SPEECH OF ADRIANA CISNEROS DE GRIFFIN PALEY CENTER FOR MEDIA LATIN AMERICA: CREATING CONTENT FOR A GROWING MARKET

IN THE SPANISH-SPEAKING WORLD LOS ANGELES, UNITED STATES September, 2011

Good afternoon, Its a pleasure to be here, many thanks to the Paley Center For Media for this invitation, I am very excited. Today I want to share with five major themes: Beyond Disruption. A growing market Evolution in the creation and distribution of content A Latin America in step with the 21st Century The Road Ahead.

The first idea, Beyond Disruption, is the theme that brings us together and is also one of the principal focus points of the Cisneros Group today. In the communications media we are confronting a historic process of transition. New technologies are revolutionizing everything from the way in which we watch television to the way that we relate to one another. Today I will address these many changes that the industry is facing in the new millennium, highlighting three that are especially important to my organization, and to many of you all here today: the evolution in the creation and distribution of content, Latin Americas efforts to keep in step with if not ahead of the ever-morphing technologies, and what that means for the future. The industry is leaving behind old models and quickly evolving and innovating to offer the most cutting edge information and entertainment to its public. Metaphorically speaking, were standing on a stage full of opportunities and

challenges, where, today, more than ever the industry must and can be close to its audience. Our positioning on that stage can always be improved upon, and we must seize every opportunity to have a direct dialogue with the viewer, listening to them and understanding their needs and subsequently adapting our productions. In our particular case, the creation of content for the Hispanic public offers a dual challenge: to develop formats in line with new technologies while keeping in mind the needs of one of largest growth segments, a segment that gains strength and influence every day. This markets demands and expectations are transforming parallel to the development of new media and technologies. It is our role to create content that merges and enhances both stems of growth. Today, Hispanics are not only looking for content that offers them a greater possibility of interaction that can be adapted to a variety of screens; but also content that they can find in their own language, that is of better quality and that is designed especially for them. As the Hispanic population grows in the United States especially second and third generation members this is especially evident. This population has similarities with both the Anglo-Saxon market and the Latino market. But herein lies the challenge: creating content for a population that is marked by its own duality. Let`s talk about: A growing market In 2009, Nielsen conducted a study among the Hispanic population in the US exploring the content preferences of the bilingual Latino community. This study found a market that is capable of surfing from an English language police series to a soap opera in Spanish without any problem; that said, they prefer content in their native language, with the subjects that offer an emotional and cultural connection. The experience of watching television in Spanish permits the viewer to connect with their culture, history and identity in a way that is not available in other places.

The study also highlighted the importance of creating commercials of better quality and designed especially for the Latino market instead of simply translating the content. This has permitted brands to find a much more receptive environment. Advertising dollars matter across the board, but perhaps even more in this market: According to Nielsen, the return on investment for scheduled advertising in media with programming in Spanish such as Univision and Telemundo, is 30 percent higher in comparison with that transmitted in English media. This, coupled with the rapid growth and digitalization of the Hispanic population, makes this market one that offers great opportunities for Latin-American content and the new platforms. Currently, more than 500 million people speak Spanish around the globe, making our language the one with the second largest number of native speakers and the third most used on the Internet. In this country alone, there are already 50.5 million Hispanics, a 43 percent increase since the year 2000, making the United States the nation with the second largest population of Spanish speakers, just behind Mexico. The Latin-American industry is facing the enormous challenge of creating more and better content for a market that is growing exponentially and consuming more television every day. Now, this growth in the expansion of the language goes much farther than those whose mother tongue is Spanish, our language is also one of the most studied in the world. Without a doubt, television content has had a great deal to do with this dispersion, stimulating the learning of Spanish throughout the world. According to the Cervantes Institute catalog on the dissemination of Spanish, formats such as soap operas have played a fundamental part in stimulating a huge interest in learning

our language[i] in countries as far away as Israel, Indonesia, Albania, Kenya or Malaysia. The trend is clear: the Hispanic public demands content in its language and the demand for our formats in the rest of the world grows every day. In the United States alone, the importance of the Hispanic sector has carried Univision to its place as the fifth most watched channel, competing head to head with channels in English. The industry recognizes the potential of the Hispanic market. Since 2001, eight new Spanish content channels have emerged, and the big chains have turned their attention towards this market, launching projects like Fox Hispanic Media and the growth of offerings by CNN in Spanish. That Hispanics are transforming the television market of the United States is undeniable. This change is not only reflected in content, but also in advertising. The Hispanic segment possesses an ever greater influence as consumers, not only due to its size but because of its economic potential, which exceeds $950 million. According to the Association of Hispanic Advertising Agencies, companies categorized as Best-In-Class increased their investment in the Hispanic market by 25 percent in 2009, dedicating an average of 21.4 percent of their budget to Spanish media. Hispanic consumers have made themselves a market of great interest, not only for their domestic growth potential, but also for their growing international influence. And now into my third point: Evolution in the creation and distribution of content Nicholas Negroponte, Founder and Director of MIT Media Lab, said The future is already here and there are only two possibilities: be digital or not. Very accurate, dont you think?

