The U.S. Media Empire in Latin America (with four pages of charts and tables)

September 25, 2007

In the last decade, television has become the single most important medium in the United States. Advertising agencies, survey research and McLuhan all agree that television is the most pervasive and influential form of dissemination and attitude formation. Public opinion studies indicate that the majority of Americans not only receive its entertainment from TV, but also rely on that medium for news information. Wilson Dizard pointed out in his book, Television: A World View, that more than any other medium, TV has the ability to identify and define our environment. The ability of TV to command the attention of millions of people for long periods of time has political consequences. The significance of these observations becomes more meaningful since the power which controls the communications media, both in the U.S. and latin America, is concentrated in a few men and their corporations. The tendency of this concentration is to limit the range of views that get presented. Moreover, since the funding of television broadcasting depends heavily on advertising, there exists among the few networks strong competition to tantalize the largest audience and therefore, any creative experimentation with television for social and cultural ends is stifled.All media (television, radio, newspapers, magazines, etc.) has political content. This is conveyed not only by the images and information presented, but also by the material which does not appear. The differences in political content projected by the three major U.S. television networks (ABC, CBS and NBC) is scarcely measurable.

The development of a television system in Latin America went through different phases. The larger and more developed countries of Argentina, Brazil, Cuba, Mexico, and Venezuela began the process in the early 1950's, primarily with the capital of local businessmen, The initial investments were large and the profit payoff was longer in coming than most Latin American investors are accustomed to; but these particular media entrepreneurs realized that television would be profitable not only in terms of money but also as a mechanism to mold opinions and to relieve people's frustrations through entertainment.

There are two basic reasons why the U.S. media corporations did not invest heavily during the early stages of Latin American television. First, the conservative factions of the corporations" boards of directors were skeptical that a large enough market existed in Latin America to make it profitable. They argued that the Latin Americans themselves should take the initial risks. If television was able to attract the necessary audience in those underdeveloped countries to the south, then the U.S. companies (mainly ABC, CBS and NBC) would get involved.

The second and perhaps more significant reason why these companies did not invest early in Latin American television is based more in the economic structure of the American capitalist system. Simply stated, the economic need to expand into overseas markets did not exist for the television industry in the 1950's. During that decade, the television market in the United States was still expanding. The American people needed more TYV sets and more programs to watch. The local TV stations needed television equipment and technical assistance. They also needed sponsors, thus sending the advertising agencies scurrying around to find their eagerly waiting clients. Finally, by the end of the 1950's and in the early 1960's the demand began to taper off. The market for TV sets and other programming and transmitting equipment was becoming saturated. Also, the production of programs and films was becoming very expensive. It became obvious to those who are responsible for turning up a profit ,that the only way to solve the problem was to increase the distribution of TV programming. By 1960, Latin America had proved to U.S. media corporations that it was safe and fertile ground.

A further impetus for TV's move into Latin America was given by the increasing presence of U.S. companies, who would naturally encourage the involvement of television in helping to sell their products (through advertising). (U.S. direct private investment in Latin America rose from $4.4 billion in 1950 to $11.5 billion by 1966. Also, the U.S., in 1967, exported $4.1 million worth of merchandise to Latin America.)

Although local businessmen in Latin America initiated development of the television systems in their countries, they were always influenced and often limited by the electronics and media industry in the U.S. Programming equipment, technical assistance and TV sets came from the United States. More important, since production facilities were so costly approximately 80% of the programs shown in Latin America originated from the United States (programs such as "The Flintstones," "I Love Lucy," "Bonanza," "Route 66," etc.)

The original promoters of television in Latin America emphasized the medium's potential in the educational field. However, once broadcasting began, educational TV was pushed aside. Dizard says, "most TV stations in underdeveloped countries are operated, directly or indirectly, by commercial interests which were initially concerned with keeping their enterprise solvent. Educational programming was a luxury that tied up their facilities without producing revenue."

