Abril Wises Up | Educational Content Consolidates

Source: Fusões & Aquisições. Thanks for your careful and consistent coverage.

Abril Educação buys Wise Up for R$ 877 million

The value of the deal, which will be paid off in parcels, may be modified according to revenues reflected in the language school’s next earnings report.

Abril Educação today announced the acquisition of the English language school Wise Up in a deal valued at R$ 877 million. The deal will be paid off in three installments and could be subject to renegotiation depending on the 2012 EBITDA of Wise Up. Cash flow and net debt might also affect the value of the deal between now and the signing date.

Founded in 1995, Wise Up has  76,000 students at 338 franchise schools in 89 Brazilian cities.

I make that out to be R$ 11,540 to acquire a student.

Wise Up is an official English-language education supplier for the upcoming World Cup.

Above, Abril’s timeline for its accelerating acquisitive phase, starting in 2010.

Abril Educação comprises the Ática and Scipione textbook publishing houses, the SER curriculum factory, and others.

According to its Formulário de Referência 2012, the company,

in 2009 reached the broadest audience in the Brazilian education market in terms of students served, according to the Ministry of Education. We estimate that 71% of Brazilian students and more than 63% of elementary schools make use of our services or teaching materials. Our brands are recognized in all the markets we occupy. Our businesses have diverse sources of revenue which complement one another, creating synergies and capable of attending to all the needs of the elementary school and pre-university education cycle. We currently operate in five markets and are preparing an entry into two others …

The new businesses are prep courses for civil servant exams and the application of distance-education to language learning, a commitment born out by this recent bit of news. .

That 71% cannot be healthy for the Brazilian culture industry and educational policy.  71% plus vertical integration is why I tend to think of Abril as a tropical zaibatsu wannabe.

Abril has been in acquisitive mode for some time now. I have not run the numbers yet, partly because there are no precise numbers to be had. Even so, the financial grandiloquence of this deal ought to give us some inkling of the financial health and creditworthiness of the Grupo Abril in general.

The British network also has 36 units on deep sea oil rigs and another 21 schools located in four inland cities.

The deal is April’s third advance on the language-learning market. Last July, it purchased 51% of Red Balloon, geared toward children, at R$ 29.8 million. Abril also owns  6% of Livemocha, a U.S. distance-learning language franchise.

In a Material Event announcement to the market, Abril Educação says, “We have many other businesses in various educational markets, covering 4,500 Brazilian cities. There exist a number of synergies between these companies and Wise Up, whose shareholders will profit from the deal.  Abril also said that the deal signed with Wise Up calls for the medium and long-term retention of Wise Up senior management.

I wonder: Would this deal make rumors of an Abril IPO more or less likely? Relatório Reservado reports:

Abril Educação is preparing a follow-on offering on the Bovespa. It is said to be awaiting an improvement, however modest, in the international markets. But we have heard this song before. Contacted, the company had no comment.

Abril is extremely, aggressively competitive in this area of its business. A memorable example was the smear campaign conducted against a competing publishing house — up for the same public tender as Abril — for the provision of text books.

The group’s flagship weekly, Veja, screamed bloody murder, calling the rival publisher a purveyor of communist indoctrination and accusing the education ministry of practicing North Korean brainwashing techniques. I shit you not. Never underestimate the power of «moral panic» marketing.

In general, I wonder whether mass-market publishing or education figures larger in the group’s bottom line. AE and a couple of other subsidiaries are listed, but the Group is not.

According to the Web site of the Editora Brazil, the magazine publishing arm of the business produces 192 million copies of 52 titles a year, with 28 million readers and 5 million subscribers.  If you are not planning to read it, please deposit in the proper recycling bin …

The two flagship educational houses, Àtica e Scipione, sold 53.2 million books to the public sector and 6.5 million to the private sector in 2011, according to company financials.

The Brazilian PPP | «A Mixed Message»

Since a nicely done Financial Times article on the «mixed message» of Brazilian PPPs — public-private partnerships — earlier this year, BrazilianPPP activity has been tracked in some detail by the Observatório das PPPs, which dubbed 2012 «The Year of the PPP».

