Other Free Encyclopedias » Company History » Film & Audio Production

Cisneros Group Of Companies Business Information, Profile, and History

latin america television media

Edificio Venevision, Quinto Piso, Final Avenida La Salle Colina de los Caobos
Caracas 1050
Venezuela

Company Perspectives:

The Cisneros Group is one of the largest privately held broadcast, media, technology and telecommunications organizations in the world. We are committed to delivering the highest quality and most comprehensive communications, entertainment and consumer products to the world's 550 million Spanish and Portuguese speaking consumers.

History of Cisneros Group Of Companies

With more than 70 companies located in 39 countries, Cisneros Group of Companies is a privately held business based in Caracas, Venezuela, owned by members of the Cisneros family. Brothers Gustavo and Ricardo and sister Marion own one-third shares in four holding companies that control most of the group's enterprises. Their cousin Oswaldo Cisneros is connected to affiliated businesses, and until 1997 was in charge of the bottling operation that was the foundation of the family empire. Gustavo serves as both chairman and CEO of Cisneros, and is politically well connected in both Venezuela and the United States, as well as throughout Latin America. In the early 1990s Cisneros was a conglomerate boasting nearly $4 billion in annual revenues from a wide range of business interests, including supermarkets, fast-food restaurants, baby products, sporting goods, ice cream, bottling operations, and television interests. Since 1994 the company has decided to sell off a number of these assets in order to concentrate on its media holdings, emerging by 2000 as one of Latin America's largest media companies. It owns Venevision, Venezuela's top television network, and Venevision International, which distributes the network's programming around the world. Cisneros is also the largest shareholder of Univision, America's most-watched Spanish broadcast television network, and Galavision, the top Spanish cable television network. Cisneros is aligned with a number of major partners in other media ventures as well, including Hughes Electronics to form DirecTV Latino, a direct-to-home satellite television service; AOL to form American Online Latin America; Playboy to create Spanish adult programming; and the leverage buyout firm of Hicks, Muse, Tate & Furst to form Ibero-American Media Partners, a $500 million fund to acquire a variety of Latin American media properties.

Founding of the Family Empire by Diego Cisneros in 1929

The foundation of Cisneros Group of Companies was laid by Diego Cisneros, a Cuban immigrant to Venezuela who started out as a truck driver and then established a material transport business in Caracas in 1929. It soon became the largest in the city, but it was the 1940 bottling concession Cisneros received from PepsiCo that made the family fortune, out of which a host of other ventures followed. In 1944 he established Liquid Carbonic, a company that produced carbon dioxide and related products; he obtained the right to sell Studebaker cars in Venezuela in 1947; Helados Tio Rico was established in 1952 and became the country's largest ice cream maker. At this point, in 1953, Cisneros integrated his businesses into Cisneros Group of Companies. With Venezuela beginning to enjoy the benefits of an oil bonanza, Cisneros was well positioned to take full advantage of the boom times to come. Venevision began broadcasting in 1961 and teenager Gustavo Cisneros learned the television business working as a gofer. In the early 1960s he and his brother traveled to the United States for their college education, and Gustavo had barely graduated from Babson College in 1968 when he assumed the position of chairman and CEO of Cisneros Group of Companies, due to a debilitating stroke suffered by his father.

Brother Ricardo joined the company in 1970 as chief operating officer, and working closely together the brothers continued to grow the business their father had founded. Over the next several years Cisneros became involved in a variety of new ventures. It created Gaveplast, which supplied plastic bags, cases, and other products. It created Pharsana de Venezuela to sell Chicco baby care products, and O'Cana Distributors to sell imported liquors. Cisneros also acquired Yukery Venezolana De Alimentos, maker of popular beverages. In 1975 Cisneros acquired a majority interest in Venezuela's first supermarket chain, Cada Automercado. A year later the company became involved in its first foreign investment, acquiring a 20 percent stake in International Basic Economy Corporation from the Rockefeller Group. Cisneros augmented its television interests by purchasing radio stations and forming Radiovision, Venezuela's first national radio network. Other ventures during the 1970s included obtaining the simultaneous rights to Helene Curtis hair products and the Miss Venezuela beauty pageant.

