February 24, 1998
Argentine Visionary Hopes To Become a Tourism King By JONATHAN FRIEDLAND Staff Reporter of THE WALL STREET JOURNAL
BUENOS AIRES -- Argentina's Eduardo Eurnekian is a hard-charging visionary who has built an almost $1 billion media empire in the past decade. Now, this local version of Citizen Kane wants to become Argentina's tourism king.
Earlier this month, a consortium led by Mr. Eurnekian won a 30-year concession to run 33 of the country's main airports. He has bought the Howard Johnsons master franchise for Argentine from Cendant Corp. of the U.S. and plans to pepper this vast country with U.S.-style hotels and motels. And he's engaged in talks to invest in a regional airline company.
"Tourism is going to be a geometric growth business in Argentina," says the 65-year-old Mr. Eurnekian in a rare interview. He says the Argentina of today is like the U.S. of the Eisenhower era: a place of newly affluent people who, coming out of years of hardship, want to stretch their legs. "The demand for U.S.-style and U.S.-quality services will be fantastic."
It had better be, given the size of the commitments made by Mr. Eurnekian and his partners in the airport deal. Together with New York-based ground-services giant Ogden Corp. and Italy's Assaeroporti SpA, the operator of Milan airport, Mr. Eurnekian's Corp. America Sudamericana SA has pledged to pay more than $5 billion to the government and to make $2.2 billion in new investments during the life of the concession. Currently, only two of the 33 airports are profitable and even those are in need of a major overhaul.
Foresaw Media Boom
Mr. Eurnekian is no stranger to bold bets. A decade ago, he correctly foresaw that a combination of democratic government and free-market reforms would spur a media boom in Argentina. More recently, he has been at the forefront of investors, including George Soros of the U.S. and Italy's Benetton family, who believe Argentina will once again be one of the world's great agricultural powers. He has purchased a giant tract in the north of the country and is planting half of it with cotton for export.
"Eduardo is a visionary who also has a real knack for business," says Eric Pfeffer, president of Cendant Corp.'s hotel division in Parsippany, N.J. "He's a real find for us."
While Mr. Eurnekian's foreign partners have nothing but praise for the way he does business, his image in Argentina is more controversial. The son of Armenian immigrants, he started out in the family textile business, which by the early 1980s had fallen on hard times because of the disastrous state of the Argentine economy. Like many other companies in the textile industry, Mr. Eurnekian kept his companies afloat by borrowing tens of millions of dollars from a government development bank that was never repaid, people in the industry say.
Because of runaway inflation, the companies all contended that the loans were worthless, despite the government bank's insistence that they be indexed to inflation. During the 1980s, Mr. Eurnekian's brother and business partner held a senior economic post in the government of then President Raul Alfonsin.
Mr. Eurnekian denies ever borrowing money from the now-liquidated Banco Nacional de Desarrollo. The official in charge of the liquidation process at the economy ministry here says he can't confirm whether Mr. Eurnekian's companies borrowed money from the bank. "I don't want to cause myself any headaches," he says.
What is clear is that by 1988, the future wasn't getting any brighter for the family business. Trade barriers were being pulled down and local companies were swamped by a flood of cheap imports. "I thought, how can I be a pioneer like my father?" recalls Mr. Eurnekian, who has never married and works legendarily long hours. "I thought: communications." That year, he invested in an almost-bankrupt cable-television company and bought a small business newspaper.
He set to work buying up cable licenses for greater Buenos Aires, a region of 13 million people, and, as his cash flow grew, bought a television channel and a radio station. His main textile plant was gradually gutted and filled with journalists and technicians.
Mr. Eurnekian's move was well timed. Attracted by President Carlos Menem's aggressive free-market policies and Argentina's relative affluence, U.S. cable operators began scouting for acquisitions here. In 1994, Mr. Eurnekian sold a 51% stake in his Cablevision SA, then Argentina's second-largest cable operator, to Tele-Communications International Inc. of Denver for $350 million. Last year, he netted $320 million by selling most of his remaining shares to local investment giant CEI Citicorp Holdings SA.
Useful Bargaining Chip
Mr. Eurnekian has since used his profits from the Cablevision sale to plunge into the tourism and agriculture businesses. But he retains his closely held media properties, even though most apparently are unprofitable. Some journalists employed by Mr. Eurnekian say that's because he finds their work useful as a bargaining chip with authorities.
As the airport bidding entered its final round, for instance, Mr. Eurnekian pulled the plug on a hard-hitting interview program called "Dia D" that had frequently uncovered scandals in the Menem government. The host of the program, Jorge Lanata, says he believes the sudden cancellation of his highly rated show was a quid-pro-quo for the airport deal. Mr. Eurnekian calls Mr. Lanata's interpretation "a ridiculous invention."
"I don't use my journalists to further my business interests," he insists. "I don't interfere with the news, although I reserve the right to do so." Mr. Eurnekian's subordinates say their boss personally vets the contents of news broadcasts and often subjects his staff to scathing outbursts when he disagrees with an issue.
Richard Ablon, the chairman of Ogden, says that Mr. Eurnekian's reputation as an autocrat doesn't bother him in the least. "It's true that Eduardo has a strong personality," he says. "But he's a tremendously successful businessman and one who is quick to make decisions. We don't need him to win any popularity contests."
Source: Asbed Bedrossian
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