Media

The media sector comprises print media (newspapers and magazines), television (national content producers and networks, regional affiliates and specialized programming), radio, outdoor advertising and events. Print and broadcast media companies are owned by Brazilian individuals (by birth or naturalization) due to constitutional requirements (that have only recently been amended). As a result of restricted access to capital markets that individual ownership implies, Brazilian media companies have become undercapitalized and vulnerable to economic volatility, particularly as programming and long-term debt to the sector have generally been priced in US Dollars. While there are clear market leaders in magazines and broadcast television, other segments such as radio and outdoor advertising are highly fragmented with a few regional companies but none on a national scale. Events and entertainment companies have witnessed significant growth since the introduction of the Real in 1994.

In mid-2002, the Brazilian Congress approved a Constitutional amendment allowing Brazilian companies to increase their ownership stakes from 30% to 100% of print media and broadcast companies. It also established that foreign companies could own up to 30% of the capital (in either preferred or voting shares or both) of print and broadcast companies. A new law, yet to be passed, will regulate the foreign participation in companies of these segments. This change in the constitution with accompanying legislation will enable foreign media and, or private equity firms to invest in the sector. Brazilian media companies will now be able to access the public equity markets. In addition, Brazilian companies now have the opportunity to undertake corporate restructuring by merging the various companies owned by family members into a new corporate structure.

Telefinance and its partners have significant experience in assisting Brazilian media companies. Previous transactions and assignments include:

• Arranging financing for start-up, early stage and more mature ventures.
• Raising capital for content producers and start-up Internet companies.
• Valuation analyses of multimedia companies and specific radio, newspaper and television assets.
• Buy side and sell side M&A advisory engagements.