Financial journalist Luis Nassif suggests that correcting this «mixed message» will require reform of the regulatory agencies, viewed as the captive of powerful industry lobbies.

First, what the FT reported about an exemplary case in point from Bahia state:.

Modelled on experiences in Spain, the Hospital do Subúrbio was built by the public sector, but privately equipped and operated. It was the first new emergency unit for two decades in the city of Salvador.

“I think the government took one look at the challenge of running a hospital, and decided they weren’t up to it,” says Jorge Oliveira, chief executive of Promédica, part of the consortium that now operates the facility.

The backing of Mr Wagner, a member of the statist Workers’ party, was significant.

“If [PPPs] hadn’t been introduced by the Workers’ party, I don’t think they would have survived,” says Ana Maria Malik, a professor of health policy at the Getúlio Vargas Foundation in São Paulo.

According to the FT, a point of disagreement in this and any number of of other  PPPs is the assignment of demand risk.

The FT again:

Brazil | Building Out the Culture Industrial Complex

 

Source: Estado de S. Paulo »  Portal ClippingMP.
By: Sonia Racy
Translation: C. Brayton

Marcos Prado speaks out about the difficulties of producing films in Brazil, the challenges of distribution, and what comes next.

As the Oscars approach, Mar­cos Prado laments the rarity of Brazilian films among the nominees. Why does Brazil produce such a small number of films?

“I have no precise answer to these questions, but I know from experience how difficult it is to produce movies here,” says Prado, producer of the two Elite Squad films, the celebrated documentary Estamira, and the feature-length Artifical Paradises.

Is it a matter of inadequate marketing? “We lack domestic marketing, as well as strategies for foreign markets and government support,” Prado says.

While awaiting the results of Oscar night, Prado spoke to this column about what he says are exciting new projects.  The following are selections from that interview. .

After Paraísos Artifi­ciais | Artificial Paradises, what is your next project?

I will direct a film called Nó na Garganta | A lump in the throat – about football hooligans. We have already applied to BNDES and are raising other funds. Our budget is R$ 10 million.

We want to show why these young men identify so passionately with their team, their intense way  of life. There is a warlike aspect to this. I want to explore this underworld, which, while it generally involves young men of a more inferior social status, also attracts middle class youth to football violence. We are trying to understand, not to justify or to judge.

Any other projects on the way?

We are working on a screenplay on the life of Brazilian jiu-jitsu master Rickson Gracie — a story about his life, not about fighting, however.

We also plan a film about the invasion of the Morro do Alemão shantytown complex in Rio de Janeiro. Both will be directed by Zé Padilha. The film about the shantry we are provisionally calling The Invasion of the Alemão. The plot will deal with a book by Rodrigo Pimentel and Gustavo Almeida, to be published this year.

Invasion of the Alemão is a play on words: alemão is slang for the military police. Pimentel is a former military police captain and author of the novel Tropa de Elite.

Also emerging from our Pandora’s box: a TV series based on Elite Squad. We are still negotiating with channels interested in airing it.

Neuza was commenting just the other day that Brazil is in the initial stages of a migration from the ever popular novela — soap opera — to U.S. style one-hour dramatic series and half-hour situational comedies.

How did you and Padilha start working together?

We were always fast friends. Padilha was working in a bank. One day, he said to me: “Brother, the Age of Collor has let me down.”I answered: “Not me!”

Of course, the difference was that I had no savings to be confiscated, I was flat broke anyway! And then he told me he had long wanted to make documentaries, as I had been doing for quite some time, He proposed a documentary on coal miners. We eventually wound up make Elite Squad.

Was Elite Squad originally planned as a documentary?

It was, but we wound up producing a fiction because we could not find a way to document what goes inside the police forces. You cannot just sit there interviewing the talking head. That is boring. So Zé spent two years working on the screenplay. And it worked out well. .

Does Ancine work?

It works, but it is a bit slow and rigid.

And what about BNDES?

It helps.And there are other incentives as well, but all of them are expensive. The Brazilian film industry cannnot  become a true industry under the current rules governing Brazilian cinema.