During the 1980s Cisneros continued to add to its media holdings. It formed the Rodven Group of Companies to manufacture records and audiotapes, as well as videocassettes. In 1987 Rodven became involved in the U.S. market, acquiring a 50 percent stake in Top-Hits, producers of Hispanic music. Venevision television programs also began to be broadcast in the United States, distributed by Television Latina. In 1985 Cisneros acquired Cinemakit, a Venezuelan television and film production company, then in 1988 purchased Videomovil Color, C.A., an audiovisual production company. In addition, Cisneros became involved in the fast-food business during the 1980s, gaining exclusive rights to operate the Burger King and Pizza Hut chains in Venezuela. It augmented its supermarkets with department stores, acquiring the Venezuelan outlets of Sears Roebuck and renaming them Maxy's. Overseas, Cisneros also acquired Spain's largest chain of department stores, Galerias Preciados. Moreover, in 1984 it purchased two well-established U.S. companies: Spalding, manufacturer of sporting equipment, and Evenflo, maker of baby products. Cisneros also became involved in London real estate, purchasing four acres of land in Paternoster Square, on which the company built an office and retail complex.

Cisneros continued to strengthen its media portfolio in the early 1990s. It acquired a stake in Univision, America's top Spanish-language television network. It also acquired Chilevision, a television network in Chile. Cisneros added to its beverage interests, acquiring a Venezuelan beer distributor, Cerveceria Regional. Cisneros also increased its U.S. holdings, as well as added to its supermarket operations, by acquiring Pueblo International, which generated more than $1 billion in annual revenues from its 52 stores, most of which were located in Puerto Rico, along with several located in south Florida and the U.S. Virgin Islands. Pueblo was the oldest and largest chain in Puerto Rico, and combined with Cada, promised to boost overall purchasing power. With Cisneros' backing, Pueblo looked to expand aggressively on its new warehouse-style Xtra stores, which catered to the large Latin population in south Florida. In addition, the acquisition of Pueblo included 23 Blockbuster Video stores, the result of an exclusive franchise agreement with Blockbuster for stores in Puerto Rico and the U.S. Virgin Islands.

Adverse Impact of the Bank Scandal of 1994

Over the years, the Cisneros brothers nurtured relationships with politicians and power brokers around the world. Gustavo listed David Rockefeller, Henry Kissinger, and Washington lawyer Vernon Jordan as personal friends. At home, the brothers had close ties to Venezuela's president, Carlos Andres Perez, which proved almost as problematic as beneficial when the country's economy began to sputter. In 1989, for instance, rioters attacked Cada supermarkets to protest austerity measures introduced by the government. When threatened by a military coup attempt in 1992, Perez sought refuge at Venevision's well-fortified Caracas television studio, from which he thwarted the military by addressing the nation on television. The Cisneros' connection with Perez became a clear liability during the economic turmoil of 1994. In January of that year Venezuela's second largest bank, Banco Latino, failed, triggering a major financial crisis that required the government to bail out a number of banks. Ricardo Cisneros, one of 83 Banco Latino directors, was caught up in the resulting scandal. He quickly fled the country for Miami after arrest warrants were issued for him and the other 82, who faced charges of fraud, misappropriation, and publishing false bank balances. In addition, President Perez would be placed under house arrest for two years, accused of misappropriating funds. Gustavo Cisneros, however, was not implicated in the scandal and continued to run the family business from Caracas. He staunchly defended his brother, who was later exonerated. This series of events was seized upon by media rival Radio Caracas Television, which also had a newspaper at its disposal. Because the Cisneros family was of Cuban descent, the accompanying media barrage found a receptive audience, especially among the established wealthy of Venezuela, many of whom resented the success and power enjoyed by the immigrant Cisneros family.

