The move follows threats from Brazilian communications giant Globo and MSO co-operatives Canitec in Mexico and Tepal in Central America that network carriage would be cut if the networks didn't stop carrying the panregional ads for Galaxy Latin America's direct broadcast satellite product.
A FIRST FOR AN MSO
Industry executives believe this is the first such move by a local MSO to kill an ad message by threatening to cut off programming. Cable operators fear DBS television will siphon business.
Furthering the conflict is Globo's alliance with News Corp. to build a direct broadcast satellite system, NetSat, and Globo's competitive stance against Televisao Abril, a Brazilian TV rival that has invested in Galaxy Latin America.
The threat has nothing to do with Galaxy's competitive stance against NetSat, and the Brazilian MSOs will not carry ads for NetSat either when that service launches, said Moises Pluciennik, CEO with NetBrazil, which buys programming for 48 Brazilian cable companies. At issue is competition between terrestrial cable and satellite service, he said.
"We are not in a position of allowing cannibalization of the market," he said.
Those who relented following the flight that ended June 30 are Discovery Channel Latin America; ESPN; Turner International networks CNN International, Cartoon Network and TNT; Teleuno; TeleNoticias; and MTV Latino.
Canal de Noticias NBC and USA Network held the line, said Erik Moe, VP-marketing, sales and distribution for Galaxy Latin America.
NetBrazil's Mr. Pluciennik said he has received word from all networks, including Canal de Noticias NBC and USA, that they would stop airing the spots July 1.
Executives for Tepal and Canitec could not be reached.
The campaign was handled by J. Walter Thompson Co., Miami and Mexico City.
$2.5 MIL AT RISK
At risk for the programmers is more than $2.5 million in panregional ad spending over the next six months. But sources say most networks receive upward of 70% of their income from affiliate sales.
"There's not a panregional programmer who is not affected," said Charlotte Leonard, senior VP-general manager at Turner Entertainment Networks Inter-national.
In some cases, MSOs said they wouldn't drop the signals but instead pull the DirecTV spots locally, said Dawn McCall, senior VP-general manager in Miami for Discovery Channel. It was not known whether USA or Canal de Noticias NBC had suffered such problems.
"We felt certain it would happen extensively," said Ms. McCall, who notified JWT the week of June 24 of Discovery's decision not to carry the ads. "We want our customers to feel comfortable that their ads are going to run."
At a July 1 conference call of the Television Association of Programmers Latin America, executives decided each network should make its own decision.
Executives with the association said they were concerned that any attempt to band together in a reaction might amount to collusion or violation of U.S. antitrust laws.
A SHORT-SIGHTED MOVE
Mr. Moe called the move short-sighted by networks that have strived to build long-term advertising in the region.
He said he will reward those that stick with the DirecTV campaign, some of which might enjoy "a doubling of media placement." Litigation remained a possibility, he hinted.