Caracas Chronicles

On August 12th, at 3:40 p.m., Queirys Durán, a young woman from Caracas with just 600 Twitter followers, posted something on her account that nobody believed at the time. She was wrong. She was also right.

“Ladies and Gentlemen save this tweet: Tomorrow at 5:00 a.m., DirecTV Venezuela returns with its signal throughout the country. From tomorrow we will be able to enjoy the programming. Prepare your decos. #DirectvRegresa.”

Eighty-five days earlier, without warning, our TV screens went black. It was Tuesday, May 19th. At 8:00 a.m. Globovisión disappeared from the channel guide. DirecTV’s parent company, AT&T, was complying with U.S. sanctions against the channel and its owner, Raúl Gorrín. But the regime would not have any of it. Three hours later, the Houston-based company made public its decision to cease operating in Venezuela “because it is impossible for AT&T’s DIRECTV unit to comply with the legal requirements of both countries.”

The Short Road Back

Talks about a comeback began almost as soon as DirecTV Venezuela turned off the signal on May 19th. While the Maduro regime focused its energy on restoring its pay-TV service (CANTV Satelital), operators began to ask AT&T about its Venezuelan operation. In early July, a surname was leaked: Cisneros. Which one? Gustavo brought DirecTV to the country back in the mid-90s, and Oswaldo, owner of Digitel, the fastest-growing mobile company in the country, is known for his impeccable timing for business. The lead went cold, but something was brewing. 

Talks about a comeback began almost as soon as DirecTV Venezuela turned off the signal on May 19th.

By the end of the month, everyone was scrambling for position; Juan Guaidó took the pole, tweeting that there was “no single institutional or international barrier” for Venezuelans to be able to enjoy DirecTV again and, in Miraflores, Maduro decided that restoring CANTV Satelital and the Digital Terrestrial Television project (known as TDA) wasn’t enough. With elections four months away and nobody watching any of the regime messages, they needed to negotiate. And they did, the government and a private company.

Nelson Bocaranda wrote on his July 30th column that the return of DirecTV was only a matter of time. El Diario, citing legal sources, supported Bocaranda’s claims in an August 1st report. It was the time needed to put together a new company, to train personnel, to put a technical support team on the ground, to create technical infrastructure. 

It wasn’t done like that. 

“It was rushed,” explained a TV executive who agreed to speak only under condition of anonymity. “Maduro wanted to claim victory, and a private company hiring people wasn’t going to help. It was rushed because he needed people to forget why DirecTV left in the first place—his stubbornness about Globovisión and PDVSA TV (both companies sanctioned by the U.S. Department of Treasury). He probably gave up on both channels as long as the signal was restored immediately.”

Error 721

DirecTV’s comeback did not materialize on the date Queirys predicted. But it was already sealed. At the time of her tweet, Scale Capital (a Chilean venture capital company) had agreed to buy all of Vrio’s (formerly known as DirecTV Latin America) assets in Venezuela, with the consent of the Maduro regime. 

Twenty-four hours after Queiry’s post, seasoned telecom journalist Fran Monroy noticed a Twitter trend: DirecTV decoders were downloading software. A bunch of pictures of TVs with “Error 721” and the company logo were uploaded to the social network. He dismissed the notion of a comeback, though. At this time, Rodolfo Carrano, one of the three DirecTV executives jailed via Maduro’s TSJ after AT&T decided to close its Venezuela operation, was already home on probation. Something was going on, but nobody knew for sure.

At this time, Rodolfo Carrano, one of the three DirecTV executives jailed via Maduro’s TSJ after AT&T decided to close its Venezuela operation, was already home on probation.

And then, Bocaranda: “DirecTV is coming back to Venezuela.” It was close to midnight on Thursday. The tweet went viral, and the return was trending.

Land of Confusion

“This is a mistake,” said the TV executive, as he was consulted early Friday morning about a possible return of DirecTV. “They (Maduro’s Ministry of Science and Technology) are using DirecTV’s SAT for their CANTV Satelital project. This is a mistake.” 

It wasn’t. As people woke up, more and more users were starting to tune some of their favorite channels, missing since May. I turned on my mother’s decoder—I’ve been caring for her the past week, as she’s battling a severe parasite infection caused by the poor quality of the running water in Caracas—and went to the kitchen for some coffee (for her, a Coke for me). Suddenly, the TV woke up: Los Desayunos de TVE was on. My mother yelled with excitement. If it wasn’t a comeback, it sure looked like one.

As the hours passed, names began to show up. By 10:45 a.m., the first confirmation, via a source within the Maduro regime. “It’s happening with a third party involved.” An hour later, that third party had a name and the National Telecommunications Commission’s (Conatel) blessing: Scale Capital.

“Venezuelans are not used to good news, but on Friday, we woke up to one.”

“Scale Capital reached an agreement with DirecTV Latin America LLC. and the service will be provided using the installed infrastructure of DirecTV Venezuela. Likewise, the company is completing the purchase of shares from Galaxy Entertainment de Venezuela SAT III R, CA and Galaxy Entertainment de Venezuela, CA,” read the statement published on the company’s website. A few hours later, the other two former DirecTV executives, Héctor Rivero and Carlos Villamizar, jailed in June under charges of scam, boycott, and criminal association, were on their way home. 

Who’s Behind Scale?

Alexander Elorriaga is the man responsible for the massification of DirecTV in Venezuela. During his tenure as president of DIRECTV Venezuela, the company went from 22% market share in 2007 (second to Inter) to more than half of the cable TV subscribers in 2014, according to Conatel. “Nobody knows the DirecTV platform in Venezuela better than Elorriaga,” said Monroy. Elorriaga also has connections to both Cisneros mentioned above: as a vice president of Marketing and Sales in Digitel and as a close ally of former Venevisión president, Victor Ferreres. The latter, through his company ART-Vertising, was awarded a contract to commercialize all of DirecTV Venezuela’s advertising spots back in 2007. 

Elorriaga’s boss at DirecTV Panamericana (later DirecTV Latin America and now Vrio), Jacopo Bracco, left the company in 2015 and joined Scale Capital as a managing partner in 2018. Scale Capital is defined as a “mid-market growth and private equity firm exclusively dedicated to investments in telecommunications, media and technology in Latin America and Spain,” according to its website. They have investments in artificial intelligence and management software. Still, their most public product in the portfolio was a small mobile virtual network operator, Simple, that has a little over 120,000 clients in Chile. Until Friday, when it was revealed that it was the company buying out AT&T of its Venezuela’s operation.

“Does Scale have the money to buy all of DirecTV’s assets in Venezuela?” commented the TV executive. “Well, first, we need to know how much that operation was. But my perception is they had to have raised capital for this to happen. Is it a new Hanson Media Group? (the shell company that bought Cadena Capriles, back in 2013). If it is, they sure learned their lesson putting a guy like Elorriaga in charge.”

Details of the operation remain undisclosed, but since AT&T is a publicly-traded company, shareholders will have access to this information as soon as Q32020 closes in September.

“Venezuelans are not used to good news, but on Friday, we woke up to one.” That was the opening line of Román Lozinski’s Monday radio show. A collective sigh of relief from parents with small children, soccer fans that were just in time to see Barcelona’s historic defeat, and Doñas del Cafetal that leave TVE on for no particular reason was heard around the country. For once, the people felt like they had won.