Is it hard to arrange financing for films here in Brazil?

It is not easy. Ancine regulates the movie industry and limits the extent of federal subsidies to  R$ 7 million. There are also state and municipal incentives, which raise this ceiling some, but not very much. The problem is that this level of funding is too low for more ambitious productions.

Brazilian directors are beginning to work overseas. Padilha, for example.

They are going abroad because this is a dream they dream of fulfilling.  Padi­lha is becoming a director well known to the gringo audience and as a result will have more artistic freedom in the future. He is currently making a US$ 100 million film, Robocop 4. He has little artistic freedom, however..

In raising funds through the Rouanet Law, the maximum tax-free donation is R$7 million?

Correct. R$ 3 million of these  R$ 7 million go to distributors — the vast majority  of them subsidiaries of foreign companies. They are allowed by law to reinvest the percentage of box office receipts they would ordinarily remit to their parent company. Exercising this right, they become co-producers. For example: I am a film distributor,  I find myself interested in your project, and so I invest in your film, but only after you sign a contract with me. In this way, I have to give up the portion of the film rights that belong to me.

So that means that onlyh R$4 million in funding is available?

More or less, because this arrangement with the distributors is a common practice virtually everywhere in Brazil. And so you realize that you end up losing more and more of the own rights to your own film. A lot of producers also have to cede rights to investors and others.

For example: if you make a film without the participation of Globo Filmes, your film never gets launched. And so you concede 20% of your own rights and now, because 50% of ticket sales belong to the exhibitors, there is very little left of your share.

Producers have no way of making money off of Brazilian film productions.

On the rise of Globo Filmes, via Wikipedia:

In 1997, in a bid to enter the film industry, the Globo organizations created their own production company, Globo Filmes, a company that sought to rebrand all sectors of the national film industry. In a very short time, Globo Filmes would grow into a major monopoly that ruled the Brazilian film industry. Although its movie division was initially miniscule when measured against its TV networks, Globo successfully entered one of the culture industry’s most important niches, a niche it had never entered before.

Between 1998 and 2003, Globo was directly involved in 24 film productions and its supremacy in this area was definitively established in late 2003, when films produced by Globo Filmes took in 90% of the national box office earned by Brazilian films and 20% of all films exhibited in Brazil, foreign and domestic.

Brazilian box office sales for 2012. Disney leads the way, as it often does.

Is there any way out?

A lot of producers take it out of the salaries …  Along comes Ancine and says you are not allowed to do that. So you have to run an obstacle course to find some way to secure your funding. This is just plain wrong. The film industry has to be able to survive without resorting to such subterfuges.  But it’s not easy.

Did you distribute Elite Squad yourself?

Yes, we did, and we structured the finance in order to receive 70%. We set up a distribution company, called Nossa, in partnership with Conspiração, O2, Lereby and others involved in the industry.  The market liked the structure we came up with and market players cooperated on the creation of an option. The only problem is that this requires the producer to invest in the launch of the film, which the Rouanet law does not permit.  We are trying to reinvent a formula that would allow Brazilian cinema to become an economically viable industry.

What do you think of the competition between DVDs and movie houses?

Movie houses are declining, that much is true. The more purchasing power and technological savvy people have, the more they watch films at home. Still, the principal source of a producer’s income comes from ticket sales.

Government statistics on the market are optimistic, but quotas favoring national and international produtions seem to be slow to respond — judging the diet offered by our own cable TV operator.

The Brazilian movie market is the most vigorous of all the art forms. In 2011, according to an Ancine report, …  some 143.9 million tickets were sold and the gross revenue of movie box office was R$ 1.44 billion, both of them new national records that situate Brazil among the most important markets in the world.

Tickets sold represents a good deal less than one Brazilian per session.  U.S. box office for 2012 was 1.54 billion, or let us call it 5 movie tickets per capita.

“The number of feature-length films launched — 99 — was the highest in the last decade,. says  Ancine executive director Manoel Rangel. After the market began growing again in the 1990s, the Brazilian film industry has consolidated itself. The aesthetic values of its  productions and its alternative cinema are heating up. Competition remains fierce, of course. There were no Brazilian films among the box office champtions in  2012.

