Read the article “Becoming a Broadcasting Leader in 10 Years: A Case Study of Portugal’s TVI – Media Capital Group” from the International Journal on Media Management. Evaluate the success of

6/7/2019 Week 4 - Assignment https://ashford.instructure.com/courses/44981/assignments/901882?module_item_id=2280978 1/3 W eek 4 - As sig n m en t C ase S tu d y: P ort ugal’s T V I - M ed ia C ap it a l G ro   Read the article “Becoming a Broadcasting Leader in 10 Y ears: A Case Study of Portugal’s TVI – Media Capital Group” from the International Journal on Media Management. Evaluate the success of TVI, the Portuguese broadcaster, in leading the country’s broadcasting market in only ten years. In your paper: Analyze why the acquisition of the Media Capital by the Prisa Group created many advantages.

Explain diversification strategies as well as growth strategies adopted by TVI.

Describe TVI’s differentiation strategy and its major competitors.

Assess TVI’ s targeting and segmentation approaches.

Use the SWOT analysis provided in the case and explain how TVI should develop strategies to successfully face its future challenges (e.g., cable, other technological innovations, telephone companies entering the competition, industry and economic threats, etc.) Your paper must include an introduction, a well-developed body , and a proper conclusion. Be sure to include a properly formatted reference page, using APA style as outlined in the Ashford Writing Center.

FindIt@AU, EBSCOhost, and ProQuest are good starting points for your search. It is also highly recommended that you search through the specialized journals in media management (e.g., Journal of Media Economics, Journal of Media Business Studies, International Journal of Media Management, and Academy of Management Journal).

Do not forget to consult the BUS699 Library Research Guide for further search tips and ideas. The paper Must be five to six double-spaced pages in length (not including title and references pages) and formatted according to AP A style as outlined in the Ashford Writing Center (h ttp ://w rit in gcen te r.a sh fo rd .e d u) . Must include a separate title page with the following: T itle of paper Student’ s name Course name and number Instructor ’s name Date submitted Must use at least two scholarly sources in addition to the course text.

The Scholarly , Peer-Reviewed, and Other Credible Sources (h ttp s://c o nte n t.b rid gep oin te d ucatio n.c o m /c u rric u lu m /f ile /b 2d 6fb 25-6 29e-4 2e1-a 13e- 43b f6 7043c8a/1 /S ch ola rly % 2C % 20P eer% 20R evie w ed % 2C % 20an d% 20O th er% 20C re d ib le % 20S ourc es.d ocx) table of fers additional guidance on appropriate source types. If you have questions about whether a specific source is appropriate for this assignment, please contact your instructor . Your instructor has the final say about the appropriateness of a specific source for a particular assignment. 6/7/2019 Week 4 - Assignment https://ashford.instructure.com/courses/44981/assignments/901882?module_item_id=2280978 2/3 This tool needs to be loaded in a new browser window Must document all sources in AP A style as outlined in the Ashford W riting Center.

Must include a separate references page that is formatted according to AP A style as outlined in the Ashford Writing Center . Carefully review the Grading Rubric ( h ttp ://a sh fo rd .w ayp oin to utc o m es.c o m /a ssessm en t/9 144/p re vie w ) for the criteria that will be used to evaluate your assignment. W ay p o in t A ssig n m en t Su bm is sio n The assignments in this course will be submitted to W aypoint. Please refer to the instructions below to submit your assignment.

1. Click on the Assignment Submission button below. The Waypoint "Student Dashboard" will open in a new browser window . 2. Browse for your assignment. 3. Click Upload . 4. Confirm that your assignment was successfully submitted by viewing the appropriate week's assignment tab in Waypoint. For more detailed instructions, refer to the Waypoint T utorial (h ttp s://c o nte n t.b rid gep oin te d ucatio n.c o m /c u rric u lu m /f ile /d c358708-3 d 2b -4 1a6-a 000- ff5 3b 3cc3794/1 /W ayp oin t% 20Tu to ria l.p df) ( h ttp s://c o nte n t.b rid gep oin te d ucatio n.c o m /c u rric u lu m /f ile /d c358708-3 d 2b -4 1a6-a 000- ff5 3b 3cc3794/1 /W ayp oin t% 20Tu to ria l.p df) .The s e ssio n f o r t h is t o ol h as e x p ir e d. P le ase r e lo ad th e p ag e t o a cce ss t h e t o ol a g ain 6/7/2019 Week 4 - Assignment https://ashford.instructure.com/courses/44981/assignments/901882?module_item_id=2280978 3/3 6/7/2019 https://ashford.waypointoutcomes.com/assessment/9144/preview https://ashford.waypointoutcomes.com/assessment/9144/preview 1/3 Descrip tio n : To ta l P ossib le S co re : 7 .0 0 Distin guis hed - T horo ughly a naly ze s w hy th e a cq uis itio n o f th e m edia c a pita l b y th e P ris a G ro up c re ate d m any a dva nta ges.

P ro fic ie nt - A naly ze s w hy th e a cq uis itio n o f th e m edia c a pita l b y th e P ris a G ro up c re ate d m any a dva nta ges. M inor d eta ils a re m issin g.

B asic - P artia lly a naly ze s w hy th e a cq uis itio n o f th e m edia c a p ita l b y th e P ris a G ro up c re ate d m any a dva nta ges. R ele va nt d eta ils are m issin g.

B elo w E xp ecta tio ns - A tte m pts to a naly ze w hy th e a cq uis itio n o f th e m edia c a pita l b y th e P ris a G ro up c re ate d m any a dva nta ges; h ow eve r, s ig nific ant d eta ils a re m issin g.

N on-P erfo rm ance - T he a naly sis o n w hy th e a cq uis itio n o f th e m edia c a pita l b y th e P ris a G ro up c re ate d m any a dva nta ges is e ith er n onexis te nt o r la cks th e c o m ponents d escrib ed in th e a ssig nm ent in str u ctio ns.

D istin guis hed - C om pre hensiv ely e xp la ins th e d iv ers ific atio n s tr a te gie s a s w ell as g ro w th s tr a te gie s a dopte d b y T V I. T he exp la natio n is th oro ughly s u pporte d w ith r e fe re nce to th e a rtic le a nd o th er s ch ola rly s o urc e s.

P ro fic ie nt - E xp la ins th e d iv ers ific atio n s tr a te gie s a s w ell as g ro w th s tr a te gie s a dopte d b y T V I. T he e xp la natio n is s u pporte d w ith re fe re nce to th e a rtic le a nd o th er s ch ola rly s o urc e s, b ut th e e xp la natio n is s lig htly u nderd eve lo ped.

B asic - E xp la ins th e d iv ers ific atio n s tr a te gie s a s w ell as g ro w th s tr a te gie s a dopte d b y T V I. T he e xp la natio n is m inim ally su pporte d w ith r e fe re nce to th e a rtic le a nd o th er s ch ola rly s o urc e s. T he e xp la natio n is u nderd eve lo ped.

