A man in search of money is an old story in Hollywood. But in an industry overflowing with producers peddling their projects to studios, Santiago Pozo isn't looking for money just to finance a dream movie.
Mr. Pozo, in fact, likens that type of narrow focus to pure gambling. "My business is not to play roulette," he says. "My business is to build a casino."
That broader vision has fueled Mr. Pozo's hopes of transforming his Los Angeles-based Arenas Entertainment into a miniature movie studio with a Hispanic focus that can tap into the growing demographic market. His efforts, which include a global search for financing and strategic partners, highlight growing global interest in the U.S. Hispanic media market and offer universal appeal for entrepreneurs in every industry. In just two years, Mr. Pozo and his company have attracted the attention of a top international venture capital fund and landed the first half of a $24-million mezzanine financing strategy.
For 15 years, Arenas has functioned as a specialized advertising shop that sells major studio movies to the U.S. Hispanic market. The company has handled campaigns for such studio fare as Shrek, How the Grinch Stole Christmas, The Fast and the Furious, and the Mummy. Last year, the marketing division of Arenas worked on almost 30 feature films as well as video releases, theme park attractions, pay TV, and music projects, according to David Acosta, the company's president of marketing. Selling studio movies gives Arenas a steady income; Mr. Pozo calls it "a healthy business unit" for the company.
Two years ago, however, Mr. Pozo made a strategic decision to shift "from a service company to a supplier without abandoning the service part of the business." In addition to selling studio fare to U.S. Hispanics, he wanted to produce and distribute films specifically tailored to the market. "The capital needs for production and distribution are quite different from a PR [public relations] and advertising firm," he explains. "I went to different sources of money in Mexico, the U.S., and Spain."
But the timing didn't help. "The big thing at that time was the Internet. Investors told us they couldn't support us because there was no Web component," recalls Mr. Acosta. "Hispanic Internet stuff was out there, with StarMedia the most high-profile. So we were competing against Hispanic and general-market Internet companies."
With perseverance, Mr. Pozo eventually found a receptive ear at Marco Polo, a venture capital fund in Spain that concentrated on technology, media, and telecom. "We thought Arenas was a unique opportunity for the time because it was a chance to build a platform at the top of the entertainment industry that targets the biggest growing market, that is, the U.S. Hispanic market," says Marco Polo President Jorge Galera. "We think media in the U.S. that targets Latinos will be a growing segment. But we also think the knowledge of Arenas, especially Santiago Pozo, is a major competitive advantage. We think that competitive advantage can be coupled with [projects] we can develop in Spain and Latin America."
Mr. Galera describes Arenas as a potential two-way marketing channel: Entertainment products created by other Marco Polo-funded ventures will gain access to the U.S. Hispanic market by taking advantage of Arenas' well-established marketing. In the other direction, Arenas will produce Hispanic-oriented content that travels well to foreign markets.
Marco Polo, for example, sees potential with its strong contacts at Grupo Prisa, the largest television broadcaster in Spain. "We see synergy between the two companies not only in production but also in distribution and marketing," says Mr. Galera. "When you try to place Spanish-language products in the U.S., [they] encounter barriers. But if you have a vehicle to get into that market - not dominate the market, just to be there - it opens a lot of opportunities."
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