Brazilian cinema attendance ranks 13th in the world, with 80,000,000 tickets sold per annum, according to NationMaster. It also ranks 13th in films produced, with 81.

Brazil has 2,098 cinemas, half of them located in the Southeast.

The U.S. slipped to 5,697 in 2011 and has declined steadily since 1995, when it fielded 7,744.

Above: The Brazilian mass market suggests that very few national films obtain Hollywood levels of box office success at home.

Samboja | Residents Revolted

Source: iG | São Paulo.

Quality of life has deteriorated in the opinion of São Paulo city residents.

According to a poll taken by the Nossa São Paulo network, city residents assign the city, on average, a score of 4.7 on a scale of 1 to 10 in terms of quality of life … “This is the lowest indicator we have seen since we began the survey,” said Márcia Cavallari, the CEO of market research firm Ibope, during the announcement of the results this morning.

Oddly, the results do not appear on IBOPE’s news page today.

In 2012, 8 out of 10 S. Paulo residents described traffic as bad or extremely bad, according to the survey. Most indicators have fallen in comparison with previous years. “Of the 169 items studied by the survey, 82% scored less than the arithmetical mean of 5.5 out of 10,” said Marcia, addiing: “17% of these items scored above the mean [5.5]“. Last year, 22% of these areas scored higher than average.

Mayor Fernando Haddad took part in a debate organized by the NGO Nossa São Paulo on Thursday.

I cannot seem to locate the event on NPS’s news page as well.

In the survey of 1,512 city residents, conducted between November 24 and December 8, 56% of the interview subjects said they would leave the city if they had the opportunity to live elsewhere.

Among interview subjects, 58% were born in the city. Of the 42% of non-natives, 82% have lived in São Paulo for more than 10 years. The survey also show that 7 in 10 São Paulo residents use the bus system every day and report an average wait of 21 minutes.

Oded Grajew, coordinator of the Nossa São Paulo network, says that the numbers suggest there is something very wrong with the city.

«Vivendi Sells Off GVT»

Source:  Portal ClippingMP.

BTG Pactual, the investment bank led by André Esteves, has dropped out of the running for Brazilian telephone company GVT, controlled since 2009 by the French communications and entertainment groupo Vivendi.

At the outset, the company was pursued by four suitors, but that number fell to three when BTG, due to a combination of factors, including … price, as Valor discovered. BTG has no comment on the story. It is believed that Esteves could rethink the company’s offer and rejoin the fray.

The sale of GVT is in its “data room” phase, opening its books to interested parties. Binding offers are expected in February, but in the meantime, the company’s data has undergone constant, though minor, adjustments.

The three groups still in the running are (1) the consortium comprising the American fund KKR, the Brazilian asset manager Gávea —  founded by former Brazilian central bank chairman Armínio Fraga — and Cambuhy Investimentos; (2) Apax, a Brazilian private equity partnership; and (3) the American DirecTV.

GVT has been valued at some R$16 billion. When it decided to sell off its Brazilian holdings, Vivendi decided to offer  between €7 billion e €9 billion for GVT. As soon as bidding began, Vivendi showed signs of a willingness to accept R$19 bilhões, or €6.3 billion.

In 2009, a Vivendi invested R$ 7.5 billion in the purchase of 100% of GVT after disputing the deal with Telefónica.

The value of  GVT as estimated by the interested parties places it above its competitor, Oi, with its R$15 billion in market capital. The Telefonica-Vivo group has a market value of R$55.7 on the São Paulo Stock Exchange | Bovespa.

I wish it were easier to call up share price data from the Web site of the BMF-Bovespa.

Brazilian blog Fusões e Acquisições has been tracking the deal since June of last year.

Vivendi began to consider divesting itself of  GVT after a failed attempt to sell off Activision Blizzard, its digital gaming unit. Sources say, however, that the company was not willing to pay the offer price. “Selling off GVT is no longer a taboo subject and is being discussed internally,”said one source. But Vivendi has not yet hired an investment bank to sell the company off.

