April 2010 – Cover Story: A Chairman’s Perspective

As ERA Europe Chairman Alexander Chacón prepares to pass the baton to his successor, he reflects on his tenure and looks ahead at the association’s future.

For the past two years, Alexander Chacón has had to balance two very key roles: one as CEO of European Home Shopping (EHS) and the other as chairman of ERA Europe’s Board of Directors. Given the high demands of both positions, one could just imagine the hectic schedule Chacón must keep. But, as his term begins to wind down, it’s quite apparent that this chairman has managed to make a difference in his business, the association and the industry.

Electronic Retailer caught up with Chacón in New Orleans during The Great Ideas Summit, where he talked engagingly and passionately about the direct response industry, the state of the industry in Europe today, his tenure as chairman and why the Electronic HomeShopping Conference should be this summer’s must-attend event.

Electronic Retailer: As a Harvard-educated lawyer from the U.S., how did you come to be involved in the direct response industry in Spain?

Alexander Chacón: I went to Spain as a lawyer about 20 years ago. I was going to be based in a Spanish law firm for about six months before going back to the U.S., because I’m a New Yorker even though my ethnicity is Spanish. And after those six months, I fell in love with Spain–the people, the way of living, and I saw a lot of business opportunities. I quickly became a successful lawyer and I was offered to stay and become head of the mergers and acquisitions department. I stayed in that law firm for close to two years before moving with my entire team to an investment bank charged with initiating transactions. One of my functions was to look for business opportunities. And I saw an opportunity that was DR, home shopping. I was always looking at opportunities in the States in order to try to apply them in Europe. And home shopping was one of those opportunities. When the bank turned it down, I decided to invest myself in the home shopping sector. So I went ahead and did it myself and left the bank. That was the start of EHS. I was very fortunate because the first year we did about 3 million euros in revenue and it just kept progressively increasing. And really my vision was to create a media company. So fast-forward to today, we own cable networks, broadcast stations across Spain and one of the leading 24-hour home shopping channels in Spain. And that’s basically the story.

ER: How did you become involved in ERA, joining the Board of Directors and then becoming its chairman?

Chacón: A few years ago, I was asked by Gilles Labouyrie and Dennis Reustle to participate in the European Board and thought it was a good opportunity because I also believe that you should give back to your industry–and I love this industry! So I said, “Yes, absolutely.” This was the European Board a few years ago. I quickly realized there was a great group of committed people who were just giving freely of their time to the industry. And the year after that, I was asked whether I would consider becoming chairman of the Board, which I also agreed to.

ER: This was another step up in commitment, of course.

Chacón: Yes. But quite frankly, I couldn’t be happier with the way it’s turned out because it has given me a great opportunity to understand more about the industry, more about the companies and what they’re doing, as well as to try to promote and protect the industry in Europe. And there is a tie-in to the U.S. because as chair of the European Board, you also have a seat on the U.S. Board. It’s incredible to see the different dynamics between the way the U.S. and European Boards function–sometimes reaching the same results, but through different processes.

ER: Recently, you launched in Europe an Executive Committee task force. What is it and where did the idea for it come from?

Chacón: Marcel Avargues and I thought at one point we needed to re-check what we’re doing. We knew the U.S. was doing a similar review, but we also knew we needed to do it ourselves–an audit on what we’re doing, where we’re going. How can we improve the benefits to the membership at large, and what direction is the industry going in?

ER: Which way was it going and not going?

Chacón: We came to the realization that we are experts in audiovisual commercial content. Our core competency as an industry is that we are world leaders in the production of audiovisual commercial content, which means producing content that engages the consumer and compels them to purchase a product or a service.

ER: There’s more to it than that, isn’t there? It’s the metrics behind the business model, rather than the creative you put on-air, correct?

Chacón: It’s true. Anyone can do that, but can you make money out of it? Can you make it work? Can you become strong enough to continue to engage, because nobody’s looking at a one-shot deal. You’re looking at creating consumers, repeat consumers, ongoing consumers. So, now this is what we’re faced with as an industry. We have all these channels to distribute this content, be it analog television, digital television, through the Internet, mobile, in store, etc. And so we’re sitting, strategically, on this core competency and we’re world leaders at this. So, it’s exciting!

There are now more consumer touch points and it’s a question of adapting to that and being there when people are in a position to buy. Even in stores–physical conventional stores–there is audiovisual commercial content that compels the consumer to take that product over another product. And that is the nexus–what people are doing on TV. Some people are putting audiovisual content on the Internet, while some are doing it in stores.

That’s almost our “banner,” but there’s a lot behind that. And the part behind that is the logistics. The administration is the ability to sell product from a distance and actually make it work seamlessly. I think the industry and association are going in a superb direction. There’s a strong membership. In fact, we’ve actually decided to be selective about future growth.

ER: One of the things the European Executive Committee task force is working on is a new member drive. Can you tell us about the acquisition of new members? What sort of companies are you looking for?

Chacón: Understanding our core competency and realizing the direction in which we can grow are pretty important. There are a lot of sub-industries that would fit well into our association. But we don’t want to grow for growth’s sake. ERA Europe is strong, but we feel that there are other sectors out there. For example, the video-in-store companies should be part of our association. There are a lot of electronic retailing companies like Amazon that should become part of our association. Why? Because they’re using video in order to sell products and services. And of course, service companies, fulfillment companies and telemarketing companies should also be a part of our association. So, there’s a drive to specifically target those sectors.

