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Historic Growth Leads Latin Networks’ Charge - Broadcasting & Cable

Historic Growth Leads Latin Networks’ Charge

Marketers and advertisers take note and act on 2010 Census data
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RELATED: Spanish-Language Networks Not Breaking From Status Quo

Attendees of the May 18 upfront presentation of Discovery en Español at New York City’s Four Seasons Hotel will not only be welcomed by the top executives in charge of sales and programming for the Spanish-language network. For the first time, they will also be greeted by David Zaslav, president and CEO of Discovery Communications

The fact that Zaslav will take time from his busy schedule—he often jokes about spending more time on a plane than at home—to open the Discovery en Español upfront speaks volumes about the increasing role U.S. Hispanic audiences play in the expansion plans of the company. Discovery’s U.S. Hispanic division reported its strongest primetime year in 2010, with double-digit growth among key demos and households, compared to the year before.

“In 1998 we transformed the Hispanic pay-TV landscape by creating Discovery en Español to provide Hispanic audiences with the best content from Discovery,” says Zaslav. “Now the network showcases the most popular programs from our portfolio including Discovery Channel, TLC, Animal Planet, ID and Science as well as original productions like our acclaimed Rescued: TheChilean Miner’s Story.” Zaslav plans to offer up his vision for the continued growth of the division at the upfront.

Discovery en Español is one of many Hispanic TV programmers returning this year to New York City after a few years in hiatus to tout their new programming and start nailing down some advertising dollars in an upfront estimated at around $2.2 billion.

The mood is festive. Most broadcasters, cable programmers and media buyers interviewed by B&C are bullish about this upfront season and anticipate a windfall of advertising money. The industry is coming out of a strong 2010, in which ad spend for both Spanish-language broadcast TV and cable reportedly grew at a higher rate than the so-called general market.

“The market is hot—there’s no denying that,” says Steven Wolfe Pereira, executive VP/managing director at Publicis Groupe’s Mediavest, one of the largest media buyers.

While advertising expenditures grew 6.5 percent in 2010 to $131 billion, ad spend in Spanish-language television grew a healthy 10.7 percent, according to Kantar Media. Still, there is plenty of room for additional growth: Although U.S. Hispanics account for 16% of the U.S. population and 22% of people ages 18-49, Spanishlanguage TV drew only 9% of television ad spending in 2010—$5.3 billion versus the general market’s $58.7 billion, according to Kantar. [Several sales executives interviewed by B&C expressed caution at these figures, saying they might be in" ated.] Still, optimism remains.

“I think you will see a very strong marketplace, both on the broadcast and on the cable side; and both in the English- and in the Spanish-language space,” says Craig Geller, head of ad sales at Si TV, the Englishlanguage network targeting acculturated Latinos that will relaunch on July 4 as nuvo TV.

And while the latest U.S. Census data plays a major role behind the optimism, there are other variables weighing in, including double-digit audience growth across networks, higher CPMs for some broadcasters and an unprecedented spike in pay television consumption among U.S. Hispanics. Today, according to the New York-based Cabletelevision Advertising Bureau, the vast majority of Hispanic households—85 percent— have either cable or satellite, while DVR Hispanic households have more than doubled in the last three years.

The Census Factor

Still, there is no denying that the 2010 Census has a lot to do with the upbeat mood. According to the Census Bureau, more than half of the growth in the total U.S. population between 2000 and 2010 was because of the increase in the Hispanic population, which grew by a whopping 43%, rising from 35.3 million in 2000 to 50.5 million in 2010. Overall, the rise in the Hispanic population accounted for more than half of the 27.3 million increase in the total U.S. population, and today Hispanics comprise 16% of the total U.S. population of 308.7 million.

By contrast, the non-Hispanic population grew relatively slower over the decade, at about 5%, according to the Census Bureau. Within the non-Hispanic population, the number of people who reported their race as white alone grew even slower (1%). In addition, Hispanic households continue to outpace the growth of the nation’s TV audience as a whole, with the number of Hispanic households with TV sets increasing by 3.1% in February 2011 from a year earlier, Nielsen reported. (Overall TV households grew only 0.9% in the period.)

Armed with these and other population trends, Hispanic networks are going to market with a sound message: Spending against U.S. Hispanic audiences is no longer an option; it is a required investment if you want to grow your business, especially in times where overall audience in English-language networks is going down.

