New Investors to Leverage StarMedia for Latin American Marketing

With multi-million dollar investments in Alley-based content play StarMedia Network, BellSouth and Primedia are aiming to carve out ways to market their wares to the site’s Spanish- and Portuguese-speaking audience.

Through terms of a stock purchase announced Wednesday — in which BellSouth paid about $2.55 per share, or $25 million — the Baby Bell gained control of about 11 percent of StarMedia and forged a strategic alliance with the portal, which is aimed at Latin American and U.S. Hispanic/Latino audiences and has about 35 million members.

StarMedia said it would use its new relationship with BellSouth to create regional portals, which could be accessed on the Web or via a wireless device, within the next six months. Accordingly, BellSouth will receive prime placement on those local portals, as their chief sponsor.

For BellSouth, the five-year alliance with StarMedia serves to beef up its customer relationship management efforts — it has some 12 million customers through various Latin American affiliates, making it one of the dominant regional telecom players.

The arrangement also boosts BellSouth’s marketing efforts toward one of the world’s fastest growing populations. Much of this promotional effort will likely center around BellSouth’s wireless services, since the company is anticipating that Latin American wireless use will increase steeply during the next several year.

As a result, the new partners are touting the regional portals’ accessibility by Web, WAP, SMS and voice.

“This alliance with StarMedia will allow us to move very quickly to provide our wireless customers throughout Latin America with the most advanced Internet portal in the region,” said Gary Forsee, vice chairman of BellSouth, and president of BellSouth International. “StarMedia’s combination of content, technology and advertising relationships is a great fit with BellSouth Latin America’s access platforms, customer base and distribution system.”

Meanwhile, StarMedia is free to sell advertising inventory on these portals. Both partners will share revenue from the sites, which will be hosted and delivered via BellSouth’s Internet infrastructure and to its wireless customers. (BellSouth also becomes the preferred infrastructure provider for StarMedia itself.)

“We’ve always believed that the wireless platform has the potential to be a dominant means by which Latin Americans access the Internet,” said Fernando Espuelas, chairman and chief executive at StarMedia. “By joining forces with BellSouth, we are able to expand our initial investment [in wireless access] with significant capital, and to provide an additional leading-edge, pan-regional distribution platform for our clients and users.”

BellSouth wasn’t the only company to take advantage of StarMedia’s willingness to swap stock for cash and alliances. Primedia, a New York-based publisher of trade magazines and owner of content site, contributed to a $11 million purchase of StarMedia stock. Similarly to BellSouth, Primedia’s investment netted it a strategic alliance with the portal, which will likely result in the creation of a co-branded portal aimed at U.S. Spanish-speaking audiences.

“StarMedia is clearly a leader among the Spanish- and Portuguese- speaking Internet communities,” stated Tom Rogers, chairman and chief executive of Primedia. “Primedia’s agreement with StarMedia will result in the distribution of our About content and the joint development of products to serve this increasingly important market.”

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