B elo w E xp ecta tio ns - A tte m pts to e xp la in th e d iv ers ific atio n s tr a te gie s a s w ell as g ro w th s tr a te gie s a dopte d b y T V I; h ow eve r, th e exp la natio n is n ot s u pporte d w ith r e fe re nce to th e a rtic le a nd o th er s ch ola rly s o urc e s a nd/o r is s ig nific antly u nderd eve lo ped .

N on-P erfo rm ance - T he e xp la natio n o n d iv ers ific atio n s tr a te gie s a s w ell as g ro w th s tr a te gie s a dopte d b y T V I is e ith er n one xis te nt or la cks th e c o m ponents d escrib ed in th e a ssig nm ent in str u ctio ns.

D istin guis hed - C om pre hensiv ely d escrib es T V I’s d iffe re ntia tio n s tr a te gy a nd it s m ajo r c o m petit o rs . T he d escrip tio n is th oro ughly su pporte d w ith r e fe re nce to th e a rtic le a nd o th er s ch ola rly s o urc e s.

P ro fic ie nt - D escrib es T V I’s d iffe re ntia tio n s tr a te gy a nd it s m ajo r c o m petit o rs . T he d escrip tio n is s u pporte d w ith r e fe re nce to th e artic le a nd o th er s ch ola rly s o urc e s, b ut th e d escrip tio n is s lig htly u nderd eve lo ped.

B asic - D escrib es T V I’s d iffe re ntia tio n s tr a te gy a nd it s m ajo r c o m petit o rs . T he d escrip tio n is m inim ally s u pporte d w ith r e fe re nce to th e a rtic le a nd o th er s ch ola rly s o urc e s. T he d escrip tio n is u n derd eve lo ped.

B elo w E xp ecta tio ns - A tte m pts to d escrib es T V I’s d iffe re ntia tio n s tr a te gy a nd it s m ajo r c o m petit o rs ; h ow eve r, th e d escrip tio n is n ot s u pporte d w ith r e fe re nce to th e a rtic le a nd o th er s ch ola rly s o urc e s a nd/o r is s ig nific antly u nderd eve lo ped.

N on-P erfo rm ance - T he d escrip tio n o f T V I’s d iffe re ntia tio n s tr a te gy a nd it s m ajo r c o m petit o rs is e ith er n onexis te nt o r la cks th e co m ponents d escrib ed in th e a ssig nm ent in str u ctio ns.

D istin guis hed - T horo ughly a sse sse s T V I’s ta rg etin g a nd s e gm enta tio n a ppro ach es. T he a sse ssm ent is th oro ughly s u ppo rte d w ith r e fe re nce to th e a rtic le .

Pro fic ie nt - A sse sse s T V I’s ta rg etin g a nd s e gm enta tio n a ppro a ch es. T he a sse ssm ent is s u pporte d w ith r e fe re nce to th e a rtic le , but th e a sse ssm ent is s lig htly u nderd eve lo ped.

B asic - P artia lly a sse sse s T V I’s ta rg etin g a nd s e gm enta tio n a ppro ach es. T he a sse ssm ent is m inim ally s u pporte d w ith r e fe re nce to th e a rtic le . T he a sse ssm ent is u nderd eve lo ped.

B elo w E xp ecta tio ns - A tte m pts to a sse ss T V I’s ta rg etin g a nd s e gm enta tio n a ppro ach es; h ow eve r, th e a sse ssm ent is n ot su pporte d w ith r e fe re nce to th e a rtic le a nd/o r is s ig nific antly u nderd eve lo ped.

N on-P erfo rm ance - T he a sse ssm ent o f T V I’s ta rg etin g a nd s e gm enta tio n a ppro ach es is e ith er n onexis te nt o r la cks th e co m ponents d escrib ed in th e a ssig nm ent in str u ctio ns.

B US699.W 4A 1.0 5.2 015 Analyzes Why the Acquisition of the Media Capital by the Prisa Group Created Many Advantages Total: 1.00 Explains Diversification Strategies as well as Growth Strategies Adopted by TVI Total: 1.00 Describes TVI’ s Differentiation Strategy and Its Major Competitors Total: 1.00 Assesses TVI’ s Targeting and Segmentation Approaches Total: 1.00 6/7/2019 https://ashford.waypointoutcomes.com/assessment/9144/preview https://ashford.waypointoutcomes.com/assessment/9144/preview 2/3 Distin guis hed - C om pre hensiv ely e xp la ins h ow T V I s h ould d eve lo p s tr a te gie s to s u cce ssfu lly fa ce it s fu tu re c h alle nges. T he exp la natio n is th oro ughly s u pporte d w ith r e fe re nce to th e S W OT a naly sis p ro vid ed in th e a rtic le a nd o th er s ch ola rly s o urc e s.

P ro fic ie nt - E xp la ins h ow T V I s h ould d eve lo p s tr a te gie s to s u cce ssfu lly fa ce it s fu tu re c h alle nges. T he e xp la natio n is s u pporte d w ith r e fe re nce to th e S W OT a naly sis p ro vid ed in th e a rtic le a nd o th er s ch ola rly s o urc e s, b ut th e e xp la natio n is s lig htly u nderd eve lo ped.

B asic - E xp la ins h ow T V I s h ould d eve lo p s tr a te gie s to s u cce ssfu lly fa ce it s fu tu re c h alle nges. T he e xp la natio n is m inim ally su pporte d w ith r e fe re nce to th e S W OT a naly sis p ro vid ed in th e a rtic le a nd o th er s ch ola rly s o urc e s. T he e xp la natio n is u nderd eve lo ped.

B elo w E xp ecta tio ns - A tte m pts to e xp la in h ow T V I s h ould d eve lo p s tr a te gie s to s u cce ssfu lly fa ce it s fu tu re c h alle nges; h ow eve r, th e e xp la natio n is n ot s u pporte d w ith r e fe re nce to th e S W OT a naly sis p ro vid ed in th e a rtic le a nd o th er s ch ola rly s o urc e s a nd/o r is s ig nific antly u nderd eve lo ped.

N on-P erfo rm ance - T he e xp la natio n o n h ow T V I s h ould d eve lo p s tr a te gie s to s u cce ssfu lly fa ce it s fu tu re c h alle nges is e ith er nonexis te nt o r la cks th e c o m ponents d escrib ed in th e a ssig nm ent in str u ctio ns.

D istin guis hed - C le arly a nd c o m pre hensiv ely e xp la ins th e is su e to b e c o nsid ere d, d eliv erin g a ll re le va nt in fo rm atio n n ece ssa ry fo r a fu ll unders ta ndin g.

P ro fic ie nt - C le arly e xp la ins th e is su e to b e c o nsid ere d, d eliv erin g e nough r e le va nt in fo rm atio n fo r a n a dequate u nders ta ndin g.

B asic - B rie fly e xp la ins th e is su e to b e c o nsid ere d, d eliv erin g m inim al in fo rm atio n fo r a b asic u nders ta ndin g.

B elo w E xp ecta tio ns - B rie fly e xp la ins th e is su e to b e c o nsid ere d, b ut m ay n ot d eliv er a dditio nal in fo rm atio n n ece ssa ry fo r a b asic u nders ta ndin g.

