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Becoming a Broadcasting Leader in 10 Years: A Case Study of Portugal’s TVI—Media Capital Group


Paulo Faustino Autónoma University of Lisbon, Portugal


Jonkonping International Business School, Sweden


The main objectives of this article are to analyse (a) some media group strategic corporate management options, especially within the television segment; (b) as well as identify critical success factors to achieve leadership. Some future challenges are also identified within the scope of new broadcasting technologies such as Internet protocol television, cable, satellite, and digital terrestrial television.


TV Market Context and Development of the TVI—Media Capital Group (MCG)


TVI and the Television Sector in Portugal


The strong influence of the Catholic Church on TVI (Televisão Independente or Independent Television) was evident in minute detail: The first TVI logo—used until 1994—was designed to look like the number four made from a Christian cross. Figure 1 shows the various logos TVI has adopted since its foundation until now.


TVI was essentially broadcasting imported programs in its early years. At a time where Sociedade Indepen- dente de Comunicação (SIC) was betting on less usual, even alternative, programs, TVI was strongly investing in foreign “family” programs and game shows that were popular in other countries. Meanwhile, SIC was betting on Brazilian soap operas, an audience phenomenon of guaranteed success, establishing a strategic partnership with Brazilian TV Globo, the largest soap opera producer in the world.


SIC equally opted for betting on bolder films and series, namely of an erotic character, which aroused the interest of an audience not used to these types of programs because RTP (Radio and Television of Portugal), as a public television station, was not allowed to show this type of content. RTP attempted to do so in 1991, before the emergence of private television stations, when The Empire of the Senses, a film by Japanese director Nagisa


Address correspondence to Paulo Faustino, Director of Media XXI and Director of Master in Media Management, Autónoma University of Lisbon, Visiting Researcher of Jonkonping International Business School, Sweden. E-mail: faustino.paulo@gmail.com


Oshima was broadcast, resulting in a strong controversy between the Church and RTP, given that the former insti- tution defended that a public television station (such as RTP) was not allowed to show films of such a nature, even at late hours. The comment made by the archbishop of Braga, D. Eurico Dias Nogueira, who affirmed to have learned more from 10 min of the film that in his entire life, became famous.


TVI as a Project Associated With the Church and a Project Integrated in MCG


TVI started its activity as the second private television oper- ator in Portugal on February 20, 1993. When Portugal joined the European Union in 1986, the debate on private television channels was brought to the forefront because only RTP had been operating in the country since 1957. In 1989, the Television Law (Law number 58/90 from September 7 revoked by Law number 31–A/98 from July 14, which was subsequently revoked by Law number 32/2003 from August 22) was approved, which “marked the end of the state monopoly and enabled private enti- ties to pursue television activities, under licensing granted by the Portugal Government, following public tender.”1


Approximately 6 years after its foundation, TVI was acquired by the communication group Media Capital in 1998, having initiated a new stage marked by the ambi- tion of becoming a new leading station in Portugal.2


When José Eduardo Moniz became the managing director of TVI, the station started presenting better results, rapidly going from a station doomed to failure to an audience leader in Portugal.


The International Journal on Media Management, 9(4), 151–163 151


1993–1994 1994–1996 1996–2000 2000–2007


Source: Company


Figure 1. Independent Television (TVI) logo evolution from 1993 to 2007.


In 2005, Media Capital (the main TVI shareholder) was acquired by the Prisa Group, a Spanish media group present in 23 countries. The MCG started with a weekly newspaper, Independente,3 having sold this weekly publi- cation in 2001 to Inês Serra Lopes and other shareholders. In the last 6 years this group has concentrated its activi- ties mainly in the television, radio, and Internet sectors. Media Capital’s press holdings consist of magazines and newspapers, including the local partner of the Metro newspaper. The complete holdings of the MCG as of 2006 are presented in Figure 2.


TVI is one of the MCG companies, presently being the most important broadcasting operator in Portugal, with leading brands in the majority of segments where it is present such as television, radio, the press, outdoor, and Internet. MCG activities may be summarized as follows:


� Television business—TVI and NBP (television and production).


� Music—FarolMúsica (record label) and MC Enter- tainment (a production company for theatre


plays, concerts, and events) and Media Capital Radio, which owns Rádio Comercial, Rádio Clube Português, Cidade FM, Best Rock FM, and Cotonete (the only online radio in Portugal).


� Media Capital Editions, which owns social maga- zines such as Lux, Lux Woman, Maxmen, and Grazia within the generalized press segment and titles such as Casas de Portugal, Briefing, Revista de Vinhos, and Auto Comércio within the specialized press segment.


� Internet—IOL portal. � Outdoor advertising—Media Capital Outdoor


(MCO). � Other business areas—several partnerships and


joint ventures in areas like cinema and the daily press.