As unpleasant as it was to endure such tendentious publicity, Cisneros Group of Companies also faced the task of dealing with difficult economic conditions in Venezuela that were taking a toll on even the healthiest of companies. Cisneros initiated retrenching efforts, electing to concentrate on its strengths: retail, beverages, and especially media. To sell off noncore assets and reinvest in these areas, the company purchased a townhouse in Manhattan's Upper East Side and hired a staff to oversee the operation. Over the next two years Cisneros unloaded its Venezuela supermarket and department store chains. Pueblo also was put on the block, but in the end Cisneros decided to retain the supermarket chain, although it closed down all of the Florida stores. Also among the assets sold were Spalding and Evenflo, bringing in a reported $1 billion. Moreover, Cisneros cut a $500 million joint venture deal with its bottling operation, Hit de Venezuela, and Coca-Cola, severing a relationship with Pepsi that lasted more than 50 years. It was a lucrative transaction for Cisneros, which received $300 million in cash, but a bitter pill for Pepsi, which had been unable to compete against Coke worldwide, with the exception of Venezuela. Pepsi sued, ultimately winning a $94 million award from the International Court of Arbitration, but the money provided little more than cold comfort to Pepsi. Despite the size of the judgment, Cisneros, on the other hand, still benefited greatly from an alliance with Coke: not only did it gain immediate cash, its improved distribution network allowed the bottling operation to increase market share significantly.

Teaming with DirecTV in 1996

By 1996, Cisneros had done more than make a comeback; it had accumulated a war chest of $2 billion and was eager to expand its Latin American media holdings. It acquired a 20 percent stake in Galaxy Latin America, a direct-to-home satellite television service joint venture with Hughes Electronics Corporation under the DirecTV brand name. The service supplied more than 140 channels to small-dish owners in 27 Latin American countries, with the system providing audio in Spanish, Portuguese, or English. Although these countries were far from affluent, the market was large, exceeding 450 million people; and, because of difficult terrain, cable television was unable to establish a dominant presence. The potential payoff was so large that a number of other players made bids to secure the Latin American satellite market. Specifically, Cisneros and its partners were now going head to head with media mogul Rupert Murdoch's News Corp. and his Latin partners, who were establishing the Sky Latin America service. In addition to becoming involved with DirecTV, Cisneros formed Cisneros Television Group to develop pay-television channels for international distribution, in particular through DirecTV. This subsidiary then entered into a joint venture with the Hearst Corporation to create Locomotion, a 24-hour Spanish-language cartoon network to be included on Galaxy Latin America's DirecTV package. Relying initially on the Hearst Entertainment library of half-hour animated series, Locomotion hoped to reach a teen and young adult audience, unlike Turner's The Cartoon Network, which was aimed at young children. Later in 1996 Cisneros turned to the other end of the programming spectrum when it teamed with Playboy Enterprises to create two adult television networks for the Latin audience: Playboy TV/Latin America and AdulTVision/Latin America. Again, the programming was initially intended for DirecTV.

Cisneros also remained active in the beverage industry. In 1997 the company sold its Hit de Venezuela subsidiary to Mexico-based Panamerican Beverages Inc., the largest Coke bottler in Latin America, for $100 million and 10 percent of Panamco shares. The merger made Panamco the largest soft drink bottling company in Latin America and the Caribbean. Just as Cisneros became involved in a fierce competition over satellite television it also became part of a regional beer war, with local companies forging partnerships with international industry giants. Cisneros' regional subsidiary joined forces with Interbrew, the Canada-based owner of Labatt, to create a joint venture to acquire small Latin brewers. Rather than market a single global brand to the area, the partners planned to appeal to local tastes by adapting their brands to each market.