N on-P erfo rm ance - T he a ssig nm ent is e ith er n onexis te nt o r la cks th e c o m ponents d escrib ed in th e in str u ctio ns.

D istin guis hed - E m plo ys p ers u asiv e a nd a pplic able in fo rm atio n fr o m c re dib le s o urc e s to d eve lo p a n a m ple a naly sis o r s yn th esis o f th e to pic . V ie wpoin ts o f e xp erts a re s cru tin ized th oro ughly .

P ro fic ie nt - E m plo ys a pplic able in fo rm atio n fr o m c re dib le s o urc e s to d eve lo p a n a naly sis o f th e to pic .

Basic - Id entif ie s a pplic able in fo rm atio n fr o m c re dib le s o urc e s, b ut m ay n egle ct th e a pplic atio n o f s u ch in fo rm atio n to w ard th e analy sis o f th e to pic .

B elo w E xp ecta tio ns - P re se nts in fo rm atio n fr o m e xte rn al so urc e s, b ut s u ch in fo rm atio n m ay la ck c re dib ilit y a nd/o r r e le va n ce .

N egle cts to a pply s u ch in fo rm atio n to w ard th e a naly sis o f th e to pic .

Non-P erfo rm ance - T he a ssig nm ent is e ith er n onexis te nt o r la cks th e c o m ponents d escrib ed in th e in str u ctio ns.

D istin guis hed - D ispla ys m etic ulo us c o m pre hensio n a nd o rg aniz atio n o f s yn ta x a nd m ech anic s, s u ch a s s p ellin g a nd g ra m m ar.

W rit te n w ork c o nta in s n o e rro rs a nd is v e ry e asy to u nders ta nd .

P ro fic ie nt - D ispla ys c o m pre hensio n a nd o rg aniz atio n o f s yn ta x a nd m ech anic s, s u ch a s s p ellin g a nd g ra m m ar. W rit te n w ork c o nta in s o nly a fe w m inor e rro rs a nd is m ostly e asy to u nders ta nd.

B asic - D ispla ys b asic c o m pre hensio n o f s yn ta x a nd m ech anic s, s u ch a s s p ellin g a nd g ra m m ar. W rit te n w ork c o nta in s a fe w erro rs w hic h m ay s lig htly d is tr a ct th e r e ader.

B elo w E xp ecta tio ns - F ails to d is pla y b asic c o m pre hensio n o f s yn ta x o r m ech anic s, s u ch a s s p ellin g a nd g ra m m ar. W rit te n w ork c o nta in s m ajo r e rro rs w hic h d is tr a ct th e r e ader.

N on-P erfo rm ance - T he a ssig nm ent is e ith er n onexis te nt o r la cks th e c o m ponents d escrib ed in th e in str u ctio ns.

D istin guis hed - A ccu ra te ly u se s A PA fo rm attin g c o nsis te ntly th ro ughout th e p aper, tit le p age, a nd r e fe re nce p age.

P ro fic ie nt - E xh ib its A PA fo rm attin g th ro ughout th e p aper. H ow eve r, la yo ut c o nta in s a fe w m inor e rro rs .

B asic - E xh ib its lim ite d k n ow le dge o f A PA fo rm attin g th ro ugho ut th e p aper. H ow eve r, la yo ut d oes n ot m eet a ll APA r e quire m ents .

B elo w E xp ecta tio ns - F ails to e xh ib it b asic k n ow le dge o f A PA fo rm attin g. T here a re fr e quent e rro rs , m akin g th e la yo ut d iffic ult to d is tin guis h a s A PA .

N on-P erfo rm ance - T he a ssig nm ent is e ith er n onexis te nt o r la cks th e c o m ponents d escrib ed in th e in str u ctio ns.

Explains How TVI Should Develop Strategies to Successfully Face Its Future Challenges T otal: 1.00 Critical Thinking: Explanation of Issues Total: 0.50 Critical Thinking: Evidence Total: 0.50 W ritten Communication: Control of Syntax and Mechanics Total: 0.25 W ritten Communication: AP A Formatting Total: 0.25 6/7/2019 https://ashford.waypointoutcomes.com/assessment/9144/preview https://ashford.waypointoutcomes.com/assessment/9144/preview 3/3 Distin guis hed - T he le ngth o f th e p aper is e quiv ale nt to th e r e quire d n um ber o f c o rre ctly fo rm atte d p ages.

P ro fic ie nt - T he le ngth o f th e p aper is n early e quiv ale nt to th e r e quire d n um ber o f c o rre ctly fo rm atte d p ages.

B asic - T he le ngth o f th e p aper is e quiv ale nt to a t le ast th re e q uarte rs o f th e r e quire d n um ber o f c o rre ctly fo rm atte d p ages.

B elo w E xp ecta tio ns - T he le ngth o f th e p aper is e quiv ale nt to a t le ast o ne h alf o f th e r e quire d n um ber o f c o rre ctly fo rm atte d pages. N on-P erfo rm ance - T he a ssig nm ent is e ith er n onexis te nt o r la cks th e c o m ponents d escrib ed in th e in str u ctio ns.

D istin guis hed - U se s m ore th an th e r e quire d n um ber o f s ch ola rly s o urc e s, p ro vid ing c o m pellin g e vid ence to s u pport id eas. A ll so urc e s o n th e r e fe re nce p age a re u se d a nd c ite d c o rre ctly w ith in th e b ody o f th e a ssig nm ent.

P ro fic ie nt - U se s th e r e quire d n um ber o f s ch ola rly s o urc e s to s u pport id eas. A ll so urc e s o n th e r e fe re nce p age a re u se d a nd cite d c o rre ctly w ith in th e b ody o f th e a ssig nm ent.

B asic - U se s le ss th an th e r e quire d n um ber o f s o urc e s to s u pport id eas. S om e s o urc e s m ay n ot b e s ch ola rly . M ost s o urc e s o n th e r e fe re nce p age a re u se d w ith in th e b ody o f th e a ssig nm en t. C ita tio ns m ay n ot b e fo rm atte d c o rre ctly .

B elo w E xp ecta tio ns - U se s a n in adequate n um ber o f s o urc e s th at p ro vid e lit tle o r n o s u pport fo r id eas. S ourc e s u se d m ay n ot b e sch ola rly . M ost s o urc e s o n th e r e fe re nce p age a re n ot u se d w ith in th e b ody o f th e a ssig nm ent. C ita tio ns a re n ot fo rm atte d co rre ctly .

N on-P erfo rm ance - T he a ssig nm ent is e ith er n onexis te nt o r la cks th e c o m ponents d escrib ed in th e in str u ctio ns.

W ritten Communication: Page Requirement Total: 0.25 W ritten Communication: Resource Requirement Total: 0.25 P ow ere d b y 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: [email protected] 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), 151–163151 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, 3having 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 theMetro 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 theatreplays, 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 asLux, Lux Woman, Maxmen, andGrazia within the generalized press segment and titles such asCasas de Portugal, Briefing, Revista de Vinhos, andAuto Comérciowithin 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 Radio Press TVI NBP Lux Channel Protocol with Sports TV“mupis” MCO TV TCIOLVizzavi 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. 152Faustino 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 byRédio 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 Group153 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.

