As Hispanic population explodes, so does Spanish-language TV

MIAMI — Their advertising sales may be down nearly $100 million, but Spanish-language broadcasters say that ringing sound you hear from their industry isn't an alarm bell. It's a wake-up call — and a lot of companies have already answered.

"This time next year, if you're not in Hispanic media, you're going to want badly to get in," said Don Browne, president of Telemundo. "And those who are already in it are going to feel pretty damn good about it."

Once a cozy little Monopoly board with all the hotels stacked on two properties, Univision and Telemundo, Spanish-language television has turned into a rambunctious free-for-all with new competitors getting into the game all the time.

The siren song that beckons them: explosive population growth among U.S. Hispanics, which has already outstripped every demographic projection of the past decade and is expected to show an even more breathless pace when results of the 2010 census are in.

Some industry figures think tangible proof could come as soon as June, when the World Cup soccer tournament begins in South Africa. "All the matches are going to be televised in the United States in the afternoon and early evening," said Jose Cancela, owner of the Hispanic USA marketing firm. "I think the ratings are going to be through the roof."

Pounded by the same recessionary forces that have hammered all media the past couple of years, Spanish-language TV advertising billings dropped nearly 5 percent to $2.1 billion during the last three months of 2009. Nonetheless, the growing U.S. Spanish-language market, coupled with technological changes connected to last year's nationwide switchover to digital TV signals, has new players swarming into the industry to challenge Univision and Telemundo.

—Miami's Spanish Broadcasting System, a radio company that first dipped a toe into television five years ago with the purchase of a scrawny Key West UHF station, is now a full-fledged network with 11 affiliates around the country and a channel on the Spanish-language DirecTV Mas satellite service. It reaches 30 percent of U.S. Hispanic households and aims to double that by the end of the year.

—Estrella TV, launched by veteran Spanish-language California radio company Liberman Broadcasting last year, has already acquired 28 affiliates reaching 73 percent of the Hispanic market. Earlier this month, Nielsen Media Research began listing Estrella in its national ratings alongside Univision and Telemundo.

—Azteca America (owned by Mexico's No. 2 network TV Azteca), founded in 2001 as a West Coast regional network, has steadily expanded its reach and now has 67 affiliates that reach 89 percent of the Hispanic audience across the country.

—LATV, launched in Los Angeles nine years ago, programs its 32 affiliates with mostly sports and music shows aimed at a youthful audience.

—America TeVe, which operates only three stations, hasn't made much of a footprint nationally. But its aggressive programming of Miami's WJAN-41, with live shows aimed specifically at Cuban-Americans rather than the general Latino audience targeted by the big Spanish-language networks, had a noticeable impact on local Nielsens.

—Even public television has gotten into the act with V-me, a network created in 2007 by a partnership of Educational Broadcasting Corp. (the parent company of New York public station WNET), the investment firm the Baeza Group, Spanish media conglomerate PRISA and the venture capital firm Syncom Funds. V-me has 40 affiliates, all digital channels piggybacking on PBS stations.

Launching a new broadcast TV network used to be a rare, expensive and usually quixotic act. (English-language broadcasters have tried it just four times in the past half-century, and only two of them survived.) Luring stations away from their affiliations with existing networks was all but impossible.

But the signal switch last year that gave broadcast stations several new digital sub-channels has opened up signal space that the nascent Spanish-language networks have quickly latched onto.

"It's a very clever strategy," said Miami Hispanic media consultant Adam Jacobson, "because once you get onto one of those digital channels, the FCC's regulations say that local cable companies must carry you. Those cable spots are few and expensive, so it's been a godsend for small networks."

The technological strategy, however, would be little more than a footnote in a management textbook if the viewers weren't there. In 2000, the U.S. Census Bureau predicted that America's Hispanic population would grow from 35 million to 38 million by the middle of the decade. Actual number in 2005: 41 million.

Now the official figure has hit 47 million, and some demographers think it will be 50 million when the final census figures are in. An added sweet spot for broadcasters: About 60 percent (much larger than for non-Hispanics) are between the ages of 18 and 49, exactly the bracket that TV advertisers covet.