Vivendi, a conglomerate whose holdings range from telecom to entertainment, is reviewing its internal structure in order to shore up its falling share price.  Investment banks have submitted investment plans that provide for the sale of business units or the complete dismembering of the Vivendi group.

Valued at  [?]20.5 billion, Vivendi is led by board chairman Jean-René Fourtou, 72, who took over after former CEO Jean-Bernard Levy announced he was leaving last month, citing a falling out among board members over how best to restructure the group.

Vivendi’s share price has recovered somewhat in the meantime, from €13.63 to €17.

Listings to the Left | Carta Capital Under Fire

Source: Comunique-se

Carta Capital magazine stands accused by the state’s attorney of Minas Gerais of forging a document used to illustrate articles on the so-called «monthly payola of the PSDB» … The infraction alleged by the magazine was supposedly committed during the reelection campaign of Minas governor Eduardo Azeredo (PSDB) in 1998.

Isto É magazine — above — also reported on documentary evidence in the case, in a September cover story The document in question is sometimes called the «Lista de Mourão» after its mentor, Cláudio Roberto Mourão da Silveira.

In a press release, the state prosecutor states that “on December 3 of 2012, the editors of Carta Capital were served with Notice No. 108/2012-SCI-PGJ, informing the magazine’s senior editors of the falsehood of information published in the article in question, “Return to the origins,” in the November 14 edition.

The article, written by Leandro Fortes, states that the former governor and current federal deputy withdrew more than R$100 million from state-owned firms and passed the funds to politicians and judges, most of them linked to the PSDB,  as well as to media companies.

The list included the name of Supreme Court justice Gilmar Mendes, former presidente Fernando Henrique Cardoso and Goiás governor Marconi Perillo (PSDB).

According to Fortes, this scheme to skim money from the public coffers was much worse than the «monthly payola» of the PSDB’s rival, the PT.

“For those who have watched the trial in the Supreme Court, with its innovative doctrine of «de facto dominion» and its guilty verdicts based on subjective intuitions, the «Toucan payola» will prove even more shocking thanks to the presence of something sorely lacking in the current case: inequivocal and decisive proof.

Dominio do fato is a controversial legal doctrine under which hierarchical superiors can be held responsible for bad acts by subordinates, even when demonstrably unaware of such acts For instance, the central player in the «PT payola» scheme was found guilty without any evidence of bad acts on his part. The judges reasoned that given his position, he must have or should have known of the scheme. The German legal scholar who authored the concept has appeared in a handful of interviews questioning its use in this case.

Coordinator of CAORIM, the Center for the Operational Support of Criminal Prosecutors, Joaquim José Miranda Júnior filed a police report with the Belo Horizonte Forgery and Fraud division, charging CC with journalistic fraud, The state’s attorney of Minas Gerais claims the document bears a forged signature of prosecutor Adriano Estrela, suggesting that the underlying sources of the story were “forged” and “inauthentic.”

On holiday, Leandro Fortes told Comunique-se he knows nothing about the accusation by the MP-MG.

Jornal da Mídia adds:

The lista … was produced by a known forger, who did jail time long before creating the list in question. The document is registered in the notary office and its signatures notarized. It contains gross errors, such as describing the alleged beneficiaries as holding offices they would not hold until several years after the registered date of the “document.”

Carta Capital replies immediately with the following op-ed.

I have been reading here and there that the Minas Gerais prosecutor is accusing this magazine of forging documents in the case of the «Toucan payola. I repeat: we have been accused by the MP of creating and publishing false documents from a law suit, according to reports on the Internet. The author of this serious accusation will have to back his words with evidence in a court of law.

As to the Web sites that hastened to spread this “information,” without contacting us for comment, I would like to repeat that CC does not publish police records or forged documents, does not accuse without evidence to back it, does not transform corrupt politicians into paragons of public morality  does not transform a wadded up piece of paper into a brick, does not associate with racketeers like Carlinhos Cachoeira and does not use the services of black bag, private-sector intelligence operators — who have become the true “investigative reporters” of Brasília.

The pejorative description reflects Mino Carta’s contempt for the contemporary Veja magazine, a magazine he founded in mid-1968.