Of the three major TV networks in the United States, ABC has been the leader in penetrating the overseas market through its international organization known as World-vision, a collection of commercial TV stations abroad in which ABC has invested. ABC's vision, a collection of commercial TV stations abroad in which ABC has invested. ABC's leadership in the international field is, at first, difficult to explain, since it is not only financially weaker than CBS and NBC, but is also the least viewed of the three major U.S. networks. It seems probably that the decision to go abroad was based on these limitations - that is, since the competition was so strong in the United States it would be more profitable to move into a market where the competition was less fierce. Further motivating ABC's international push was its proposed merger with ITT (International Telephone and Telegraph Corp.), announced in December, 1965. The merger would have solved ABC's financial problems and would have provided the network with important overseas contracts as ITT has the largest international telecommunications system in the world. Another important aspect of the proposed merger for ABC was that ITT is one of the five American commercial carriers authorized by the Federal Communications Commission who can purchase channels from Comsat (Communications Satellite Corp.) to resell to the public. (The four other authorized carriers are AT&T, RCA, Western Union and the Hawaiian Telephone Co.) In addition, the merger would have insured ITT with a large buyer not only for satellite channels, but also for its own television equipment.

Unfortunately for both companies, ITT was forced to terminate the merger plan in January, 1968. Although the FCC had approved the merger twice during the two year attempt, the Department of Justice opposed it.

However, in spite of this disappointment, ABC Worldvision has continued to grow. In early 1968, Worldvision boasted 64 TV stations in 27 countries (16 of them in Latin America) reaching more than 20 million homes. The procedure ABC uses in building its Worldvision empire is fairly standardized. First, ABC will invest in the television station. This investment is related to services which ABC International is able to provide for the Worldvision station. For instance, ABC can offer financial support, technical and administrative services, personnel training programs, a program buying service and, in addition, act as the station's sales representative. These last two functions are the ones that ABC sees as crucial for the success of the Worldvision system, as the stations have to agree to accept programs and advertising chosen by ABC for prime-time viewing. "For example, ABC can sell BEtman to an advertiser and then place Batman along with designated commercials in any Worldvision country where the advertiser wants it to appear." "Television Around the World" by Ralph Tyler in Television Magazine, October 1966, p. 33). Therefore, the role of Worldvision for ABC is to centralize three very important and profitable tasks - program buying, sales representation and networking. In one sense ABC International is becoming a worldwide advertising agency. "But ABC's approach is the reverse of what the agencies-are doing. ABC is attempting to create a single world-wide medium that an international advertiser can buy in a centralized way, while the advertising agencies are attempting to spread their services abroad to bring them closer to the variety of media around the world. Both, however, are banking on the existence of a sizeable group of international companies with marketing plans that cover large portions of the globe."

The role ABC International has played in Latin America and the way it has organized and expanded its operations, epitomizes how media, television specifically, can be utilized to play handmaiden to the penetration, domination and eventual bastaidization of foreign economies by U.S. corporations. In 1960, after much persuasion by U.S. government officials and businessmen, the Central American countries agreed to form an economic common market. This system allowed U.S. businesses to be established in one Central American country and to sell their goods in all the countries, without paying any tariffs; and according to the U.S. Department of Commerce, hundreds of U.S. corporations flocked down to take advantage of the new market.

Also in 1960, one year after it was formed, ABC International advanced $250,000 to and invested in five Central American TV stations - one from each of the five countries. This group became known as the Central American TV Network (Cadena Centro-americana or CATVN). As one might predict, CATVN, through ABC International, has acentralized advertising sales program and a film distribution system. ABC Internation al published a list of 31 companies which advertised through the Worldvision system and almost all do business in Central America. ABC, through its television stations, is fostering an artificial consumerism which in most Third World countries should not be higher priority than educaton, health and basic economic development. However, this seems to be the case in Latin America. G.S. corporations continue to prosper and ABC's role in that process is summed up in their own words. "Already, the ABC Worldvision stations can reach a universe of more than 15,000,000 (1963) television homes. The spending power of this trend-setting audience is upward of $136 billion in disposable income. They are the first to develop-iiia loyalties which set the pattern for others."

And now that the United States is exerting more pressure on the South American countries to convince them of the necessity of a functioning Latin American Free Trade Association, ABC International in January, 1968, formed LATINO (Latin American Television International Network Organization) which will follow the same pattern as CATVN and includes so far, Venezuela, Ecuador, Uruguay, Argentina, Chile and Mexico.

Neither CBS nor NBC has gone into the international market on the scale of ABC. Both companies are in good financial positions - earnings are up and assets are large ($670 million for CBS and $2,084 million for RCA which is NBC's parent corporation). Both companies are also taking on the appearance of conglomerates. RCA's subsidiaries include Hertz, Commercial Credit Co., Random House, Sunbury and Dunbar Music, Inc., Defense Electronic Products and two Job Corps Training Centers. CBS's family includes the publishing house of Holt, Rinehart and Winston, Inc., the toy company Creative Playthings, Inc., Baily Films and the New York Yankees.

