The World: Insider's View - Venezuela

Under strict new ad rules, and with the loss of RCTV's licence, Venezuela's media industry is having to find more inventive ways of doing business.

Venezuela's media community will remember last year as the one in which the president Hugo Chavez' government's Law of Social Responsibility was fully implemented.

First enforced in September 2005, the law not only established a maximum time of 15 minutes per programming hour for television advertising, but also set down limits on the amount of foreign-sourced work that could be screened.

According to the new rules, 70 per cent of an ad's content must be produced locally for it to be considered a "national production".

The law demands that "national ads" must make up 85 per cent of total TV advertising, while foreign work is limited to 15 per cent.

With the price of TV advertising rising, revenue is being switched to alternative media. Moreover, with alcohol and tobacco ads forbidden on TV, cable and radio since 2005, media agencies have been compelled to find other options - such as below-the-line, event marketing, the internet and other interactive channels - to reach customers.

While this might be regarded as the positive aspect of the rule changes, the Government has just set the media business a tough task. In May, it decided not to renew the terrestrial broadcasting licence of RCTV.

RCTV is the country's oldest open-broadcasting station, airing large numbers of soap operas and reality shows. Its frequency has been taken over by TVES (Social Venezuelan TV), a new Government-owned channel. RCTV lives on, but only on cable, while its news programmes are aired on YouTube and on other internet spaces, and are restricted to the few who can afford it.

Yet, although it has lost its broadcast frequency, RCTV stays in touch with its audience by screening its soap operas and staging open-air shows in streets and squares around the country's main cities. This has, at least, provided it with a temporary lease of life, given changes in media-consumption habits take time.

What all this means to Venezuela's $1 billion ad industry remains to be seen. Of that figure, $700 million is invested in traditional media, with 70 per cent of that going on TV, while $300 million goes into promotions, below-the-line and other non-traditional media.

Meanwhile, the Government is increasingly monitoring various private media and is imposing sanctions every time it considers that the Law of Social Responsibility has been broken. This has resulted in fines and even the closure of some offices.

Nonetheless, the media business survives and will continue to do so. Media owners, creative and media agencies have no choice but to do their best to adjust to the new circumstances. They have already demonstrated that they can be extremely creative in searching for new ways of doing business.

- Maigualida Garcia is the managing director of Initiative Caracas.