A Comcast-Backed Telemundo Could Grow Hispanic TV Marketplace

Related Content: Vivendi: No Decision Yet on NBCU Stake

Comcast’s imminent deal to acquire a majority stake in NBC Universal may change the balance of power in the Hispanic TV world and possibly give a boost to the operator’s efforts to sell its services to the Hispanic community. NBC Universal owns Telemundo Communications Group, which encompasses not only a Spanish-language broadcast network, youth-oriented cable channel Mundos, an online video presence, but the second biggest provider of Spanish-language novellas in the world. Another plus, Telemundo is in a growth business as marketers look to target multicultural consumers more seriously.

Comcast currently competes hard against DBS systems for Hispanic consumers and the huge library of Spanish-language content could supersize its ambitions both in video on demand and in bundling more attractive programming packages to Hispanic consumers. Comcast was said to be impressed by the presentation on Telemundo’s assets and executives are excited about the potential offered by a new owner.

Former NBC Universal Chairman Bob Wright, now an adviser with Thomas H. Lee Capital Partners, observes: “If I were Comcast I would be looking at Telemundo [as an asset]. Comcast is in a lot of markets where there is a Hispanic population, South Florida for instance.” Wright told B&C the Hispanic broadcast network hasn’t had much opportunity to shine as part of NBC Universal’s broad portfolio. Comcast might be able to promote the Telemundo brand in order to help sell its low-cost triple play services specifically targeted to that consumer.

Comcast operates in markets such as Chicago, Boston and Houston where there are significant Hispanic populations.

Telemundo network reaches 93% of U.S. Hispanic viewers through 16 owned and operated stations, 45 broadcast affiliates and is also distributed to nearly 800 cable systems, according to NBC Universal’s Website. Telemundo’s stations are in markets such as Los Angeles, New York, Miami, Houston and Chicago among other cities. It also has 100 third party affiliates that distribute the system. Small cable channel Mundos might also see some benefit from Comcast ownership. It is currently distributed in 30 million homes.

Online, Telemundo distributes its shows through its own video player at Telemundo.com and MSN Latino. The company frequently stresses its ownership of online rights to programming, as a counterpart to rival Univision whose shows derive from Televisa which is still battling Univision over who controls U.S. digital rights. Earlier this month, Univision completed a deal to share other non-Televisa-owned programming with Google’s Youtube.com. Content rights might help Comcast broaden the appeal of its OnDemand Online offering which it is rolling out in December.

According to SNL Financial, Telemundo network is projected to bring in net ad revenue of $318 million in 2010; that’s up from the 2009 projected figure of $309 million. In the two years prior to the recession, 2007 and 2008, Telemundo had shown growth, and big marketers are gearing additional spending to that market in anticipation of the 2010 Census which is likely to show a bigger Hispanic population. The U.S. Census Department has also committed to spending $145 million on advertising in order to promote participation among Hispanics. This week, Coca-Cola’s chief marketing officer for North America, Katy Bayne, told investors, “multicultural consumers are our core consumers.” The Spanish language TV market has not been immune to the downturn though the market dropped by only 2% to $3.19 billion for the 12 month period through June 2009, according to Nielsen data. Spot TV accounted for an additional $1.52 billion.

Telemundo network’s audience is also up season-to-date. According to Nielsen figures, the network is attracting a weekly average of 640,000 viewers in the 18-49 year old demographic, compared with 630,000 at the same point last year, according to Nielsen data for the season to date through Nov.15. In the younger 18-34 demographic, the network attracts a weekly average of 390,000 viewers compared with 370,000 last year over the same period. The network was down in overall viewers and in households however.

Back in May 2009, David Jensen, then VP of content acquisition at Comcast and now VP of international programming, told B&C sister publication Multichannel News, “I think Comcast has the most ambitious multicultural intention of any distributor.” He added that Comcast intended to spend five to six times its usual ad spend targeting the Hispanic community. Jensen said that Comcast had a commitment to make a major ad buy from Univision as part of its retransmission consent deal. Whether Comcast would choose to promote Telemundo as part of that buy is unknown. Telemundo and Univision have a tacit agreement to not run each other’s advertising, though Telemundo spends heavily with Univision’s radio stations.

With a deal for Comcast to acquire NBC Universal still not complete, executives from Comcast and Telemundo declined to comment for this piece. Telemundo’s assets would no doubt be a nice growth story for Wall Street. NBC Universal spent $2.7 billion for the company in 2001, during the last down market. Under CEO Don Browne, Telemundo has transformed itself into a bona fide content provider.

Separately, a big commitment to programming to minority viewers and a push to encourage take up of broadband services among such communities may also help Comcast win friends for the deal on the Hill. Comcast has made significant outreach to the Hispanic community in advance of its move on NBC Universal. The firm’s efforts to hire employees and vendors from multiple backgrounds are documented at Comcast.com/diversity.