Although CBS and NBC's overseas investments are not extensive, the facilities they do have tend to be in strategic areas. CBS has production companies in Buenos Aires, Caracas and Lima; NBC is involved in Monterrey, Mexico; Caracas, Saigon and the Middle East.

NBC's specialties overseas are programming and management services contracts rather than direct investment in TV stations. NBC International deals directly with overseas broadcasters to sell NBC programs which are shown in 82 countries. Management services involve everything from advising to actually establishing an entire television system for a country. According to NBC, a large contract will include analyzing the aims of the client country (why does it want TV?), making a technical survey, suggesting an overall program, setting up a staff to implement the program (three NBC personnel, a general manager, director of engineering and director of administration, are put in charge of the project), designing, constructing and equipping the TV studios and finally, supervising and assisting in the station's broadcasting. A contract for installing a complete system usually runs for five years. The influence of NBC's style, structure, and priorities (particularly its favoritism toward commercial non-government stations) on a client country's TV system is unavoidable. Oae trade magazine has suggested that NBC's interest in developing TV systems around the world is not primarily for control but to stimulate the demand for TV equipment, of which RCA is a leading producer.

CBS has concentrated its limited overseas involvement in Latin America, but its overall policy is still one of hesitancy. The important factor is that CBS, and also NBC, have a different set of priorities than ABC. Merle S. Jones, president of CBS television and a director of CBS (also director of Proartel, Buenos Aires; Provental, Caracas; Pantel, Lima; Trinidad and Tobago TV Co.; and Teleprogramas Iberoamericanas,Panama ), explains CBS's limited overseas expansion not as a lack of interest, "but the opportunitiess just haven't been there as we define opportunity. We've just had exploratory talks in South America--in Colombia, Brazil, Chile--but they Just weren't attractive opportunities. As you go around the world, television is either government or quasi-government operated and doesn't offer much inducement to invest... We'd rather hold ourselves open for the total market."

CBS and NBC possibly consider ABC's role overseas to be primarily that of an international advertising agency, more concerned with the buying and selling of programs and advertising space. Perhaps ABC was forced to take on that function because of its weakness in the field of television broadcasting vis-a-vis CBS and NBC. What seems clear is that CBS and NBC see themselves as broadcasters, and therefore they want control of TV stations abroad. Since that control cannot yet be obtained, they prefer to wait for a more opportune moment.

Time-Life Broadcast is the other large U.S. corporation with investments in Latin America (Argentina, Brazil and Venezuela). Time-Life's interests in Rio de Janeiro, Brazil became the focus of controversy in 1965 when conservative nationalist Carlos Lacerda attacked the Brazilian government for not acting on Time-Life's "unconstitutional" involvement in TV-Globo (no foreigners can own or participate in the administrative orientation of journalistic enterprises). Time-Life has invested approximately $6 million in Rio's leading TV station which is owned by the same family that puts out U Globo, the largest circulating newspaper in Brazil.

A case of intensive involvement by U.S. companies in the TV market is Caracas, Venezuela. Time-Life and CBS each hold 20% interest in the production company Provental (Ch. 8), with the remaining 60% held by Goar Mestre and local investors. Mestre was a leading businessman in Havana where he developed and controlled most of Cuban television before the Revolution. In 1958, he went to Argentina to set up Proartel (Ch. 13), again with Time-Life and CBS.] NBC has its investment in Radio Caracas-TV (Ch. 2), which is a member of ABC's Worldvision group. ABC controls a share of Venevision (Ch. 4) and Screen Gens has a part interest in Canal Once Television (Ch. 11).

The effect television will have on latin America is still unclear, but it will probable be no more beneficial for them than it is for us. Television's emphasis on consumerism will not only lead to increased frustrations for many Latin Americans, but it will continue to distort, as U.S. corporations have done in the past, the development of those societies. The values projected by television programs and advertising imported from the United States will definitely affect the cultural integrity of the Latin American people. The Japanese economist, Shigeto Tsuru, expresses the point, rather pessimistically, that the media serves those who control it.

In this world of high-powered communications we may even have to speak of a new kind of "self-alienation" for citizens living under capitalism. If there were a society on this earth somewhere which would make full use of the highly developed techniques of communication of today for the sole purpose of its inhabitants' autonomous cultural needs, it would be an experience of a lifetime for us to visit there-for us who daily, even hourly, cannot escape from the onslaught,either subtle or crude, of modern commercialism in a capitalist society.

Tags: US media empire, TV

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