highlights.
Mixed in with presentations on an aircraft carrier, the USS Intrepid, was the message that Time Warner has become the largest US media group in Latin America, with estimated television revenues of $2bn, which it expects to grow rapidly.
The main reason, executives said, is that while cable and satellite TV penetration in the region has gone from 20 per cent in 2006 to 35 per cent in 2011, that is only where the US was 30 years ago. By 2016, analysts say, pay TV will reach 44 per cent of Latin American households.
Pay-TV viewing is rising faster than free-to-air viewing falls. Even at an average of almost 23 hours of viewing time a week, “they are watching 11 hours less than the US”, says Michael Del Nin, Time Warner’s senior vice-president of international and corporate strategy. “There is room to grow.”
Those dynamics, coupled with relatively liberal regulatory regimes and a receptive audience for US content, help explain US companies’ growing interest in Latin America at a time when growth markets such as India, Russia and China are proving trickier.
Time Warner’s pitch is that its unique scale means it can produce high-quality content more cheaply. “Think of us as an aircraft carrier,” Mr Del Nin tells advertisers on the Intrepid.
Citing data from IBOPE, the Brazilian statistics institute, Time Warner claims a 25 per cent share of pan-regional pay-TV viewing in 2011, compared with 21 per cent for Disney, 14 per cent for Discovery, 13 per cent for News Corp’s Fox and 8 per cent for Viacom.
International growth is a focus of investors’ interest in Discovery Communications and News Corp, but has been “overlooked” by Time Warner shareholders, Davenport & Company analysts wrote last week.
Its position is the result of five years of sometimes counterintuitive investments. Once, Time Warner mostly exported US content, while HBO, its premium network, formed lower-risk ventures with film studios to reach overseas markets.
That changed in 2007, says Olaf Olafsson, the novelist and head of Time Warner’s strategy and international teams. With Argentina’s financial crisis still fresh in investors’ minds and Brazil a smaller economy than it is today, Time Warner bought a $235m cable networks business called Claxson.
It reprogrammed channels and improved distribution, forming the basis of today’s network of 28 Turner channels. Then, two years ago, it spent $150m to buy Chilevision, its first free-to-air broadcaster.
“It has been a phenomenal acquisition. I’d love to give you all the numbers and say this is very typical of what we do,” Mr Olafsson says. One adviser estimates that Chilevision has doubled in value since the deal was struck. HBO, meanwhile, has bought out former partners’ stakes.
Gerhard Zeiler, the former RTL chief executive appointed in February to run Turner’s international operations, describes Latin America as the “crown jewel” of a network encompassing 33 channel brands in 30 languages in 200 countries.
The story in Latin America fits an emerging narrative at Time Warner. After spinning off AOL and Time Warner Cable, “Time Warner has really become very much a TV company”, Mr Del Nin says, with networks contributing 46 per cent of revenues and 70 per cent of profits.
Now, the group argues that Latin America is a model for collaboration between Turner, HBO and Warner Bros. The divisions jointly operate the Warner Channel in the region, which carries Warner Bros-produced series such as The Big Bang Theory.
Warner has “oversight [of the profit and loss account] but Turner do all ad sales and operations. Affiliate sales sit with HBO. We’re like Switzerland,” says Jeff Schlesinger, president of Warner Bros’ international television operations.
“It may be a snapshot of the future,” says Juan Carlos Urdaneta, president of Turner Latin America. “I think there are going to be a lot more opportunities.”