Pesos down tube
Argentine biz struggles amid currency collapse
The Jan. 6 monetary devaluation did away with the 10-year parity between the pesos and the dollar. Officially, there are now 1.4 pesos to the buck, with its value set to fall further when the currency is floated.
Argentine co-production coin will lose value in greenback-pegged international productions. But, ironically, local production costs will decrease. That's nearly the only good news.
The devaluation, announced by President Eduardo Duhalde, the country's fourth since the fall of Fernando de la Rue only a few weeks before, did not surprise media execs.
"It's a major change in the economy after 11 years of certain game rules," says Diego Lerner, Walt Disney Intl.'s Argentina-based VP and managing director of its Latin America division. "You need to take things day by day because in this country, a month is long-term right now."
Foreign aid
Investments have been battered by more than three years of recession, and outfits linked with international comgloms will be better equipped to ride the storm, whether tapping co-finance, strong product or taking a financial hit.
However, this may be a good time for foreign firms to invest on the cheap.
Spain's Telefonica is the top local telco, and its Admira subsid owns leading broadcaster Telefe and 50% of No. 3 net Azul TV.
The U.S.' Liberty Media was one of the top investors in Argentina last year, with Hicks Muse not far behind: Both have major holdings in pay television, a sector struggling in the recession.
Broadcasters already were shifting to cheaper productions and formats as ad revenue plunged. America TV, ranked No. 4, filed for bankruptcy protection in October.
Counting cost
"Acquisitions will get the squeeze since what advertising money is left will be paid in local, less-valuable pesos," says Pedro Leda, prexy of Buenos Aires-based distrib Leda Films. "The broadcasters will air repeats and will try to produce more cheaply."
"In the short-term, we're not prepared to buy anything for Telefe or Azul TV," says Admira managing director Ele Juarez, who heads its centralized acquisition service for Telefe, Azul, Spanish net Antena 3 and satcaster Via Digital.
"It's obvious that local production may increase. We will have to focus more on production than acquisitions. We have the facilities and the talent in the company," Juarez adds.
The local film industry is driven by subsidies, bar a few TV-financed pics and international co-productions -- and national film institute INCAA may not be able to pay its subsidy commitments for 2002.
"Culture will come last," predicts producer Luis Angel Bellaba.
Local productions have been delayed. Shooting may even be pushed back on "Afrodita," the adaptation of an Isabel Allende novel starring Stephen Rea ("The Crying Game") and Cecilia Roth ("All About My Mother") skedded for Jan. 28. It is co-produced with Cinesur.
"We're exploring all options," including alternative finance, says Bellaba. Companies will stump up services rather than cash in co-productions, he predicts.
Despite the trouble, Disney's Lerner emphasizes that the Latin American economies are notoriously cyclical, and he believes Argentina will come back. "It's part of the personality of the region," he says.