The reference to a wadded-up piece of paper refers to a political propaganda set piece used during the last presidential election. Passing through a poorer  neighborhood in Rio, the candidate was struck on the head by a wadded-up flier thrown by a union member.

The mainstream press turned the incident into an exemplar of how vicious and violent government supports are. It really was absurd, and yielded quickly to online mockery.

We do not belong to this club, and this attempt to lump us with in the others is pathetic  We do not practice the journalism of the sewers.

As to the  «Toucan payola» document, like the Furnas list before it, it is once again self-evident how much political power is being brought to bear on the effort to undermine its credibility.

This time around, however, the participation of the MP of Minas is impressive. The  Furnas List was also described as a phony. Former governor Azeredo continues to use this argument — that the list is a forgery — in response to documents that describe how the «pipeline» operated in his back yard.

One faction of the “fair and independent media” simply parrots Azeredo to see if it can make the forgery theory stick. But a report by the federal police criminalistic lab has proven that the list was not tampered with and that the signatures are authentic.

The report by Leandro Fortes, as usual, was based on documents received from trusted sources, including participants in the lab experiments that ripened into the slush fund laundering scheme developed for the PSDB by  Marcos Valério de Souza, later used by the PT. We are absolutely confident in our reporting..

The original report ran in Issue No. 723,, November 11, 2012.

Furnas List

Mourão List

Brasília | Oligopolies Under Observation in 2013

Oligopolies in the Media Market

Source: Folha de S. Paulo | Brasilianas.Org.
By: Vladimir Safatle
Translation: C. Brayton

In recent weeks, Argentina made fresh headlines in Brazil with stories on clashes over the enforcement of Argentina’s so-called “Media Law,” which defines a new regulatory order for companies in the news and entertainment sectors.

Some of these new provisions, and especially those related to combating monopolies, have been viewed as signs of a vengeful State intent on limiting freedom of expression, as in the case of the archrivalry between President Kirchner and the Clarín group.

Leaving aside these heated public conflicts, however, the Argentines are engaged in an important debate that deserves to be treated more dispassionately. It seeks an answer to the question: “Do we or do we not need laws that restrict the concentration of ownership in the media sector?” That is to say, can we successfully argue that concentrated media ownership does not necessarily affect democratic practices?

At this juncture, it is worthwhile remembering that the global media market is currently among the most oligopolized in the world.

What is more, as we gather from  reading between the lines of the recent case involving Rupert Murdoch, this state of affairs really does affect our political life.

Murdoch built an empire of TV stations, newspapers, magazines, radio stations, book publishers, movie theater chains, and Internet portals that gave him the ability to mold debate, pressure governments and interfere in politics to the extent that it promised the American general  David Petraeus its unlimited support should he choose to run for U.S. president.

Situations like this are not exclusive to the Anglo-Saxon world, however. Recent decades have witnessed a brutal, highly negative trend toward consolidation of the sector that affects not only our politics but also our culture.

A single group like Time Warner, for example, exercises simultaneous control over production, distribution and development of new techniques. In this case, we are justified in saying that laws barring the formation of oligopolies is a way for society to defend itself against the coerced uniformity of opinion and the silencing of alternative voices.

Opponents of this viewpoint might reply that a more fragmented market would leave media companies more vulnerable to government pressure. This argument is not without merit.

The solution to this aspect of the problem, however, is not the perpetuation of the other aspect. Strategies are needed in order to prevent governments from framing the news according to their own interests.

In Brazil, this would imply limiting government influence by drastically cutting spending on government advertising — which should be confined to public service announcements — and enforcing laws such as the ban on politicians owning media outlets. Clear and absolutely fair criteria for the use of publicity budgets by state-owned firms should be developed.

São Paulo’s state-owned and publicly traded Sabesp might make an interesting case in point. It frequently walks the corda bamba between public service announcements and government propaganda, as is “this is your current government at work for you.”

But this could be an artifact of my own subjective impression as a couch potato. This might make a good little feature article to research.

Where are all the Sabesp TV spots stored? What PR techniques do they apply? Do they amount to the use of public money to promote a specific administration?