In December 2005, the shareholder structure of MCG was as follows: The Prisa Group (Vertix, SGPS, SA) was the largest shareholder; RTL, a television company owned by the Bertelsmann group, was a close second; followed by Berggruen Holdings, Ltd. and Miguel Pais do Amaral holding. During 2006 and 2007, the Prisa Group devel- oped an aggressive strategy (involving a takeover bid) to reinforce its shareholder position, having achieved a 94.4% share in the end of the first quarter of 2007.4


TVI’s position was built in only 10 years of operation. The group has synergies with several entities, involving production of television and music contents as well as organization of cultural events. Distribution of movies and sports rights has allowed this group to reach a


Media Capital


Television Advertising Internet ISP RadioPress


TVI NBP Lux Channel Protocol with Sports TV


“mupis” MCO TV TC


IOL Vizzavi Magazines:


Lux Brand Briefing Casas de Portugal Maxmen Notícias Choque Poster Recreio Revistas de Vinho Portuguese Wine


Newspapers: Metro


Cidade FM Nostalgia Radio Comercial Rádio Renascença MCO Radios– Radio XXI


Other Areas


Movies – CMCL; Fox/MGM; Miramax; and independent north american production companies Music Fairs – Expolider Exhibitions Sports – União de Leiria


Figure 2. Media Capital Group, 2006.


152 Faustino


unique position within the competitive media sector, which reflects a clear growth strategy and high manage- ment dynamics. Media Capital made an initial public offer, in 2004, to the Lisbon stock market.


Conquering the Leadership and the Market Context


In the beginning of the 1990s, television market guide- lines were well defined. RTP (the public channel) enjoyed a broadcasting monopoly, with two generalist channels: RTP1 (with a market share of approximately 80%) and RTP2 (with the remaining 20% of the market). This domi- nance allowed them privileged access to the best inter- national shows and the most popular national events, such as Globo’s Soaps (the Brazilian soaps considered the best in the world) and football matches. Due to their status as a public service broadcaster, they also benefited from large sums from government support, along with advertising revenues. At this time, the penetration rate of television sets in Portuguese homes was already around 95% and, although the national population was spending less time watching television than in average European homes, average daily consumption was relatively high. This situation made it difficult for new private competi- tors to enter this industry in several ways:


1. Any new operator had to support its own activities through advertising, in direct competition with the two other channels mentioned earlier.


2. The economic recession in Europe in 1992 caused smaller global investment in advertising, with special impact on the more expensive media such as television.


3. In addition, because it did not seem reason- able to foresee a significant increase in television set sales, audiences had to be conquered at the expense of rivals.


4. Finally, the high costs of operating broadcasting stations made it impossible from the beginning to target specific market segments and would even- tually decrease the number of private projects aimed at creating new generalist channels.


Competition in the Television Market


Access to the national TVHH market was an additional imperative that potential operators had to satisfy. In this sense, SIC decided to use state company RTP’s broad- casting network from the beginning, which allowed it to ensure an initial coverage of 50% of the Portuguese popu- lation and continuous expansion with time. TVI decided to build its own network using the land occupied by


Rédio Renascença (owned by the same group), with an investment of approximately E20,000,000.


However, it was not a good idea to have such large geographical coverage when the majority of the viewers did not even know how to get the new channels on their new television sets. To reinforce its position during its initial stage (1995), SIC undertook an intense educational campaign all over the country, not only to help with the channel setting on television sets, but also to intro- duce the experience of their shows, combined with an offer consisting of a diversified program portfolio, a high- quality news bulletin, Brazilian soaps, and an aggressive campaign to acquire advertising.


In the period between 1995 and 2001, the initial effort made by SIC paid off, with this channel becoming a tele- vision audience leader, both during the day and in prime time. However, with the sale of TVI in 2000 and the complete changes made to their program schedules in 2001, TVI conquered the leadership, having maintained that position.


The main factors behind SIC‘s leadership loss were its refusal to broadcast “Big Brother” (a reality show broadcast by TVI) and bad management of program stocks concerning Globo Soaps. “Big Brother” was a show of doubtful quality and interest, besides the fact it was a rather expensive product (around E5,000,000). SIC did not quite understand its effects on the market and underestimated its impact, having refused to include it in its programs. On the other hand, TVI, although in serious financial difficulties, decided to take this step, completely changing its image with the viewers. This product was a huge success, having contributed to relaunch TVI within the television sector.


Management and Program Development and Strategies


Growth, Strategy, and Business Synergies


To Media Capital, the Prisa Group represented a strong partner for future development. The experience enjoyed by Prisa in the press, radio, and paid television segments helped the MCG continue its growth, as well as exploit synergies and develop joint ventures. Presently, Media Capital has a strong shareholder base that brought together the main media group in Spain (and one of the biggest in Latin America). According to Juan Luís Cébrian, president of Prisa,5 “Portugal is a market that we already know and we believe to have a strong growth potential. We want to work with our Portuguese colleagues from the MCG to exchange experience and knowledge, as well as develop the business.”


TVI—Media Capital Group 153


When examining the structure of the group and the balance of activity in 2004 and the beginning of 2005, one finds that Media Capital has been diver- sifying its businesses within the specialized press, radio, television (including cable), Internet (access and multimedia contents provider), outdoor advertising and record industry sectors, organizing musical and cultural events, as well as business fairs and exhibitions, and extending its activities to distribution of movie rights and participation in an anonymous sports football club society.


On January 28, 2005, at the Media Capital “Investor’s Day” (shareholder meeting), the Chairman of the Board, Miguel Paes do Amaral, presented three main points concerning the organization’s growth strategy aimed at obtaining profits:


1. Structural growth of the working businesses— through market growth balance (considering price and volume variables), together with growth of the group’s advertising investment and devel- opment of new revenue areas in every media.

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