TSM

"Another favorite of Don Emilio who contributed to TSM’s growth, but was not an employee, was his nephew Víctor Rivero Azcárraga. Víctor showed he had a firm character from a very young age by refusing to offer a bribe to avoid performing military service. After finishing his service, he founded Majestic, a factory of radio and television sets, for which Azcárraga Vidaurreta lent him the capital. Don Emilio never had an equity stake in that company, but the advantages for his own business were obvious, since if there were more televisions accessible to the public, TSM’s advertising revenues would increase. To promote the business, Don Emilio gave Majestic free airtime to advertise and financed the company’s expansion. The company grew rapidly, and Rivero —three or four years older than his cousin Emilio— was a wealthy man at the age of 30. Don Emilio took pride in this and used to exclaim: “This is a hardworking Azcárraga!” For several decades, while there were high taxes on imported products, Majestic produced many of the televisions that were sold in the country."

"When the Azcárragas sold their holdings in radio, after leaving the film industry, the maneuvers were interpreted by some observers as a reduction of their presence in the media per se. They could not have been more wrong. The family business was simply concentrating on a single medium. In 1959 TSM invested $1.7 million in expanding the geographical reach of its network, and in 1960 it spent even more. Betting on the future, Azcárraga Vidaurreta made every effort to inject resources into the insatiable television business. As Emilio Jr. would recall years later: “My father always told me that television was the mistress and radio was his wife. You gave nothing to radio, and to television everything!”"

"Emilio Jr. made other loyal friends among the TSM executives, learning from his father what was required to establish himself as “the boss.” There was, for example, Aurelio Pérez, who came to TSM in 1955 after having been head of production at Channel 4. That year Pérez got married and felt flattered when Emilio, who was seven years younger, agreed to be his best man. When Pérez returned from his honeymoon, Emilio told him that he was aware that, since his father had died, Aurelio now had to support two households, his mother’s and his own. Therefore, Emilio had decided to grant him a raise. Anticipating his employees’ needs and showing them gestures of generosity, in private, was a gift that the young Azcárraga inherited and that he would practice throughout his life."

"Don Emilio’s favorite was Fernando Diez Barroso. Married to Laura Azcárraga, his eldest daughter, Diez Barroso served as the company’s chief administrator and chief financial officer. Since Othón Vélez Sr. had remained at XEW-Radio and because television had become Azcárraga’s main interest, Diez Barroso once again became Don Emilio’s right-hand man. This hierarchy, together with his undeniable professional talents and his close relationship with the Azcárraga family through his marriage to one of the daughters, made him the apparent heir to the leadership of TSM. In a bitter irony, Diez Barroso had a nickname that Emilio Jr. surely felt ought to be his: The Prince."

"In his quest to prove that he could be a businessman on his own, the young Azcárraga invested in several independent companies. One of them, which he had started shortly before Emilio and Silvia met, was Super Remate de Autos. The idea was to sell used cars and loose spare parts through long advertisements that ran on Channel 2 on weekend mornings, airtime for which there was little demand. The business was launched in 1954 and was so successful that it continued for 19 years. Don Emilio did not grant him loans, but beginning in 1955 Emilio Jr. was able to obtain his own capital by offering his shares in TSM as collateral. Thus, he invested in the first Broadway musicals that came to Mexico, including Bells Are Ringing (Ring-ring, Love Calls), which starred Pinal. Although audience response was good, the 12-peso cap that the government imposed on ticket prices prevented these shows from turning a profit."

"By the time Don Emilio decided to scale back his daily activities, he had already begun to shed some of his other businesses to prioritize investments in TSM. The first thing he gave up was his equity stake in the film industry. Paradoxically, Azcárraga had enjoyed an enviable position in it. He was president and co-owner of Estudios Churubusco — which since 1947 had produced more than half of Mexican films — and the owner of about 20 movie theaters. But the golden age of Mexican cinema had begun to decline at a time when Azcárraga needed cash to establish Channel 2. In 1952 he initially sold a portion of his shares in Churubusco to Gabriel Alarcón, one of the leading theater owners. As the decade went on, the film industry declined even further, as the audience for Mexican cinema, both in Mexico and in South America, shrank while American films gained ground."