Although Cisneros remained involved in beverages and the supermarket business through Pueblo International, the company was clearly focused on becoming a regional media powerhouse. In 1997 it became partners with the American firm of Hicks, Muse, Tate & Furst, leverage buyout specialists who had invested billions in the U.S. media market. They formed Ibero-American Media Partners, a $500 million fund to acquire a variety of media properties in Latin America, as well as in Spain, Portugal, and the United States. The venture was especially interested in the highly fragmented Latin American radio market. It made immediate inroads in Chile, buying a number of radio and TV stations, and forming Ibero-American Radio Chile to consolidate its radio holdings and make further acquisitions in the country.

In late 1998 Cisneros found another major partner, the giant Internet company America Online (AOL), with each investing $100 million to form America Online Latin America. Internet usage in the region was growing faster than anywhere else in the world, making it a tempting target for AOL. Despite the brand's dominance in the United States, however, it was late entering the Latin American market and faced entrenched competition from local newspaper-sponsored Internet services and New York-based StarMedia, which had served Latin America since 1996, as well as Yahoo! Inc. and its Yahoo en Espanol service launched earlier in the year. AOL Latin America chose Brazil as the country to target. Although it boasted nearly half of the region's Internet users, Brazil was a debatable move considering the bulk of the Cisneros media assets that could provide content were devoted to the Spanish-speaking market rather than Portuguese. Moreover, the country's top Internet Service Provider, UOL, was a content-rich site backed by two major Brazilian publishers that had modeled itself after AOL. AOL also found that its domain name had already been taken by a small Brazilian ISP, forcing it to use a longer, more unwieldy Internet address. In the summer of 2000 AOL Latin America next entered Mexico, followed by Argentina. At the same time, the venture prepared to make an initial public offering (IPO) of stock. Originally the goal was to raise $575 million. In the end, however, AOL Latin America raised only $192 million, and of that amount $64 million was purchased by Cisneros and AOL.

Despite challenges in establishing AOL Latin America, Cisneros looked to further combine its varied media holdings with the capability of the Internet. In October 2000 Ibero-American Media Partners merged with major Argentine web site El Sitio to form Claxson Interactive Group, which brought together a variety of media assets in both Spanish and Portuguese, including radio, television, and Internet content. Because El Sitio competed with AOL Latin America as an ISP, it agreed to sell that part of its business and tentatively agreed to provide content to AOL Latin America. In addition to its attraction to the Internet, Cisneros remained active in developing new television content. Cisneros Television Group launched ASI Music Latin America, a multichannel audio-only music network; and HTV, the first Latin music television channel to be distributed throughout the world. In 2001 the Venevision subsidiary joined forces with the Spanish film and television conglomerate, Admira, to create a joint production fund for programming aimed at Latin America and the U.S. Hispanic market. With a long list of influential partners and a wide array of media assets, Cisneros appeared well positioned to dominate Latin America for many years to come. It was also clear that it harbored some global aspirations as well.

Principal Subsidiaries: AOL Latin America; Caracol; Caribbean Communications Network; Chilevision; Claxson Interactive Group; Galavision, Inc.; Pueblo Xtra International, Inc.; Venevision.

Principal Competitors: News Corporation Limited; Telemundo Group, Inc.; Grupo Televisa, S.A.

Chronology

  • Key Dates:
  • 1929: Diego Cisneros establishes a trucking business.
  • 1940: Cisneros obtains the rights to Pepsi in Venezuela.
  • 1961: Venevision begins broadcasting.
  • 1968: Gustavo Cisneros takes over as chairman and CEO.
  • 1984: Spalding and Evenflo are acquired, then sold a decade later.
  • 1996: The company engages in a joint venture with DirecTV to serve Latin America.
  • 1998: A joint venture with AOL forms AOL Latin America.
Columbia Tristar Motion Pictures Companies Business Information, Profile, and History [next] [back] Chrysalis Group Plc Business Information, Profile, and History

User Comments

Your email address will be altered so spam harvesting bots can't read it easily.
Hide my email completely instead?

Cancel or


This web site and associated pages are not associated with, endorsed by, or sponsored by Cisneros Group Of Companies and has no official or unofficial affiliation with Cisneros Group Of Companies.