2. Concentration of efforts toward cost efficiency— by economy of resources involved in operational structures; maintaining of CAPEX at minimum levels; and exploitation of contents, promotion, and synergy of costs associated with the group.

3. Continuous investment evaluation—by managing program and marketing costs, as investments, and through evaluation of the group portfolio and growth opportunities through potential creation of value.

During this same meeting, the Chairman of the Board also discussed potential exploitation of contents, adver- tising, and promotion synergies across several group media:

“Quinta das Celebridades,” a TVI reality show, “used” by MCG radios,Luxmagazine, and the IOL portal. Exploitation of TVI’s news content by outdoor advertising; MCO; and contents exchange between Agência Financeira (financial information Web site), Mais Futebol (sports information Web site), and Portugal Diário (generalist Web site), all of which are owned by the IOL portal. TVI, Media Capital radios, and free weekly news- paperMetro, were encouraged to share news with each other.

On February 20, 2006, also during the presentation made on Investor’s Day, some objectives of the Media Capital general strategy for profitable growth were also defined:1. Structural growth in current business: Use leading positions to leverage an increase in prices and market shares. Achievement of additional revenue from group content and new platforms.

2. Focus on cost efficiency: Keeping lean operating structures and CAPEX at minimum levels. Exploiting cross-synergies to reduce costs within the group.

3. Best practices in the sector: Program and marketing investments orien- tated toward returns. Focus on leading, reference media assets aimed at organic growth. Business Area History Television.

In 1999, Media Capital acquired the majority of TVI’s capital, having relaunched a second Portuguese private channel in 2000. In the beginning of that year, TVI’s market share was 18%, with this channel having surpassed SIC in the third quarter with 33.3%.

TVI’s position was due to its prime-time programs, a combination of a news bulletin of a popular character, followed by soap operas, Portuguese series, and the first edition of the “Big Brother” reality show.

In the beginning of 2002, Media Capital’s activity within the television sector was expanded with the acqui- sition of 45% of NBP’s social capital (the main Portuguese soap opera and popular series production company and supplier for TVI). In the last quarter of 2002, Media Capital bought the remainder of NBP, through the acqui- sition of VAL.

NPB integrated production companies FEALMAR and Multicena (with 5 studios employing over 500 collabora- tors); Empresa Portuguesa de Cenérios, which provides set design services—construction, assembly, decoration, and assistance; Casa da Criação, responsible for devel- oping television scripts produced by NBP; Camarins, a television and film acquisition, management, mainte- nance, and commercialization logistics platform; and EMAV, a unit orientation directed toward audiovisual equipment leasing and management. Not associated with any particular company within the NBP structure, a workshop company also exists to train soap opera actors, as well as an audiovisual creation and production area and a center to export television contents produced by NBP.

Within the television sector, TVI’s activity is supported by RETI, a network owned by TVI since its launch in 1993. Unlike other Portuguese television channels, TVI does not lease Portugal Telecom’s services to broadcast its transmissions. 154Faustino Internet. In March of 2000, Internet service provider IOL was launched as a portal, having become the place to launch other group brands and contents, as well as encourage sales of products and services including adver- tising. Overall, 20 sites were launched and linked to publications, television channels, theme contents and entertainment, personal pages, and editions of exclu- sively electronic publications such asPortugal Diárioand Mais Futebol.

IOL also promoted free services or paid additional services such as e-mail, chat and search engines, and ticket purchases through Plateia IOL. Of special interest is “Cotonete.Iol,” the first Portuguese digital radio channel that allows personalization of music lists accessible to each user. Media Capital is also the owner of ISP Vizzavi, acquired from Vodafone. Press. Since May of 2000, the MCG offers specialized titles associated with its Lux brand: Lux magazines,Lux WomanandLux Deco(no longer existing)—which are also associated with the contents of television magazineLux.

Media Capital continues to publish media and adver- tising newspapersBriefing, Casas de Portugal(real estate), Maxmen(men’s magazine),Notícias Choque(popular photo- journalism),Poster(movies and music, aimed at young- sters),Recreio(children),Revistas de Vinhosand its English versionPortuguese Wines.

In May of 2001, Media Capital sold Sociedade de Comu- nicação Independente, editor of newspaperO Indepen- dente, a weekly newspaper that had created the group years ago, which had been in serious financial difficulties for many years. The newspaper was acquired by a group of 10 investors, including directors Inês Serra Lopes and Vítor Cunha. This newspaper closed down in September of 2006.

Media Capital has maintained a more reduced activity in the press segment through Feira das Vaidades, SA, a publisher of women’s, men’s, and tabloid magazines. In October of 2003, Media Capital redirected its investment priorities to the audiovisual and Internet sectors, having almost abandoned its activities within the press sector by selling its subsidiary Económica, the publisher of news- papers such asDiário EconómicoandSemanário Económico, to Recoletos (a Spanish subsidiary held by British media group Pearson).

Since 2004, Media Capital, through its subsidiary Meglo, SGPS, SA, has established a joint venture with Swedish group Metro International SA. Meglo is the co-publisher of the Portuguese edition of free commuter newspaperMetro. This daily was launched in December of 2004, being distributed in Lisbon’s subway. Media Capital Multimedia, which is responsible for local contents production, holds 35% ofMetro’ssocial capital and Metro International, being in charge of the project’s opera- tional management, also owning 65% of the publisher’ssocial capital. This daily newspaper has an average number of 30 pages of news concerning areas such as society, economy, sports, international, leisure, and advertising (the only revenue source for this publication).

On an international level,Metrohas 61 different editions in European cities, as well as North and South America and Asia. Radio. In 2003, radio stations owned by Media Capital (Romântica, Capital—now extinct—Cidade FM, Nostalgia, and Rédio Comercial) all underwent restruc- turing regarding their editorial and program guide- lines. Commercial strategies were also redefined for all services.

Rádio Comercial was relaunched on February 15, 2003; its programs consisted essentially of musical successes of the 1980s and 1990s, as well as information (short, every hour) aimed at the young adult segment (25–44 years of age). Best Rock FM followed Rédio Comer- cial’s tradition, becoming a successful pop-rock music station (from the 1990s until today), aimed at an audi- ence between 18 and 26 years of age. When presented to the investors, Best Rock was described as being neck- to-neck with RFM, the leading station for this particular segment, integrated in the Rádio Renascença group.

Cidade FM was revamped to play more Portuguese music, targeting young people aged 17 to 24. Nostalgia disappeared, having been replaced by Rédio Clube Português. This station was restructured to play Portuguese and International pop-rock classics of the 1960s, 1970s, and 1980s, targeting adults between 42 and 55 years of age.