"Azcárraga and his partners invested first in San Antonio, the Texas city where he went to school and where his son was born. In September 1961, they put up $200,000 to acquire KCOR-TV (Channel 41), which had been founded in 1955 as the country’s first all-Spanish station and obtained most of its programming from TSM. Unfortunately for its founder, Raúl Cortez, it had never sold enough ads to be profitable. Fortunately for Don Emilio, Cortez—who had been resisting the idea of new shareholders—chose to throw in the towel just as the Mexican government’s complaints about TSM imports were reaching a climax. Close to the border, an affiliate station in San Antonio would be the perfect anchor for a string of acquisitions in the United States. Fouce and Noble took 20% each. Azcárraga kept the legal maximum of 20% in shares, but since his employees Anselmo and Kaufman took 35% and 5%, respectively, and since Noble was surely a front man for Don Emilio, he was in fact illegally controlling a majority of 80%. There were no objections from the powerful regulatory body, the Federal Communications Commission (FCC); this was, for the time being, too small a business to attract Washington’s attention."

"However, differences in loyalties prevailed, and the existence of these power fiefdoms created a divide between TSM’s young executives and artists: their loyalty to Azcárraga Sr. or Azcárraga Jr. typically mirrored that of the executive to whom they reported. This contrast was accentuated by Azcárraga Milmo who, eager to differentiate himself from his father, tended to be tough on the people favored by don Emilio, and vice versa. Over the years, this division within TSM fed the perception that Azcárraga father and Azcárraga son were completely different. Depending on whom one spoke to, don Emilio was a saint, an intelligent and shrewd boss, while his son was a good-for-nothing playboy; or else don Emilio was impatient and intolerant and Emilio Jr. a brilliant but misunderstood young man who had to make immense efforts to free himself from his father’s shadow."

"But Anselmo did fall in love with Mexico. He and his wife Mary stayed for 12 years and had three children. Anselmo wrote copy for radio commercials for JWT, and in his free time directed plays for the English-speaking community theater group. He quickly built a network of contacts in the Mexican media and ventured into Spanish-language theater. Since at that time Emilio Jr. was also dabbling in theater, it was inevitable that their paths would cross. In 1954, Emilio and René became friends. Over the following years, together with Luis de Llano of TSM, they produced various Broadway musicals. Generally, Azcárraga provided the capital, Anselmo produced, and De Llano directed. For those who worked with the trio, René was the diplomat: if Emilio lost his temper with someone, René would smooth things over, waiting until his friend was out of earshot to say, “Don’t worry, what Emilio meant is…”"

"Despite his playboy image, Emilio was gaining presence within TSM. His charm and energy, his growing powers of persuasion, and his imposing height guaranteed that he would become a skillful salesman. These attributes, and the fact that his father let him venture into different sectors within TSM, allowed him to earn the respect of the young employees and create his own power base. The circle began with Othón Vélez Jr. Over time, Vélez became the company’s chief sales executive, although his beginnings did not portend it. After graduating from Culver in 1949, he set up a used-car business in Mexico City that never turned a profit. Although his father assumed the losses, he refused to use his influence to get his son a job at XEW, thinking that Othón Jr. should continue trying to make his own way. But he did help him obtain a license to sell televisions, representing the American company Capehart. It was not until 1957, the year Vélez retired, that Othón Jr. entered XEW. There he frequently worked shoulder to shoulder with Emilio Jr., and the two friends became an efficient sales team. Emilio contributed his charm and Othón his wit and irreverence; the combination was a success."

"Upon launching KMEX, Don Emilio made another smart decision: to create an independent company—a “network” in industry terms—that would be 100% owned by him and would supply programs to the two stations. He called it Spanish International Network (SIN). This network acquired the rights to TSM’s programs for later sale to the stations. It also set out to boost national advertising sales to complement those the stations made locally, as well as TSM’s international sales. Since SIN had a captive market and a small staff, its profitability was a sure bet. The stations, given the cost of equipment, the purchase of programs, and the costs of producing local newscasts, would take much longer to recoup the investment, but that did not worry Azcárraga because he shared ownership of the stations, whereas he could legally hold outright ownership of SIN. Separating SIN from the stations, while ensuring the stations’ complete dependence on the former, was the second maneuver that, although very astute at the time, would cause serious tensions among the partners in the decades to come."