Anyway, I have always thought that the «monthly payola» cases should be combined and subjected to a parliamentary commission of inquiry — CPI — of the PR industry at the heart of these and other scandals.

After all, the exact same mechanism was used in several of these cases: Publicity services were contracted by a state or municipal government for a given cultural or sporting event — Rock in Rio, an Enduro motorcycle event in Minas Gerais — and then publicity fees were accounted for as having been paid to fictional or purpose-built Potemkin village PR outsourcers.

In fact, however, most of these PR funds were skimmed off for use by political and private parties. Enter the hidden camera video of political operators stuffing their socks and jocks with bundles of cash and you have yourself a classic Brazilian “mountain of money” scandal.

In any event, big PR has a demonstrated capacity for financial legerdemain — think of Duda Mendonça as well as Marcos Valério. Perhaps the second most common source of laundered campaign money: state-owned companies like Furnas in Minas Gerais.

The Vanguard of the Obsolete

Gilberto Maringoni e Verena Glass of the IPEA provide a detailed historical narrative of media law development in Latin America, explaining why regulation produced in the 1930s-1960s no longer applies.

Another factor that could not have been anticipated was the invention of digital technology and the deterritorialization of media companies through the use of virtual networks.

Before the digital revolution (1980- 90) news organizations had to be located in the country where they operated. This was not merely an arbitrary legal requirement, based on nationalist developmentalism. At this time, the entire network of businesses, and especially in the advertising sector and media finance, was anchored in calmer waters.

Now, however, an ISP, Web portal or cable TV provider can transmit content from any part of the world, without having to use antennae or sophisticated broadcast equipment.

The main problem is that the ISPs and cable operators are not classifiable as content and information producers as defined by the current, outmoded legislation.

The privatization of Latin American telecoms in the 1980s-90s, opened up a veritable  Pandora’s box. State-owned telephone monopolies were auctioned off. It may be that the authorities who sponsored this policy were blind to the about-face that would make possible a state of borderless media convergence.

Telephone operators, for example, which during the 1990s were limited to long distance voice communication, underwent a consolidation that two decades later would turn them into the biggest Internet providers in Brazil and arm them with the same political firepower as any traditional TV network.

As things stand, TV, radio, telephone, film, literature, music, data transmission, navigation data and many other services can be tapped using nothing more than a single smartphone.  Each of these functions, however, must still comply with rules specific to its sector.

ISPs use technology to produce and distribute content. To the extent that they are not subject to the old legal norms, their content can be produced anywhere in the world and transmitted to any other, with adjustments made for local characteristics [such as  language].

At the same time, now that global media maintains offices in many different countries, a complex series of loopholes in current local laws has been used to legitimate the local operation.

From the same symposium,, Denis de Moraes:

Brazil is in the  vanguard of obsolescence [sic] in terms of its regulation of the media. Its radio and TV regulator remains one of the most outmoded in Latin America. To date, the congress has made no progress toward regulating Articles 220 and 221 of the 1988 Constitution, which respectively ban monopolies in the mass media and gives preferential treatment to TV and radio stations “serving education, artistic, cultural and informative ends,” as well as “the promotion of national and regional culture and a plan of stimuli to independent productions who qualify. .The lack of action by successive governments in this area is just plain alarming.

Media a Priority for 2013

The president of the ruling PT has said that political reform and media regulation are the top priorities of this year’s Congress. The quote is from November of last year.

Rui Falcão said his party has at least two goals for 2013: A new regulatory framework for the media and political reform.

The party will begin to execute its strategy — calling on the federal president to issue a bill that regulates the media —  the party will include the issue in its agenda for the meeting of the national leadership.

Last week, Falcão told the international press that he hopes the presidency will send down a bill regulating communications in Brazil. “It is not our party that wants to pass enabling legislation for these provisions of the Constitution, it is the congress as a whole. We hope that our government will send down a bill establishing a regulatory framework that will increase freedom of expression and eliminate any possibility of censorship of the established media, regulating provisions in the Constitution that have yet to get off the drawing board.”