One of the main reasons is because we have very strong government affairs and self-regulation programs. The basis of that is we want to create consumer confidence. We want the consumer to feel that there are regulations and that they’re not going to get burned. We want to protect the industry. So, we feel that if we bring in these companies, we’re going to be stronger vis-à-vis good practices and influencing government regulations.

We’re already heavily engaged in our dialog with Brussels. For years, we have been influencing legislation affecting our industry and now when any legislation affecting our industry is brought up in Brussels, not only do our lobbyists bring it to our attention but members of the European Parliament (MEPs) contact us and say, “Listen, this might be of interest to you. What’s your view on this?” They want to know what we think.

ER: Weren’t we incredibly close, had it not been for the intervention of ERA Europe, to having laws passed that could have killed elements of our industry?

Chacón: There was some legislation, and it was because some members of the European Parliament simply didn’t understand our industry. So there was some language in the legislation that would have hurt our industry horribly. It would have killed the spot industry and they would have killed a good part of the infomercial industry. The result is the current legislation just completely frees up the industry, vis-à-vis how much time you could dedicate to home shopping. So it was a huge win for us.

Also our self-regulation program is very strong. Nancy Barkan is heading that. Not only are we across Europe–which is hard because we’re across 25 to 27 countries–but we have different languages and members with different national jurisdictions, as well as some that are not yet EU countries. So it’s much harder to self-regulate the industry, but I think we do a pretty good job of it. We’ve continually pushed more of our resources in this direction.

ER: What is the threat from counterfeit products?

Chacón: There’s a distinction between counterfeiting and the creation of a better mousetrap, meaning improving a product. But counterfeiting, unfortunately, has always existed in our industry and will continue to exist. However, there are companies that are dedicated to counterfeiting and they’re experts at it. I feel strongly that because we do know who they are that the association membership should be pointing at them and saying, “No.”

ER: These companies are giving our industry a bad name?

Chacón: More than giving our industry a bad name, I think they’re taking resources out of our industry. So, I don’t see them any different. In fact, I see them as being worse than those who come to our events without paying. They’re parasite companies and I don’t think we should ignore it.

ER: How do you see your role as chairman? What are the things that are important to you?

Chacón: When I assumed the role as chairman, I realized I had to think of Europe as a whole–the membership, where the industry is heading, and how the association is reacting to that. It’s elevated me. I wasn’t only thinking about my own company anymore, but rather the association as a whole and where it might go.

ER: How does the industry differ in Europe from the U.S.?

Chacón: The European industry is growing and evolving. This industry started in the U.S. and the U. S. is the world leader. But Europe has been evolving and I think it will grow even quicker in the next decade. Through convergence, we’re presented with a lot more ways of connecting with the consumer. Because Europe is digitalizing, the new TV stations are just creating a lot more avenues. They already had a lot of cable stations in the U.S., but in Europe we had few TV stations in comparison. Just look at the UK, they went from four to around 50 in only a decade. And that’s happening across Europe now. So these companies that have been thriving, with little opportunity to reach the consumer, are now flourishing; you’re starting to see a lot of their creativity in the industry. As a result, U.S. companies are saying, “Wow! We want some of that!”

ER: U.S. companies are saying that specifically about products, or more than that?

Chacón: It’s products and presentations. Europe is going to contribute a lot to this industry in America. I already have a lot of people coming to me asking about the hottest products because they want to bring them into America. And so within Europe, something that never happened before is happening, whereas before we’d just take the U.S. products. Now what’s happening also within Europe is we’re cross trading. It’s happening a lot more and more. There’s content produced in Germany that’s coming into Spain, that’s going into the UK, to Italy and France. And that’s creating another sort of mix in the sector. Plus, we have the euro and no borders. A lot of things have changed in the last 10 years.

ER: The Electronic HomeShopping Conference will be held in Monte Carlo June 27-29. Why should people make this a must-attend conference?

Chacón: Some executives make it part of a summer vacation. And, to be sure, it’s a fabulous spot. But there’s an important business reason, as well. In fact, I would call it a must-attend conference in this industry. The reasons are there’s a lot of product and creation in Europe and smart American companies are trying to latch onto those from the beginning and then bring them into America. So, there’s a competitive advantage in attending. When Europeans come to the U.S., they’re looking for products and trends. There’s a lot of creation, new products and audiovisual content in Europe and this is the main place to get it. Also, if you have products and want to penetrate Europe, all the European players are there in one place. Our goal as an association is to facilitate that. So we’re hoping American companies, Asian companies and other international companies that are considering coming to Europe contact us–because we can seriously help them network.

It’s our last year in Monte Carlo. The conference’s next locations will be Montreux, then Stockholm. We’re going to be rotating through different countries, and I know that’s in response to what a lot of Americans wanted. So, it’s going to be a great send-off!

ER: How would you summarize your tenure as chairman? Did you achieve what you wanted to when you began?

Chacón: I didn’t have a singular vision that I wanted to implement when I took on the role, other than to help make the association flourish. It was really about the betterment of the entire industry. To lead it and be a part of the process. The values were set: protect the consumer, the membership and the industry. Also, to ensure we have a strong Board membership. And I’m pleased with the Board membership, the strategic process taking place, the events we have and the industry as a whole!

Robert Logie is editor of the ERA Europe Newsshop, courtesy of Studio Moderna. The full interview can be accessed at www.eraeurope.org.