The radio production and broadcasting activities developed by Media Capital channels are complemented by service provision to advertisers and the general public, mainly recording of commercials in the radio station studios and exploitation of merchandising, through commercialization of theme CDs associated to TVI’s soap operas or other themes. On August 12, 2004, the High Authority for Social Communication authorized Media Capital to buy the entire capital of Rédio XXI, through MC Rédios/Rédio Comercial. Advertising. During the launch period for the new TVI programs, different synergies were developed with the outdoor advertising companies acquired by Media Capital in 1999 and 2000. During this period, Media Capital acquired some of the main companies that owned a powerful network of outdoor and public transport advertising formats. 6 Within the outdoor advertising sector, Media Capital owns 14,000 billboards in several areas, through MCO TV, set in the Lisbon and Porto subways, Carris de Lisboa, Transtejo (ferries across the Tagus River), Fertagus (Tagus TVI—Media Capital Group155 River bridge trains and Lisbon buses), SATUO (Oeiras monorail), STCP (Porto buses), TUB (Braga transports), REFER (railway network), as well as having advertising activity around city structures and fixed urban adver- tising spots (nets and big formats) and through the Portuguese bus network.

In July of 2004, Media Capital established an agree- ment with Médias et Régies Europe, SA for the acquisition of 35% of the capital of TC, Publicidade em Transportes e Meios de Comunicação SA (Advertising in transport and communication means, SA), which also operates within the Lisbon and Porto urban structure segment, MCO. 7 Other areas. The remaining business areas in which Media Capital is involved are music, movies, fairs, exhi- bitions, and sports. Within the music segment, the group develops its activity through Media Capital Enter- tainment, a company aimed at booking actors, career management, and organization of musical and cultural events, especially record producing, live music presenta- tions, and other events associated to radio and television programs owned by Farol Música. In October of 2004, Farol Música established an agreement for the exclusive distribution and sale of Warner Music in Portugal, as well as encouragement of synergies with Portuguese artists represented by the national label.

Within the movie segment, Media Capital manages movie rights through a partnership with Castello Lopes Multimédia and agreements with FOX/MGM, Miramax, and independent North American production compa- nies. Within the fairs and commercial exhibitions segment, Expolider is responsible for the conception, organization, and implementation of events. The partic- ipation of Media Capital in União de Leiria’s Anony- mous Society places the group within the sports activity, through a Portuguese Premier League football club. In 2004, Media Capital, SGPS was admitted to the stock market (Euronext Lisbon). Other General Strategy Elements To better understand the extent of the success of Media Capital’s strategy for the television segment, Table 1 shows audience evolution since the foundation of TVI (1993) until recent years (2006).

As already suggested, the public channel (RTP) did not have a market-orientated strategy before the emergence of private channels. In this sense, it is not surprising that SIC achieved the first position in the ranking of most seen channels in Portugal only 3 years after initiating its broadcasting activity, dethroning RTP1 and sending RTP2 to the last position. On its turn, TVI occupied the third position but lost share consistently until 1997, havingTable 1. Audience Share Evolution of Free-to-Air TV Channels Television Audience Share—Four Main Free to Air Channels (1992–2006) (Percentages) Anos RTP 1 RTP 2 SIC TVI 1992 72,2 17,9 8,5* ** 1993 61,5 17,6 14,3 6,6 1994 46,9 9,8 28,4 14,7 1995 38,4 6,4 41,4 13,8 1996 32,6 6,5 48,6 12,3 1997 33,0 5,6 49,3 12,1 1998 31,5 6,2 49,2 13,1 1999 28,5 6,0 48,1 17,4 2000 24,3 5,6 42,2 20,8 2001 20,1 5,6 34,0 31,9 2002 21,1 5,3 31,5 31,4 2003 23,8 5,0 30,3 28,5 2004 24,7 4,4 29,3 28,9 2005 23,6 5,0 27,2 30,0 2006 24,5 5,4 26,2 30,0 Note.Source: Marktest/MediaMonitor, http://www.ics.pt/index.

php?op=cont&lang=pt&Pid=78&area=330, retrieved May 2, 2007.

RTP=Radio and Television of Portugal; SIC=Sociedade Independente de Comunicação; TVI=Independent Television. only managed to increase its share by one point in 1998.

In summary, TVI’s strategy was based on its character as a church-depending channel, oriented toward an audi- ence mostly comprising housewives and youngsters who watch television in the afternoon.

This acquisition of TVI in 1998 entailed not only new owners but also a new managing director, José Eduardo Moniz, who was largely responsible for all subsequent events in the life of this television station.

With a new corporate management model and a new program strategy, encouraged by Media Capital, TVI freed itself from the influence of the Catholic Church and started assuming a new position within the audiovisual market.

In 1999, TVI achieved its best result ever (17.4% of share), gaining audiences both from SIC (leading channel) and RTP1. TVI resorted to the market, having bought programs from a then recent Dutch television program producer,Endemol, which had already supplied programs with good audience results to SIC(Chuva de Estrelas—All You Need is Love). In the end of the 1990s, this producer was strongly betting on an astonishingly successful television program format all over the world— reality shows, the best known of which is “Big Brother.” In just 1 year, TVI’s share increased from approximately 20% to over 30%, this being mostly due to this program and its subsequent editions.

However, this turning of tides at the station was not due solely to reality shows; TVI started betting strongly on national production, namely regarding soap operas.

Todo o Tempo do Mundo, Jardins Proibidos, andOlhos de Água 156Faustino were the soap operas that initiated this cycle, having obtained enormous audience shares. TVI has been betting strongly on this type of program since 1999, with each soap opera proving more successful than the previous.

From 2000 onward,Casa da Criaçãostarted writing the scripts for TVI novels, which represents total profession- alism. The Queluz station realizes that national soap operas represent a fundamental element to achieve its targets, on par with reality shows, directing all produc- tion means toward TVI. TheCasa da Criação(soap opera scripts), FEALMAR, and NBP (producers) end up being acquired by Media Capital. Therefore, the TVI group now own all necessary means for station soap opera produc- tion, from script writing to production, casting, actor training, and so forth. Table 2 shows the most successful soap operas.

The year of 2005 represented another important mile- stone for TVI: The channel attained leadership, with a 30% share versus the 27.2% share achieved by SIC, dethroning the latter station, which had occupied the position of market leader for 10 consecutive years.

Another audience phenomenon, namedMorangos com Açúcarwas equally important. Effectively, a very signifi- cant market segment existed that neither reality shows nor soaps managed to mobilize in favor of TVI: the adoles- cent segment. With the start of this soap in 2003 (which is already in its 4th series), TVI also managed to capture this target audience.

Two other Portuguese audiovisual sector phenomena emerged associated to this soap: manufactured music bands that rapidly reached national sales tops (D’ZRT and 4Taste) and product placement, which entails placing (advertising) brands in a subtle fashion. This had already been done in 1998 with the seriesMédico de Família(from Endemol), but it was with the seriesMorangos com Açúcarit became relevant. It is certainly a very important revenue source for TVI, as may be observed from the economic and financial indicators shown in the following section.

