Mexican Network Purchase Is Retailer’s Revenge : Media: New private networks to challenge Televisa by treating advertisers better and trying new programming.

MEXICO CITY —  Ricardo Salinas was frustrated for years that he could not afford to advertise his Elektra electronics store chain on television, even though with 275 shops it is Mexico’s largest. That’s because Mexican media giant Televisa--whose four networks enjoy a near monopoly of the TV advertising market here--virtually demanded a full year’s payment in advance, and he did not have that much money on hand.

This week, Salinas got his revenge: The 37-year-old retail tycoon bought his own television network. Two, in fact. By offering the government $640 million--30% more than the next-highest bid--he and his partners Sunday became the new owners of the two government-owned television networks and a chain of movie theaters.

Salinas figures there are enough advertisers like him in Mexico to support a second national media corporation to pose the first major challenge to Televisa in years. Looking at the success of other Mexican companies (including Televisa) on the U.S. stock markets, he expects to finance the purchase by offering shares in both Elektra and his new media company, Radio Televisora del Centro, on international exchanges--possibly the New York Stock Exchange--in the next 12 months.

The bearded, bespectacled Salinas is a fourth-generation retailer--his great-grandfather was a founder of the venerable Salinas & Rocha department store chain--who has adapted quickly to Mexico’s changing economic policy. Reflecting the drop in trade barriers, his stores are full of Korean-made VCRs and American refrigerators. His most important marketing tool is a layaway plan, an innovation in Mexico.

But media analysts such as Raul Trejo question whether that qualifies Salinas to run a broadcast network. “Selling a television is not the same as knowing how to create a broadcast message,” Trejo said.

Salinas brushed such concerns aside Monday over a breakfast at which he outlined his strategy for changing the way the Mexican media business is run in what up to now has been a one-company nation.

Besides expanding his advertiser base beyond the 40 corporations that buy most of Televisa’s commercial time, Salinas plans to change the relationship between television stations and sponsors. Currently, Televisa dictates advertising terms, refusing to guarantee time slots and defining prime-time broadly. Potential advertisers will be treated like clients at his networks, Salinas said.

The second phase of Salinas’ strategy will be programming. He plans to contract with independent producers--who have been virtually shut out of Televisa--to develop a new type of alternative programming. He defines that alternative more in terms of what it is not than what it might be.

“We are not going to make soap operas because Televisa already does that well,” he said. “We are not going to make ‘Masterpiece Theater’ because our audience does not want that.”

He also clearly does not expect to broadcast confrontational news programs. News will be “fresh and youthful” but not critical of the government that just sold him the networks and still holds the licenses on his 159 stations.

Salinas said he is looking for a foreign partner to help with programming and has spoken with Brazil’s Globo, as well as Fox, NBC and Telemundo in the United States. However, the talks have not gone far, he said, “because nobody thought we were going to win.”