45 YEARS OF IMPRESA

Portugal 2019 | TELECOMS & IT | VIP INTERVIEW

TBY talks to Francisco Pedro Balsemão, CEO of Grupo Impresa, on Portuguese television, the digital sphere, and increasing ratings.

What is the evolution of Grupo Impresa? What have been the main milestones and challenges over the years?

There is Grupo Impresa and SIC, which is the most relevant part of Impresa right now because the TV business is thriving in Portugal. Impresa as a holding was launched 45 years ago in January 1973. It started as a newspaper, Expresso, that began during the Portuguese dictatorship. At the time, it was a huge risk to use free speech and there was a lot of censorship. Fortunately, a year later, Portugal became a democracy. In the 1980s, we were able to buy some magazines and became a publishing company by the 1990s. SIC was launched in 1992 and became the pioneer in its industry. Although it wasn't launched as a startup due to its expensive and large launch, it was a pioneering operation as the first privately held TV station in Portugal; We had to be disruptive in terms of the way we operated and due to our efforts, the channel quickly became the leader in the market in terms of ratings and shares within four years. Although we lost our leading status after maintaining it for five to six more years, we are still leaders regarding commercial targets: the most affluent families turn to our channel, which is extremely important because they have purchasing power that advertisers want to tap in to. Due to programming opportunities and choices, we have managed to create this strategy. For example, telenovelas used to have the connotation of a low-quality product. However, in SIC's case, we have strong script writers backed with talented actors and these shows are viewed by millions of people from different backgrounds and locations. In terms of production, we don't have our own production company, but we work closely with a company called SP; SIC makes up 80-90% of their revenue; hence, we have a strong relationship. The telenovelas are a product of our cooperation. Notably, we won an Emmy in 2011, and in 2018 we won awards in France and Canada, allowing us to market our products abroad. So far, we have sold Portuguese soap operas in 43 countries, including South Korea, Italy, Mexico, Dubai, and Germany. We are renowned to be the first Portuguese channel to start cable operations and it paid off because of our high viewership among distribution platforms. We have SIC Notícias (News), the first 24-hour news channel in the country, which is number one among news channels. We have SIC Mulher (Women), SIC Caras (Celebrities) and SIC Radical for different target markets, as well as SIC Kids. We also export these channels abroad to 14 different countries, some of which speak Portuguese like in Mozambique and Angola, or have a diaspora of Portuguese communities, like in France and Canada. And we produce a channel only for the African market, DSTV Kids. We also have SIC Internacional and SIC Internacional África so SIC is the Portuguese media company that has the biggest number of channels in its portfolio (we produce and broadcast 9 channels).

What strategy do you have to refocus the business on audiovisual and digital segments?

We had a large publishing business up until end-2017. When I became CEO in March 2016, the strategic plan in place was ending; therefore, I decided to hire a consultant to help us develop a new plan. One thing we had always felt was that the publishing business in particular, in Europe, the US, and Australia, is difficult. We had 14 publishing titles, and we decided to sell all of them except our original newspaper, Expresso, and a music magazine. We decided not to sell it because we wanted to capture the younger target market; however, we stopped printing it and converted it to an entirely digital publication. It was hard to sell off our titles because it meant losing 200 people and 12 products; however, we had to do it because the contribution of all these brands combined was insignificant to our EBITDA. Expresso is an oasis here in the publishing business; it has a 36% share of the advertising market in Portugal. Expresso has the largest circulation in Portugal, although print sales are falling. We will not be closing the paper version, although our growth is focused on the digital version. We are well ahead of the rest of the market, selling 25,000 digital copies of the newspaper every week. All in all, we sell 86,000 Expresso's weekly publications.

Impresa closed 1H2018 with EUR2.5 million, 30 times higher than figures in 1H2017. To what would you attribute that success?

It has been one year and nine months since the 2017-2019 strategic plan was put into place, and so far, it has produced tremendous results. Selling the publications was very important, reducing our fixed costs. Similarly, we had some programming cuts due to shows that were not getting a good return on investment. We had no opportunity to increase the return because many of them were foreign programs, such as Brazilian telenovelas. They were successful in the past in our programming slots, but consumers habits have evolved since. Another reason was our increase in advertising revenue, which related to our performance and ratings. It also had to do with the fact with the World Cup this year as we had some of the matches alongside RTP. We developed new entertainment shows and news shows around the World Cup, and advertisers were eager to work with us. It will be difficult to replicate the same results in 2H2018; however, I am confident that our advertisers will be looking at our products and will continue to advertise with us. We recently hired one of the most important presenters in Portugal, which can be compared to a football team hiring Cristiano Ronaldo. It is expensive for us, although high figures that are being circulated are false, but we expect a great return on this investment.

What are your goals and priorities for the year ahead?

There are different challenges we face. We have competition from international players. The media landscape is now global but there is no level playing field because rules that apply to established media players don't apply to Netflix, Google, or Facebook. Nonetheless, local quality content is something that we are investing in, not just in terms of telenovelas, but in news and other fiction. When we start developing fictional products, we are always thinking about how they can be exported abroad; stories with a global appeal. For Dubai right now, for example, we have to edit and need to make sure there is certain content is adapted according to preferences. We are doing it systematically rather than ad-hoc. Our main goal is to move into our new building; it's important as a historical milestone since it means SIC will be in the same building as Expresso, something that has never happened in the company's 45 years of history. Our goal is to create synergies in different areas, improve operations, as well as boost creativity and motivation.