Table 2. List of the Most Successful Independent Television Soaps Soap Year Share Olhos de Água 2001 52% Filha do Mar 2002 50% Dei-te Quase Tudo 2006 49% Anjo Selvagem 2003 48% MCA II Verão 2005 47% Fala-me de Amor 2006 46% Mundo Meu 2005 46% Nunca Digas Adeus 2002 46% Ninguém como tu 2005 45% Queridas Feras 2005 45% Concerning other general strategy elements, TVI signed a protocol with Sport TV on March 13, 2006 where it was established that TVI had exclusive broadcasting rights for the Portuguese Premier League football games during the 2006 through 2007 and 2007 through 2008 seasons. TVI will broadcast games from a major team every week, also holding exclusive broadcasting rights for all other games.

Another important aspect to be highlighted in this group’s strategy is the importance given to market rela- tions: The MCG has a market relations representative responsible not only for external communications but also for investor communications and relations. The mission of the relations representative regarding Media Capital Investors is to supply relevant information, in a consistent fashion, to all interested parties involved, in the sense this ensures the possibility of correct company evaluation any moment (regardless of the char- acter of the news in question) to minimize investor risks.

As part of this information policy, the MCG presents quarterly results (according to legal requirements), orga- nizes meetings between the Media Capital Management team and investors, as well as a visit of the chief financial officer or the Investor Relations to the sales side at least once a year, also organizing an annual event (Investor’s Day) with the participation of people responsible for the various business units. Investors and analysts are also allowed to participate in regional and sector conferences, conference calls, and visits in Lisbon, when required. Media Capital provides the following regular information and presentations: news, mandatory information, monthly audience reports, quarterly results presentation and broadcast, specific company presen- tations, general assembly communications, and yearly accounting reports.

As already suggested regarding TVI’s program strategy, a strategic approach to prime time (8 p.m.– 12 a.m.) and the hours prior to prime time (6 p.m.–8 p.m.) exists, as well as in the quarters with bigger seasonal advertising investment (2nd and 4th quarters). Regarding target audiences, TVI has defined as the segment repre- sented by housewives between 25 and 44 years of age and their families as its most relevant commercial target.

To achieve market share among its target audience, TVI ensures different programs are broadcast over week- days and weekends. One differentiating aspect of TVI’s programs compared to other television channels has been a greater focus on soap operas and other televi- sion shows starring national actors. Figure 3 shows this television operator’s program strategy in a more system- ized fashion, this being based on three aspects: informa- tion (28%), fiction (32%), and entertainment (24%). Other programs (sports and international, among others) repre- sent only 16%. 8 TVI—Media Capital Group157 FOCUS ON RETURN: - Prime time - Strong quarters - Audiences in relevant demographic profiles Market audiences with high relevance on advertising revenues Selective key target time slot Define priorities for programming budget Define & fine tune programming grid Housewives ABC 1 25/54 Housewives ABC 1 25/54 Families 4–44 Adults: > 15 Access to prime – time Prime – time Night – different for weekday/weekend > ¾ of TVI Programming investment on these time slot Focus on most profitable quarters News & sports done in - house Portuguese fiction/NBP/TVI International most acquired to majors Entertainment is locally adapted/produced REVIEW STRATEGY BASED ON MARKET REVIEW DAILY GRID BASED ON AUDIENCES Figure 3. Key factors of Independent Television’s (TVI) programming strategy. Main Economic and Financial Indicators Since 2001, MCG’s revenue has been increasing with the exception of 2003, where a slight decrease occurred. As seen in Figure 4, group revenue was approximately 221 million euros in 2005, the highest amount ever regis- tered. Regarding total revenues, 72% originated from TV, 7% from radio, 7% from the outdoor business, and the remaining 14% originating from all other businesses. In 2006, Media Capital revenue reached 230 million euros, which represented a 4% increase relative to 2005.

In 2005, Media Capital’s total advertising revenue represented approximately 24% of the total advertising investment in Portugal. In Portugal, television represents 42% of the total advertising market with 4% for cable, 7% for radio, 34% for the press, 12% for outdoor advertising, approximately 1% for movies, and 1% for the Internet and other means. MCG accounts for 46% of the total television advertising investment in Portugal, 30% in radio, approx- Revenues 200219221230 180 185 190 195 200 205 210 215 220 225 230 235 2003 2004 2005 2006 Million euro Figure 4. Revenue evolution. imately 3% in the press, around 20% outdoor and approx- imately 30% of the Internet advertising investment.

TVI was the leading television channel in Portugal in 2005, for the first time in its history. TVI had been the leading station in prime time since 2001, but it reached an average audience of 34.9% of the market in 2005.

This value translates into average daily contact with over 6.4 million people, representing an almost 2% growth relatively to the previous year.

TVI’s leading position has also been confirmed by its more important target audiences, especially women (36.7% of share) and younger families. TVI has maintained and reinforced its leadership in prime time, with a global share of 38.4% in 2005. The second leading channel (SIC) was 7% behind, with RTP1 registering an audience share of 25.1%. This growth in TVI’s audience was also seen in other time slots, with a share growth between 6 p.m. and 8 p.m. from 30.1% in 2004 to 36.7% in 2005. TVI con- tinued to consolidate its leading position throughout 2006.

As may be observed in Table 3, the good audience performance achieved was reflected in economic and financial results, with a continuous net result (consoli- dated) improvement: A 136% improvement was observed between 2003 and 2006.

Regarding the contribution of each business area, as may be observed in Table 4, revenue sources associated to the television business (172 million euros in 2006) constitute the main MCG business drivers. The weight of the televi- sion business segment (approximately 25%) in this group’s accounts has grown over the years, with a 27% variation having been observed between 2003 and 2006. 158Faustino Table 3. Balance sheet and Profit and Loss Accounts in Millions of Euros 2003 2004 2005 2006 %2006/2003 Net Assets 318 343 350 349 10% Shareholders Funds 20 104 131 147 648% Operational Results 6 29 29 33 500% Net Results (consolidated) –44 –6 13 16 136% Source: Elaborated by the author from report and accounts infor- mation. Table 4. Revenue Per Business Segment in Millions of Euros 2003 2004 2005 2006 % 2006/2003 Television revenues 135 3 143 4 159 5 172 0 27% Radio revenues 12 514 414 913 9 11% Outdoor advertising 15 518 916 617 4 12% Others a 36 535 430 326 3−28% Total revenues 199 8 212 2 221 2 229 5 15% EBITDA Television 38 141 148 451 0 34% EBITDA Radio 1 12 00 50 7−38% EBITDA Outdoor advertising1 52 91 51 8 16% EBITDA Other−4.7−4.5−9.9−8.5 80% Note.EBITDA = earnings before interest, taxes, and deprecia- tions.

aRefers to businesses: Internet, editing, and audiovisual producers.

Table 5 shows a more detailed analysis of main televi- sion economic and financial indicators. A common aspect may be observed for all indicators: continuous growth for all years considered. It is also worth emphasizing the more significant variation in other operational revenues, besides advertising; in the period between 2003 and 2006, other operational revenue went up by 84%, which evidences the effort made by the television business to diversify its revenue sources to reduce its dependence from advertising. Among TVI’s complementary revenue sources, the following should be highlighted: program sponsoring, product placement, contents (soaps) sales to Table 5. Television—Main Indicators in Millions of Euros 2003 2004 2005 2006 %2006/2003 Advertising revenues120 128 136 143 20% Other operational revenues16 21 23 29 84% Total revenues 135 149 159 172 27% Total operational costs96 105 111 121 25% EBITDA 38 43 48 51 34% Note. EBITDA = earnings before interest, taxes, and deprecia- tions. other countries, merchandising and licensing, interactive television (iTV), and text messages (SMS).