2010 was the year that marked the consolidation of social networks in Latin America; the penetration of Twitter in countries such as Brazil and Venezuela reached 21 percent of the online population, compared to an 8 percent penetration rate in the United States. Not to mention Facebook, whose penetration in Latin America is 50 percent greater than in the United States. [ii] While the current penetration of computer ownership in the majority of countries in the region is still less than 35 percent, that of mobile devices is practically 100 percent. This is an especially relevant data point as we look to the future and the possibility that cell phones become the primary mode of access to the Internet, propelled by the use of phones with the Android system and better payment plans focused on increasing data consumption. In Mexico alone, 14 percent of cell phones are Smartphones and 30 percent of mobile devices are Internet enabled. Something similar is happening with video consumption online, which has become one of the fastest growing digital behaviors in Latin America, where the penetration is in line with that of the United States; although the time dedicated is still low, its expected that it will increase significantly with the increasing availability of broadband connections, with improvement in speed and growing use of tablets. Currently in countries such as Brazil, Chile, Colombia and Mexico there is an average consumption of 8 to 11 hours with an average clip time of 5 to 6 minutes. Just in Brazil, broadband penetration is greater than that of pay television; which is why online video could become the key platform for accessing video programming. This dispels any doubts that the commitment that Netflix has made to launch U.S. and local programming online in Latin America will be lucrative. And Netflix is not the only one out there -- other local players are seeking to offer similar services, such as Bazuca of VTR and Arnet in Argentina. In addition, recently we signed an agreement with Netflix for the distribution of our content.

In the case of Hispanics in the United States, the panorama is not very different, 65 percent of them have access to the Internet[iii] and, in fact, 17 percent of the Hispanics online tend to download videos compared to 14 percent of total Internet users; similarly, 9 percent of Hispanics are likely to download movies, this is 3 percent more than the general population; while 8 percent of Hispanics with access to the Internet are used to watching TV programs on line, 1 percent more than the total of Internet users. James Dean used to say I cant change the direction of the wind, but I can adjust my sails to always reach my destination. I think that this quote exemplifies very well what has been the philosophy of the Cisneros Group for over 80 years: A permanent evolution, that has allowed us to adapt perfectly to new scenarios and that today is moving us solidly down the road to expansion into new markets and new screens. Beyond Disruptionthe audience has changed and it is up to us, in the industry to respond effectively to these changes and capitalize on the opportunities that new technologies have opened for us. Perhaps the greatest challenge is that of outlining the correct strategies that will allow us to use every resource, every platform efficiently, all the while suited to our target population. New technologies are both an opportunity and a challenge. Tools like social networks could become the best complement to our content, allowing us to provide ever better experiences to our audiences, to create anticipation/buzz, and to get almost immediate feedback. At the same time, ON Demand content and systems such as DVR allow an exponential multiplication of our content views, but this also means an enormous challenge, above all in advertising.

The Internet is still a maturing media with barely 50 percent penetration; notwithstanding, its estimated that it could reach 70 percent by 2015. The potential is enormous, but the race has begun and we cannot afford to be left behind. Its certain that content will continue to be king; but digital media is already a key part of every strategy. The four idea: A Latin America in step with the 21st Century Id like to share with you the great success of the soap opera Eva Luna, whose story was driven through an innovative interactive strategy, set in motion through the association between Univision Interactive Media and Venevision Productions, which paid off in the inclusion of more than two million new viewers in the United States. This is just one example of how Latin America is in step with the 21st century, working hard to consolidate itself as an important content provider for every screen. My father, Gustavo Cisneros, is convinced that this will be the Latin American decade and in the case of the creative industry there are numerous examples that give credence to it. I could mention social gaming, which has extended quickly through the region, especially in Brazil, where it has become a fruitful business. Companies such as Mentez, who developed an innovative online micropayment platform; Vostu, who increased their capital on the order of $300 million; Zynga, who had already hired a manager for Latin America and is the now number one company for games on Facebook in the region, monetizing itself through micro payments and advertising, are clear examples of the growth in this industry. Soap operas, as I mentioned at the beginning, are another excellent example of content for exportation. The Colombian series Ugly Betty made the 2010 Guinness World Records Book of the Decade as the most successful soap opera in

the history of television, transmitted in more than 100 countries, dubbed into 15 languages and adapted for 22 nations. And finally: The Road Ahead. The road is marked out and Latin America has a great opportunity for the development and commercialization of Spanish content; globalizations of the market and new technologies have presented enormous challenges, but they are also the principal catalyzing agents for industry opportunities. The commercialization of content is a substantial source of socioeconomic growth, job creation, innovation and commerce for Latin countries. According to the United Nations Conference on Trade and Development, the exportation of creative goods from the South to the rest of the world reached $176 million in 2008, which represents 43 percent of the total of all creative industries; just a sample of the great potential of this industry for developing countries. The Latin-American industry finds itself at the ideal moment and it has everything to gain, with the rising growth of our language, quality content, digital platforms and a market of great potential. Now Youre Speaking My Language Many thanks.