U.S. Soaps Top Foreign Market, but Stay Tuned : Company Town: Latin American and Western European countries are starting to produce their own serials.

There is a scene in Italian filmmaker Nanni Moretti’s recent “Caro Diario” in which an intellectual who scoffs at television becomes addicted to a U.S. soap opera.

Later, while mountain climbing, he runs into some Americans. Reasoning that they’re at least a season ahead on the soap, he plaintively inquires about the fate of his favorite characters.

Romance isn’t the only international language. There’s also soap opera. And in countries where the O.J. Simpson trial has not preempted regular programming, daytime serials can be as habit-forming as in the United States.

And healthy for the balance of trade too.

Die-hard U.S. fans of “The Bold and the Beautiful” and those who are bewitched by the comings and goings on “The Young and the Restless” will be happy to know they’re not aberrant. Citizens of the world share the fascination.

But U.S. soaps have some stiff competition, unlike American prime-time programming and television movies, which are virtually unrivaled in overseas sales.

Latin American tele-novellas, for starters, are much cheaper to produce and sell. And lately, Western European countries, such as Germany and Italy, have gotten into the game of making their own local soaps.

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At the moment, the top soap is “The Bold and the Beautiful.” Currently sold in 48 countries, it is the most widely distributed soap opera in the world, according to Jim McNamara, president of New World Entertainment, which distributes the long-running show overseas. It looks to rival the all-time international champion “Santa Barbara,” also from New World. The now-defunct series was a breakthrough international hit, and its 2,137 episodes are still in circulation in 43 countries.

Other popular U.S. soaps abroad are “The Young and the Restless,” “General Hospital” and “Generations.” Not all soaps are equal, however. ABC’s “One Life to Live” does only modestly well outside the United States.

The market for soaps may have always been there, says Russell Kagan, whose International Program Consultants advises companies on the sale of American products overseas. But U.S. programmers pursued it aggressively only after the deregulation of European television in the late 1980s and, more recently, the emergence of new markets, such as Russia and Southeast Asia.

American soaps such as “Loving” and especially “Santa Barbara” bolstered revenue and audience share for such networks as France’s TF-1 and Italy’s Rete 4, Kagan says. “When soaps worked, they were an inexpensive way to acquire material, allowing the network to apply more of its resources toward local production.”

Soaps had their first big success as prime-time fodder, broadcast alongside one-hour filmed dramas from the United States. Gradually, however, soaps were berthed in late afternoon or fringe slots between 4 and 7 p.m.

Once a popular soap takes hold, audiences can be fiercely loyal. Matthew Ody, vice president of international sales at NBC, recalls that when the government-owned station in the Ivory Coast could not afford to buy the last 20 episodes of “Generations,” there was rioting in the streets.

Given a potentially lucrative worldwide market, you might think networks and producers would be falling all over themselves to create new daytime soaps. But the United States is slowly losing the habit. “You don’t see any new soaps on the air,” McNamara says. “We’re under siege from talk shows. I hope it’s just a phase.”

For long-running soaps, the bulk of overseas dollars still comes out of Western Europe, where a distributor can pull down as much as $6,000 to $10,000 per episode per country.

New markets are opening up every day in areas such as Eastern Europe, Russia and Asia. India, which has a culture drawn to romantic movies, has also come knocking for a peek at U.S. soap operas. Other areas of Southeast Asia, such as Thailand and Indonesia, are fed soap operas over Rupert Murdoch’s Star TV satellite service.

Eastern Europe has been especially encouraging as a growth area. While licensing fees in some countries can be as low as $100 or $200 per episode, that’s changing. “It’s a different environment since the fall of communism,” Ody says. As commercial broadcasters have begun to emerge in Poland, the Czech Republic and Russia, license fees have increased accordingly.

“There’s still not a lot of cash there, but you go in to establish a market position, you’re gambling there’ll eventually be something there,” said Mark Pedowitz, senior vice president of business affairs for ABC.

Sometimes the wait is not very long. McNamara recalls selling episodes of “Santa Barbara” in Russia in a barter situation (no licensing fees and New World shared advertising income with the station).

That was 2 1/2 years ago, and the money just trickled in. “Slowly, as ads began to sell, our cut increased from $10 a day to $20 a day and over the months to $4,000 a day,” he said.

Soon the soap was drawing audiences larger than “ER” in this country. The Russian station owner wised up and switched to a licensing fee.

U.S. soap operas face stiff competition from Latin American tele-novellas, limited-run soaps of about 100 to 200 episodes. Produced in such countries as Mexico, Brazil and Venezuela at as little as one-tenth the cost of a $120,000 U.S. episode, these Spanish-language programs “kick our butts,” Pedowitz said.

Tele-novellas not only undersell U.S. soaps, but in countries where English is not a common language, such as Asia or Russia, “it makes no difference if you’re dubbing from Spanish or English,” Ody says.

However, Pedowitz points out that tele-novellas do best in Mediterranean countries, such as Spain and Italy, and rather poorly in most of Northern Europe, with the exception of small German stations.

What tele-novellas can’t offer is the glamour of “Bold” and “Santa Barbara” McNamara says, or the youth appeal of Australia’s “Generations” and “Paradise Beach,” another Aussie soap that New World successfully distributed in 35 countries.

They also lack long-term character identification. “It’s the characters people fall in love with in soaps. They’re more forgiving of the story lines.”

New World is attempting to crack the heart of the tele-novella market--Latin America--and has already sold “Bold” in Argentina, Mexico, Venezuela, Chile and Columbia.

“Talk to me in a year and I’ll tell you whether we’ve established a beachhead,” McNamara says.

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Holland, Germany and Italy, meanwhile, have begun making their own soaps. Licensing fees are competitive with U.S. products, but the shows cost half as much (perhaps $60,000 per episode) to make. A major drawback is that a German soap opera is likely to have little export currency outside its country of origin.

And besides licensing “Neighbors” outright, says Kagan, the Aussies licensed the soap’s scripts and set up production units in foreign countries to produce local versions of the show. RAI2 in Italy will produce its “Neighbors” in Naples.

McNamara believes that after two or three years of intoxication with locally made soaps, there’ll be a fallout and new opportunities for U.S. programming. “Yes, they may be able to get two more ratings points,” he says, “but it will cost them six times as much for it.”