Despite the contribution of the radio segment being less relevant than that of the television segment—and similar to that of the outdoor business—the group has been betting on radio, currently holding a market share of approximately 30% in terms of advertising investment.

Regarding main indicators, it is possible to observe from Table 6 that continuous growth in advertising revenues was verified between 2003 and 2005, a trend reversed in 2006, where a negative variation was registered relatively to 2005: approximately 11%.

The contribution of the outdoor segment to the group’s total revenue is slightly superior to that of the radio segment, although some indicators also suggest a trend toward stagnation or a decrease in advertising revenues. It is also worth emphasizing the very signifi- cant growth observed in 2006 of other revenue sources associated to this business.

Consequently, a 4% growth in consolidated revenues was verified in 2006 (to a total revenue of 229.5 million euros), with the television segment increasing by 8%. Advertising revenues resulting from exploiting the various media reached 179.2 million euros, which repre- sents a 4% growth relatively to 2005, mainly supported by the television segment, which registered a 5% increase.

Operational results (earnings before interest, taxes, and depreciations) reached 33.4 million euros, which repre- sents a 16% increase relatively to the previous year. As already referred to, this good performance is essentially due to the television business, where the fact that TVI was the audience leader for the second consecutive year, in 2006, should be highlighted.

Conclusions and Challenges for the Future In little over 10 years, the MCG became one of the most important players within the Portuguese market:

(a) between 1991 and 1994 it was a small press publisher; (b) in 1998 it was a small media group; and (c) from 1998 onward it started assuming the Table 6. Radio—Main Indicators in Millions of Euros 2003 2004 2005 2006 % Advertising revenues11 214 214 412 8 14% Other operational revenues1 30 40 51 1−16% Total revenues 12 514 614 913 9 11% Total operational costs10 912 414 513 2 21% EBITDA 1 12 20 50 7−38% Note. EBITDA=earnings before interest, taxes, and deprecia- tions. TVI—Media Capital Group159 position of one of the largest media groups, although it repositioned itself by mainly betting on audiovi- sual media. Within this context, it may be concluded that TVI’s success is due to the fact it belongs to a complete social communication group (i.e., a group inte- grating television, radio, written press, 9the Internet and television content production). The existing close connection between the group’s media products allows exploitation of various synergies, which may encourage better performance. A close relation exists between the various Media Capital companies, which, despite oper- ating in different sectors, are closely interlinked and impel the development of their foundation company TVI.

This strategy has been very fruitful for TVI since 2000, having inclusively allowed this station to reach leader- ship since 2005. This is thus the second consecutive year TVI manages to lead the Portuguese generalist audiovi- sual market, with data from the first quarter of 2007 confirming this trend. TVI is starting, at the present moment, to consolidate its position of undisputed audi- ence leader among all Portuguese television channels.

Nevertheless, the television market is very volatile, as well as being vulnerable to changes; thus, any innovative strategies or strategies aimed at relevant but yet uniden- tified market niches may reverse the situation. 10 Regarding the market and specifically the television segment, Media Capital estimates that in the next few years the advertising market will grow between 1% and 2%, with television advertising growing in line with this market. Advertising revenues are estimated to grow above overall market growth, with increases in total market share and total television segment revenues remaining stable. Concerning costs, it is predicted that program costs will remain stable, considering stable market conditions and increased television content production efficiency.

For the last 5 years, TVI has been an audience leader; this is expected to continue as long as the station continues to bet on Portuguese fiction production (soap operas and series), reality shows (internationally successful formats), and broadcasting of football games. Similarly to what may be observed for any business, ups and downs will occur, as did in the month of June of 2007, when the World Cup was broadcast—national team games were broadcast by the competition. However, we should expect that the decrease in audience verified in that month (June) was the consequence of this particular situation and that it will not endanger the channels leading position. In this context, as suggested by Johnson (2006), the broadcasting industry is affected by six main factors:

1. Loss of share is an influence for a television network.

2. Advertisers: big customers.

3. Business concentration.4. Expensive, high-risk program structure.

5. Reality TV—shorter lead time and no real syndica- tion.

6. Cable and satellite roles.

According to Johnson, some distribution changes have occurred in the television business; namely, broad- band and Internet Protocol TV (IPTV), Voice Over Internet Protocol, Video On Demand, Satellite Surge, and Tivo/Personal Video Recorder (PVR). Johnson also believes multiple stakeholders exist (see Table 7), as well as sources of pressure on TV broadcasters, as may be seen in the Figure 5. In this context, TVI’s managers need to consider all aspects to improve business in the future.

TVI’s managers know advertising also depends on audience shares, wishing to keep an eye on possible competition such as growth of cable penetration in Portugal. According to Aris and Bughin (2005) Growth opportunities in TVI’s current free-to-air business are limited. Its markets share is under threat due to increasing audience fragmentation, partly due to new digital media platforms. Portuguese cable 11penetration has been growing, especially in affluent cities and, in the long run, digital terrestrial television (DTT) may also be a threat. So far, DTT licences granted some few years ago have been annulled due to breach of commitment by the licensees. In addition, RTP is increasingly becoming a real competitor, after the changes occurred in the public broadcasting concept. The future role of SIC (private tele- vision competitor) is also still unknown. Therefore, TVI will have to address certain issues proactively in the future. (p. 244) Table 7. Outdoor—Main Indicators in Millions of Euros 2003 2004 2005 2006 % Advertising revenues15 119 30 16 53 16 88 9% Other operational revenues0 03 0 03 0 06 0 52 1,840% Total revenues 15 54 19 33 16 59 17 40 12% Total operational costs13 90 15 78 15 07 15 63 12% EBITDA 1 50 3 40 1 51 1 77 18% Note.EBITDA = earnings before interest, taxes, and deprecia- tions. Advertisers -ROI -Targeting women aged 18–49.

-Premium time for shows focused on the 18–34 group and with high ratings Government - Seeking control and regulation of shows Viewers - “Good programs” Investors - ROI Figure 5. Multiple stakeholders and pressure on TV broadcasters.Note. Source: Johnson (2006). 160Faustino According to Vogel (2004) As such, the great cash-flow and wealth-generating machine that is cable inexorably attracted the attention of major participants in telcos, as they are called. With fibre optics and the appropriate digital switching devices, telephone and cable services are technologically similar . Clearly, television sets are no longer passive devices. (p. 286) In Portugal, cable companies offer basic packages with over 40 channels but also additional, selective, subscription-based exclusive contents (e.g., almost exclu- sive access to first league football broadcasting). In this context, Ribeiro (2007) mentioned that the next few years will be characterized by important transformations, as well as the emergence of new challenges for television market players whether carriers, paid television chan- nels, contents providers, or final consumers.