"Nevertheless, the new genre developed the loyalty of the housewives of the growing middle class, who were already fans of radio soap operas, and of the domestic servants who watched them with them. Middle-class women were also the market segment targeted by the advertisers who sponsored the soap operas: people who believed it was worth paying a little more for well-known brands and who could afford to do so. Moreover, for TSM and for advertisers, producing soap operas was cheaper than producing teleteatros since they used fewer sets for their 40 or 60 episodes. Starting with Murallas blancas in 1960, soap operas were no longer broadcast live but on videotape, which contributed to economies of scale. Videotape made it possible to edit and store large amounts of tape, so scenes did not have to be performed in chronological order, but in the sequence that was cheapest for the producer. 100-episode soap operas became common. The telenovela turned out to be a good business: it suited the advertisers and it suited TSM."

"Before long, Emilio introduced René to his father, suggesting that it could be very useful to hire that very dynamic gringo, who had a terrible Spanish pronunciation but a very good head for the entertainment business. Don Emilio accepted, and in 1955 Anselmo was put in charge of running a new subsidiary: Teleprogramas de México, which would be responsible for exporting TSM’s programs to Central America and the United States. It was the first version of an operation that, four decades later, under the name Protele, would become the most prolific exporter of television programs in the Spanish-speaking world, with annual sales of more than 100 million dollars."

"Azcárraga’s main maneuver was to sell Radio Programas de México. His partner in the network, Clemente Serna Martínez, had been pressuring Azcárraga to define his stake. “Let me buy your share or I’ll sell you mine,” Serna went so far as to tell him. Since Don Emilio was investing most of his radio profits in TSM, and as many performers increasingly had to choose between working for radio or for television (with Azcárraga pressuring them to choose the latter), Serna was concerned about the evident conflict of interest. In 1961, Azcárraga completed the sale of his shares in RPM in favor of Serna and kept only a few stations, among them his beloved XEW and XEQ. As part of the deal, Serna ceded his stake in TSM’s stations in the provinces. Azcárraga owned shares in broadcasters outside RPM, and he sold most of these to his nephew Rogerio Azcárraga, who grouped these and others into the Organización Radio Fórmula."

"Shortly thereafter, Pimstein partnered with Colgate-Palmolive, one of the leading advertisers, to produce his first telenovela for TSM: Murallas blancas (1960). Guided by the people at Colgate—who had been trained in the United States in the art of television melodrama—Pimstein devoted himself fully to the new genre. Over time, he would become the most successful Spanish-language program producer in the world in terms of ratings, but without this bringing him the personal recognition that his commercial achievements deserved."

"As for TSM’s interference, Don Emilio had the final say in broadcasting Senda prohibida, and it is likely that De Llano asked Villeli to write several of the roles for certain actors he had in mind and to make some changes to the script. But this one, the most Mexican of the prototypes, was ironically more a product of the U.S. company that backed it. Colgate, in addition to handling hiring, had a literary editing department that drew on the company’s experience producing soap operas in New York. It was they, and not the TSM team, who advised Villeli on issues of pacing and suspense. Colgate also conducted surveys among viewers with questions about tastes and attitudes toward the actors and the themes, in order to modify the course of the soap opera and maximize viewership."

"Between 1958 and 1961, soap operas replaced most of the slots that had been occupied by teleteatros, becoming Mexico’s most important dramatic format. However, their initial success has sometimes been overstated. They were not yet more popular than variety shows or than the much more sophisticated U.S. series that were being imported in large quantities. With a few exceptions, these would remain the genres with the greatest attraction for another 10 years. In 1961, the year in which television ratings were measured for the first time, TSM issued a statement denouncing the poor quality of the direction, acting, and editing of Mexican series and their technical shortcomings; a challenge to the industry by Azcárraga Vidaurreta to work harder and bring it up to U.S. standards."

"Of all the friends Emilio Jr. made in the 1950s, perhaps the most extraordinary was Reynold Anselmo. Emilio met this American, a short but very energetic man who preferred to be called René, shortly after the creation of TSM. Over the next 30 years, Anselmo proved to be one of the brightest and most original-thinking executives in the Azcárraga empire. He also came to be known as the father of Spanish-language television in the United States and the pioneer of private satellite systems worldwide."