Rio | An Anti-Militia Plan For Vanistan

Source: Jornal do Brasil
Translation: C. Brayton

Van drivers from the Rio da Prata van service collective held a message on December 21 in Bangu, Rio de Janeiro, to discuss ways to cope with threats from militia groups.

Although part of the informal economy, the van services have made clever use of Google Sites to keep riders up to date on routes and schedules. Van services have been singled out as a priority by the state government, which seeks to facilitate the legalization of drivers and cooperatives.

Since Saturday, December 14, armed men have begun charging van drivers R$200 a week [sic], threatening to burn their vehicles if the tax is not paid. The extortion scheme is taking place in the Santa Cruz and Sepetiba neighborhoods.

The beachfront Sepetiba was the scene of a raid on the leader of a militia organization — a retired military police trooper — in July 2012. During the investigations, a clandestine cemetery was found and a cheesy but menacing cobra head sword was seized from the leader of the group — see the video, above.

Santa Cruz has been similarly targeted.

Elite Squad II | Reviewing the Review

I read it on the Web site of the Instituto Ludwig von Mises Brasil.

Cristiano Fiori Chiocca reviews the film Tropa de Elite II — Elite Squad II: The Enemy Within, directed by José Padilha.

As I may have mentioned, a recent regulatory clampdown on audiovisual content producers and distributors here in Brazil means that foreign-owned cable TV operations — Sony, Disney, Universal, Fox, A&E, TNT, Telecine, AXN, MGM, HBO, MAX, NatGeo, Discovery, History Channel … must air a certain proportion of content «made in Brazil».

I always think what a shame it is to see Brazilian theatrical talent relegated to the quick as a wink dubbing credits at the end of every Simpsons episode — and how it grates on your nerves that the dubbers chose to make Bart a baritone.

It is equally disappointing to see that the available back catalogue of the Brazilian film industry seems so shallow, though we hope that programmers will start digging deeper, striking it rich with such classics as Assalto ao Trêm-Pagador.

At any rate,, as our cable plan complies with regulation, we are starting to see the same movies over and over and over  and over, day after day after day — case in point: Elite Squad and Elite Squad II: The Enemy Within, two films about official corruption and the culture of violence in Rio de Janeiro.

This sort of regulatory activism  is just the sort of thing that drives the libertarians of the Instituto Millenium crazy.

Closely associated with ABERT, the Association of Radio and Television Broadcasters, on the one hand, and neoconservative and neoliberal movements in Germany and the U.S. — its game plan comes straight from the Atlas Toolkit — IMIL is mostly a forum for venomous libertarian rantings of the third degree.

RIo | «Eleven Jailed in Militia Case»

A curious phenomenon is visible on the cable TV screens of Brazil.

As reported earlier in the year by ANCINE, cable operators will now be required to meet quotas of nationally produced content on their channels, much of which consist mainly of dubbed or subtitled series from Sony, Warner, Universal, Disney, et al.

This works well when my wife and I are watching Futurama, for example, but this is the exception that proves the rule: Brazilians speak Portuguese.

The problem is that Brazil lacks the huge back catalog of film history that makes TMC such a must-have subscription.

Net does well to keep a dedicated channel — 66 on our Net box — supplied with homegrown content, mainly short subjects heavily subsidized by the federal Lei do Audiovisual and participants.

The real-life  result of this situation is that certain contemporary Brazilian films are being screened over and over and over and over again, day after day after day after day.

A case in point are the two Elite Squad films by Fernando Meirelles, director of The Constant Gardener and a sort of homegrown Coppola.

If the first film depicts, even celebrates,  a world in which moral ends justify unspeakable means, the latter — «Elite Squad, the Enemy Within», as reasonably translated by an industrious Wikipedian — tackles the much more insidious world of corrupt police involved in death squads, protection racketeering, black marketeering, arms and drug trafficking and election tampering in a neighborhood modeled after the infamous Rio das Pedras shantytown, about which I have taken pretty copious notes over the years.

Like the Western Zone militias of today, for example, the militiamen of the film assume identities modeled after action comic books.

Art does not resemble life, you might say. But consider the latest revelations about Batman and the League of Justice.

Source: Terra Brasil.