Although TVI’s competitors have already diversified to themed TV and operate in several cable channels, TVI offers only a seasonal subscription channel during “Big Brother” episodes (24 hr per day and 7 days per week).

It should be mentioned that TVI’s future will also need to take into account the fact that the cable television market in Portugal may suffer major changes due to left off the take over public bid launched by Sonaecom on Portugal Telecom and PT Multimédia, the company that holds cable channels. The Sonaecom Group, with pres- ences in mobile telecommunications (through Optimus) and ground communications (with Novis), as well as in the media (throughPúblicoandRádio Nova), has also been showing an interest in investing in the audiovisual segment, currently in the test stage for an IPTV offer called Smart Tv. IPTV describes a system where a digital television service is delivered using the Internet Protocol over a network infrastructure of Internet channels. 12 In the end of the first half of 2007, Portugal Telecom, through its subholding, also launched an IPTV service using the brand “Meo.” According to Griffiths (2003), “with digital technologies, there is little distinction between the way television signals and other data are transmitted” (p. 18). This means that the differ- ence between television contents and other contents is starting to fade. In this market context, some opportuni- ties and threats exist for Media Capital. Figure 6 enables us, through summary SWOT analysis, to identify factors that will influence the success of the MCG, particularly TVI. In this context, this operator will also face some important future challenges; namely, the following:

1. How to access the new platforms? The Portuguese government will reopen the public tender for attribution of DTT 13 licences by the end of 2007, with the participation of several interested parties, including Media Capital.

2. How to enter the cable business? Media Capital has been attempting to create cable channels; however, this intention has been barred by the main infrastructure holder, TV Cabo, which has a privileged relationship with a Media Capital competitor, SIC.

3. How to maintain leadership? SIC has been restruc- turing and improving its performance. On its side, the public channel (RTP) started orienting toward the market since 2003, developing a management strategy focused on profitability.

Similar to other television operators, TVI will face a market essentially characterized by (a) slow economy, translated into residual growth for the advertising market; and (b) competition within the TV market, Threats Difficult macro-economic situation in the country Possibility of another private channel Migration to Internet and substitute technologies Increased competition and offer Increased contents and advertising regulation Opportunities New types of programs that have not been covered Bet on new technologies and Internet contents Bet on cable television and digital terrestrial television Contents internationalisation impelled by the Prisa Group Emergence of a favourable context to online publications Weaknesses Strengths Prime-time programs at saturation point Difficulty to gain morning and afternoon audiences Absence of paid theme channels in cable Absence of reference information in press Weak relationship with the telecommunications business Consistent leadership in the last two years National production as a differentiating factor Leadership in TV advertising Synergies between the various group companies Good management and relations with the financial market Figure 6. Independent Television—Media Capital SWOT analysis. TVI—Media Capital Group161 increasing with the emergence of new offers, supported by new technologies. In this sense, Media Capital’s growth in television activity and profitability will not only involve an increase in TVI revenues, but mostly activity diversification through new contents transmis- sion platforms (cable, DTT, IPTV, etc), as well as develop- ment of new synergies between the various businesses and rational cost management. In this context, Media Capital’s growth strategy will entail (a) structural growth for existing businesses, (b) operational costs optimisation and efficiency, and (c) adopting of the best program and management practices.

In conclusion, the MCG will need to define its content flows in the future by developing a set of new business areas: the launching of new theme channels after estab- lishing a deal with TV Cabo, TVI migration to a digital platform (an area in which Media Capital considers opportunities exist for new information channels), exploitation of new multimedia products—SMS services, teletext and IVR—creation of a TV-shopping business, sale of contents and services to ADSL service providers, devel- opment of businesses around musical products and video contents from Media Capital, exporting of series and soap operas, and the launch of TVI International 14 are measures leading to future growth. Notes 1. http://www.ics.pt/index.php?op=cont& lang=pt& Pid=78& area=330, retrieved May 16, 2007.

2. The first acquisition represented 30% (1998); the remaining capital (70%) was acquired the following year.

3. However, this weekly newspaper already existed before the Media Capital Group was formed, within the scope of Sociedade de Comunicação Independente (SOCI), founded in 1988. In this sense, it may be affirmed that Media Capital emerged as a consequence of SOCI’s development.

4. These shareholder structure alterations also led to significant management team changes, namely the exit of the Media Capital founder (Miguel Pais de Amaral) and the appointment of a new president: Pina Moura, former Economy Minister, in the XV Constitutional Government. On its hand, Manuel Polanco (son of the Prisa Group founder, Jesus Polanco) was appointed the man responsible for managing this Spanish media group’s participations in Portugal.

5. Prisa Group becomes the main shareholder of the Media Capital Group, which the group announced on November 8, 2005 (http://www.mediacapital.pt/flash/PR-Prisa_Vertix- 081105.pdf).

6. According to a decision by the Media Capital board of direc- tors, this business area was considered as non-strategic for the group. In this sense, Media Capital Outdoors is under- going negotiations to sell the corresponding assets. This intention was divulged in a communication sent to the Securities Market Commission (Comiss˜o do Mercado de Valores Mobili´rios) on July 13, 2007.7. Media Capital is the second largest outdoor advertising group in Portugal, having achieved a turnover of 17.4 million euros last year, which represents 7.5% of the total 230 million euros obtained in 2006. However, as already mentioned, negotiations are under way to sell this business unit, which is considered as non-strategic.

8. Percentage relative to time occupied in program grid.

9. Although, as already mentioned, this group has been decreasing its investment in the press segment, partic- ularly generalist and economic press segments where it already had a relevant position throughDiário Económicoand Semanário Económico. These assets were acquired by Recoletos in 2002. The only investment Media Capital currently made within this segment, characterized by a dynamic attitude, corresponds to free daily newspaperMetro.

10. For example, RTP1 (Radio and Television of Portugal) was surpassed by Sociedade Independente de Comunicação (SIC) in 1995, after having been the leading channel in Portugal for 10 consecutive years. On its turn, SIC was surpassed by Independent Television (TVI) when its leading position appeared to be consolidated and guaranteed for many years to come. RTP1 has been recovering well in this audience war, and SIC will naturally wish to recover the position it held for so long. TVI will need to remain atten- tive, continue to provide the audience with what it wants, and creating needs such as what happened with reality shows that had not existed until “Big Brother.” 11. Currently, about 70% of all households in Portugal are cabled, of which 44% subscribe to a cable service. Market leader with around 85% share is TV Cabo, a subsidiary of Portugal Telecom, the Portuguese incumbent.

12. In addition to the aforementioned operators, other compa- nies also offer Internet Protocol Television services: TV Cabo, Cabo Visão, and Art Telecom.

13. This tender had previously occurred. A public tender was opened in 2001 for attribution of the license granted to PTDP (consortium formed by the Pereira Coutinho Group, Sociedade Independente de Comunicação, and Radio and Television of Portugal), although under protest by another consortium: Media Capital/ONI. This license was revoked (in March of 2003) due to contract breach by PTDP regarding the platform launch date, whereby the consor- tium invoked technological problems and unfavorable macroeconomic conditions.

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