"That's exactly what is bringing all these new companies to Spanish-language TV," said Cesar Conde, president of Univision. "People have been waking up to what a great growth market it is. Over the last five years or so, the market has gotten incredibly competitive. That's OK. It's in everyone's interest to see that (the) market keeps growing."

Univision and Telemundo have not been standing idly by while the new networks steal their lunches. Between them, they still have more than two-thirds of the Spanish-language audience. And TeleFutura, a sister network launched by Univision in 2002, finally emerged as a Nielsen power last year. In February, it even edged out Telemundo for second place in the national Spanish-language ratings.

"Univision has gotten so big over the years that our primary competition is the English-language networks," Conde said. "We're one of the top five networks in any language now in the 18-to-49 age group. And in 18-to-34, we're usually the second- or third-largest, regardless of language. ... TeleFutura is really the part of our company that focuses day-to-day on the Spanish-language market."

Who has the biggest share of the pie, however, may not be the most important element of a strategy in a growing industry. "Everybody thinks there's just one pie, finite and static," Telemundo's Browne said. "But the beauty of the Hispanic media business is that the pie is going to grow. There's plenty to go around."

In fact, the pie is getting so large that the biggest challenge facing Spanish-language broadcasters is exactly where to slice it. Univision and Telemundo still target the broadest-possible general Hispanic audience. But does a third-generation Cuban yuppie in Miami want to watch the same shows as a Mexican seamstress in Los Angeles who just arrived in the United States last year?

"The market in Spanish-language media consumption is going to change dramatically in the next 10 to 15 years, and I don't know if the old guard understands what is going to happen," Jacobson said.

The biggest change: Hispanic population growth is being driven now by birth rates rather than immigration. A new Spanish-language TV viewer is more likely to have been born and raised in the United States than to have come here from somewhere else, bringing old viewing habits with him.

The shifting nature of the audience has already created a host of new demographics for Spanish-language broadcasting executives. In addition to targeting viewers by age, gender and income, as their English-language counterparts do, they split them into categories like Spanish-dominant, bilingual and acculturated.

"Viewing consumption can vary a lot depending where you came from and especially how long you've been here," said South Florida media consultant Julio Rumbaut.

Some of the newer Spanish-language broadcasters have carved out a market niche by programming with an eye to national origins. TeVe America's news-talk offerings are strongly oriented toward Cubans, and the target audience of LATV's hit music show "Mex 2 The Max" is pretty obvious.

Others have experimented with ditching traditional Spanish-language broadcasting altogether. In 2008, SBS even slaughtered the industry's most sacred cow of all, for three months building its schedule not around a nightly rags-to-riches-and-romance telenovela but a weekly drama about a Miami vampire, "Gabriel."

It was the most ambitious and expensive programming ever produced for Spanish-language TV. SBS won't disclose its budget, but the number kicked around the industry is $5 million, about 10 times the cost of the average novela. "Gabriel" delivered solid but not spectacular ratings.

"The thinking was to provide alternative programming, more edgy and intelligent," said Mauricio Gerson, senior vice president of programming and development at SBS. "Gabriel," he said, will be a moneymaker when sales of DVDs and foreign rights are completed. "We wanted to offer viewers something different than they're used to seeing on the other channels. And we especially wanted to get the 18-to-49-year-olds."

Not even SBS thinks the telenovela, the foundation of Spanish-language TV, is going to disappear. "We're running two of them right now," Gerson said. "That's going to be a standard that people will always support. People like story lines."

But the novela is getting a makeover to give it some cultural signposts for an audience that's increasingly oriented to U.S. urban life and sensibilities. Telemundo is already spending an estimated $100 million a year to produce its own novelas rather than buying them abroad, and Univision announced last year that it's opening a studio in Miami for novela production.

Univision's move is widely seen as a hedge against the possible end of its programming deal with the Mexican studio Televisa, which has produced almost all of the network's novelas for the past two decades. The Televisa contract — at times the subject of rancorous litigation between the two — is set to expire in 2017. But Univision's Conde said he expects it to be extended and even expanded, and says setting up a studio is simply a wise investment in a booming market.

"Investing in this Hispanic market is investing in growth," he said. "Investing in any other broadcasting is investing in a static or declining business."

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(c) 2010, The Miami Herald.

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