New player in Spain's media sector

Avanzit dives into industry in need of alternatives

When Spanish high-tech group Avanzit bought Barcelona-based boutique theatrical distributor-turned-TV producer Notro Films in February, it made Spain's media watchers sit up and take notice. Avanzit — via its media holding Corporacion Espanola de Contenidos Audiovisuales (CECSA) — showed it is no longer happy to dabble in media and is primed to become a formidable new player with vision, deep pockets and ambitions of becoming Spain's leading media group.

"CECSA's objective is to create the most powerful and complete group of content and audiovisual services," Avanzit president Javier Tallada says. "We are the only one in Spain that covers the whole spectrum of the sector's needs."

With no ties to existing TV channels, CECSA is a free agent.

This is in contrast to Globomedia, which reigns as the leading content provider for most of Spanish television. Its place — along with fellow titan production house Mediapro — under the expansive umbrella of the Grupo Arbol-Mediapro that owns a controlling stake of new broadcaster La Sexta, means it cannot claim to be truly independent.

The rest of the Spanish television industry wrestled with whether to do business with Globomedia while La Sexta is a direct rival. (Commercial channel Antena 3 did sign a unique deal with Globomedia, in which a special group of creative talent was designated exclusively to producing for the channel.)

But others are keen to explore alternatives, which is where CECSA and its growing galaxy of companies hope to score.

Upstart commercial network Cuatro opted to pick up a handful of programs from Notro Films, like the successful series "Los Simuladores," magic show "Nada Por Aqui," cook-off "Duelo de Chefs" and the upcoming primetime series "Brainiac," based on the English format.

Now part of CECSA, the Notro deal exemplifies how the group is looking to fill the niche for an independent TV producer while positioning itself for even greater things.

CECSA includes everything from technological equipment production to special effects, postproduction, digitalization, event production and now film and television content.

"All of these activities have an enormous growth potential in the present transformation process Spanish television is undergoing," Tallada explains, referring to the country's planned switch to terrestrial digital television and the marked increase in Internet TV and mobile phone TV.

"The new 1,200 digital channels are not going to have the financing capacity to have and maintain their own structures," Tallada predicts.

CECSA already owned audiovisual producer Videoreport, film production house Telespan 2000 and independent theatrical distributor Manga. The Notro deal, valued at about €30 million ($40.4 million), gave Avanzit's holding an enviably diversified bouquet of companies that cover the spectrum in film and television production and distribution. Manga and Notro complement each other well. The former — which released such 2006 hits as "Crash" and "Good Night and Good Luck" — caters to a younger, more mainstream audience. Notro offers more art house titles like "Copying Beethoven," "Manuale d'amore" and new Asian releases.

"Notro wasn't for sale," Notro founding partner Adolfo Blanco says. "But they explained the project and invited us to climb aboard."

The plan — which includes Avanzit's previously announced intention to float its media holding later this year on the Spanish stock exchange — also involved naming Notro partner Jose Maria Irisarri as president of CECSA, a shrewd move for future development.

Irisarri's trajectory in the sector of TV content creation is legendary in Spain, where he co-founded Globomedia in 1993 and steered its metamorphosis into the country's leading fiction production house. His position in CECSA gives the company a decisively TV-oriented profile, though Avanzit's interest in film and theatrical distribution is clear given the Manga/Telespan 2000 duo.

"It's an exciting and unique project that encompasses the entire value chain of business, from film and television production to distribution, commercialization and postproduction," Irisarri says.

The stock market seems to share Irisarri's enthusiasm. Avanzit stock has seen its price climb from just €2 per share in July 2006 to over €8.7 in February just before markets collapsed worldwide. Even so, Avanzit has managed to hold its share price at over €7 while other stocks continue to slump.

The Spanish TV sector is upbeat about the group's chances of success. "I'm not sure what exactly is the business plan Avanzit/CECSA intends to present," Cuatro broadcasting director Fernando Jerez says. "But with such respected professionals like Irisarri and (Notro's) Ignacio Corrales involved, I can imagine it will be something the market needs."
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