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LOS ANGELES TIMES INTERVIEW

Ricardo Salinas Pliego

Investing in Mexico's Future--and Reaping Millions in Profit

July 12, 1998|Sergio Munoz | Sergio Munoz is an editorial writer for The Times

MEXICO CITY — There is a new "tiger" in Mexico's broadcasting industry. His name is Ricardo Salinas Pliego and, as president, chairman and chief executive officer of TV Azteca, he has accomplished a feat few dared even try.

Less than four years ago, he set out to challenge Televisa, the media empire built by the late broadcasting "tiger" Emilio Azcarraga Milmo. Salinas bought Channel 13 and turned the weak, state-owned station into TV Azteca, which now controls roughly one-third of Mexico's TV advertising market. He is in the midst of negotiations to establish a media presence--perhaps a TV station or a partnership with an existing outlet--in the United States. The deal could close as early as this week.

Salinas, whose personal wealth is estimated by Forbes Magazine at $3.2 billion, is considered a controversial figure among Mexico's new brand of corporate executives. His demeanor can be as soft as silk when making a point or abrasively tough. He is notorious as well because of his close friendship with now-imprisoned Raul Salinas de Gortari, brother of former president Carlos Salinas (no relation), and alleged problems surrounding some of his dealings with various business associates.

The grandson of a businessman who owned a chain of appliance stores, Salinas, who received an MBA from Tulane University in New Orleans, originally joined the family business, Elektra, in 1981. Today, Elektra is the top retailer of home electronics and furniture in Mexico. Salinas is also president of Hecalli, a retail clothing store he founded that has outlets throughout Mexico.

At the same time, Salinas is a partner of Western Union in the huge electronic money-transfer business. The company moves approximately half of the $6 billion that Mexican workers abroad send home every year. The transactions are wired to offices located in the Salinas chain stores, where they can be cashed or converted immediately into merchandise. His Radio-Cel and Biper paging company adds an average of 10,000 subscribers a month and is the market leader.

A fan of Bill Gates, Salinas, 43, keeps a copy of Gates' book "The Road Ahead" in his extremely modern, yet modest office. He lives in Mexico City with his wife, Ninfa, and their three young children Ninfa, Benjamin and Hugo.

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Question: What made you try to compete with a powerful monopoly like Televisa in Mexico's broadcasting market?

A: We saw there was a historical opportunity to challenge Televisa when President Carlos Salinas decided it was time to end the monopoly. The president was fed up with spending tax dollars to subsidize a state channel that had no audience. He also realized that having the weak, state-funded TV Channel [13] actually strengthened the monopoly. A broadcasting monopoly created an unbalanced political situation that made the state vulnerable. This is the context for the privatization of TV. You know the rest. We got [Channel 13 which became] TV Azteca because in the blind bidding action we paid 30% more than the next bidder.

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Q: How much did you offer?

A: $645 million. The next offer was for $500 million.

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Q: Many people wonder how you, lacking the know-how or experience, decided to buy a broadcasting company. After all, your past experience was selling household goods.

A: An entrepreneurial mind is always looking for new opportunities. When the initial rumors on the privatization of the state television began circulating in 1991, I told myself, if Emilio Azcarraga has made so much money in television, broadcasting must be a good business. Then I conducted a thorough analysis of the business and realized that it is not only a great business but a superb vehicle to influence change in the country. It provides you with a chance to build a more democratic society, a freer place.

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Q: Raul Salinas, the president's brother, invested $29 million in your company. Didn't that help you win the bid?

A: The participation of Raul Salinas in this business is irrelevant because the amount he contributed to put together the deal is less than 5% of the total package. Bidding $145 million more than the next bidder helped me. To tell you the truth, I don't need my friends to help me that way! He bought a bond and has no shares in the company. We owe him that money and we'll pay him back this year.

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Q: What has been your strategy to compete with Televisa?

A: We've put an emphasis on news. The newscasts are the soul of this operation because that is what puts us in contact with the people. And it has been precisely in the news where we have hit them harder. We inaugurated a new style of broadcasting news in Mexico. It's fast-paced, young, aggressive and it has changed the style of broadcast news in Mexico.

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Q: Your critics say your broadcasts are too pro-government.

A: That's false. We've been very critical of the government in issues such as public safety or the absence of the rule of law. Obviously, we don't disagree with everything the government does.

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