Hispanic net to fix itself first

HTVN targets Univision's massive audience, aiming to draw Mexican-Americans

By Elizabeth A. Rathbun -- Broadcasting & Cable, 7/17/2000

There's a new TV group in town, and it's aiming to break the virtual monopoly on Spanish-speaking viewers held by Univision Communications.

Fort Worth, Texas-based Hispanic Television Network Inc. hopes to do so by targeting Mexican-Americans, who comprise some 65% of the Hispanics in the U.S. Another tack that HTVN has taken is buying clusters of low-power TV stations, which then are combined to provide full coverage of a market. Of HTVN's 17 stations, just two are full power.

But with last month's $35 million offer for KLDT(TV) Lake Dallas/Fort Worth/Dallas, HTVN will concentrate on buying or affiliating with full-power stations in the top 20 Hispanic markets, company CEO Marco Camacho says.

Whatever the approach, "it's going to be a major challenge" to build a major Spanish-language contender, Camacho admits.

Before HTVN can tackle Univision and vastly outrated No. 2 Telemundo, it first must get its affairs in order. "We took over a company that was broken," Camacho says. "We had to clean house."

HTVN went public in December 1999 via a reverse merger with American Independent Network, a producer of Spanish-language programming. In a reverse merger, a private concern merges with a public company, obviating the need for an initial public offering.

Among the messes to address: HTVN restated its 1998 financial statement, changed accountants and filed its 1999 annual report late "as a result of the merger and other recent changes," including the replacement of the company's management team in March, SEC filings show.

With a 14,492% increase in expenses in the first quarter, to $2.5 million from about $17,000 in 1Q '99, the "new" HTVN reported a net loss of $2.4 million in 1Q '00.

All this has taken a toll on the company's stock price. Although it hit a 52-week high of $20 per share on Feb. 17, it was trading at $7.50 on July 9-still a vast improvement over the 52-week low of about 14.3 cents hit last October.

But "the stock price is not anything I'm concerned about right now," Camacho says. "I'm concentrating on trying to build a company" that he hopes eventually will be valued at $1 billion.

HTVN plans to go after Univision's stranglehold by offering all-Mexican programming, including movies, talk shows and game shows, some to be created in-house. "Telemundo and Univision are trying to be all things to everybody," Camacho claims. When they attract Mexicans to shows with Puerto Rican stars, for example, that's only "because of the lack of [targeted] programming available," Camacho says.

Univision continues to dominate among Spanish-language viewers. It consistently has maintained a prime time share of more than 80%-up to 92% last July. (Telemundo made substantial inroads in the most recent sweeps periods.)

However, Univision's "executives don't understand the Mexican culture, the Mexican sensibilities," Camacho asserts.

Last August, the U.S. Census Bureau reported that the nation's 31.5 million Hispanics account for 11.5% of the total population. And almost two-thirds of Hispanics are of Mexican descent.

While Univision officials could not be reached for comment, Telemundo spokesman Ted Guefen points out that national networks can't afford to target consumers as closely as HTVN plans. "For someone who's got a wide reach, that philosophy won't work," he notes. "You need cross-appeal."