“The 2010 Census was a wake-up call to Madison Avenue and marketers around the country who realized the importance and the necessity of targeting Hispanics,” says Tom Maney, senior VP of advertising sales at the recently formed Fox Hispanic Media (FHM), which will be showcasing three networks at this year’s upfront presentation on May 17: Fox Deportes, Utilísima and NatGeo Mundo.

While the census numbers came as no real surprise, they did contribute to a major shift in the way marketers and advertisers are allocating their budgets, away from a “total market” approach, and toward viewing the market in terms of Hispanic market versus the socalled general market.

Another after-effect of the census seems to be a nudging of growth in both existing categories—automotive and consumer packaged goods, for example—and new ones.

“I see some categories doubling down [budgets] this year,” says Jacqueline Hernández, COO of Telemundo. “The auto, the CPGs, the telecoms….But I also see new categories like electronics and financial services coming into the market.” Overall, both Telemundo and sister net mun2 expect growth beyond the upfront season, with strategic partnerships that they hope will extend into longer-term relationships and include not only television, but their digital and mobile extensions. One example is Telemundo’s Club de Noveleras, an online and offline hub for Telemundo telenovela fans that the network launched in partnership with L’Oréal USA, a link Hernández hopes will engage users 365 days a year, 24/7.

“Advertising is in a good place, Hispanic is in a great place, and Telemundo is in the best place,” says Hernández.

The Price Factor

In addition to growing audiences, Hispanic media has been slowly but steadily securing better pricing. While overall television spots in Spanish-language media are still priced at 60 to 70 percent of what the English-language networks regularly get, this is changing fast, at least for the two largest broadcasters and, more clearly, for the genre’s 800-pound gorilla, Univision Communications, which claims to have activated up to 150 new brands in the past four quarters.

“We have achieved pricing parity with the Englishlanguage networks,” says David Lawenda, Univision president of advertising sales and marketing. And this is not new, he adds: “We have been riding at the top of the CPM range since last year.”

Univision competes head-to-head with most Englishlanguage networks, regularly beating one or several in primetime, when it usually programs its über-popular telenovelas, which are mostly imports from programming partner Grupo Televisa. At a time when primetime audiences are getting tougher and tougher to maintain, Univision has seen 10% growth in audiences season-to-date. And in terms of advertising, the largest Spanish-language media network expects an upfront that will be 22 percent up compared to the year before.

Growth in the upfront is also expected to be sharp this year partly because of an unusually heated market last fall and this spring for scatter market ads. And while Hispanic TV might not have seen the 30 to 40 percent increase in rates experienced by the top four broadcasters, it did see some robust numbers.

“The scatter market has been very, very healthy,” says Geller of from Si TV, which this year is bypassing a lavish upfront presentation in favor of client meetings around the nation’s largest Hispanic markets. Geller says his network has seen double-digit increases in scatter, and says Si TV continues to talk actively to advertisers and hopes to secure up to 70% of commitments at this upfront season.

Also bullish is Viacom’s tr3s: MTV Música y Más, which targets bilingual/bicultural Hispanics, a group that saw an explosive growth in the last decade, per the Census Bureau.

“Based on our conversations with key players in the ad community, sales are expected to increase this season. The scatter market has been strong, and we’ve witnessed a higher pay in CPM from the advertisers,” says Luisa Fairborne, VP of ad sales at tr3s.

The Cable Factor

In addition to healthier prices and growing audiences overall, Hispanic insiders point at a major trend impacting the television market these days: an unprecedented growth in Hispanic cable viewing. According to recent data by the CAB, Hispanic cable already attracts up to 20 percent of television viewing among people ages 18-49, a percentage that is a far cry from the 5-6% cable attracts in terms of advertising dollars.

“Cable viewing is growing at a time broadcasters are doubling the price of their advertising; and we are already seeing marketers shifting three, four, five percent of their budgets to cable from broadcast,” says Fox’s Maney in explaining that the CPM for cable can be up to 50 percent less than on broadcast.

Cable programmers think the U.S. Hispanic market is following the steps of what happened in the so-called general market, where 20 years ago, cable was receiving barely 10% of all advertising dollars, while they are estimating cable could attract even more dollars than broadcasters in this upfront market.

“Cable accounts for a larger and larger share of Hispanic viewing and is a necessary element of any media buy today,” says Cynthia Perkins-Roberts, VP of diversity marketing and sales development for the CAB.

With TV usage among Hispanics increasing steadily in the last five years, sports cable channels have seen a 41 percent growth, with ESPN Deportes among those taking the most advantage of the trend. The Spanishlanguage sports network, which reaches 5.3 million Hispanic households, has seen its business quadruple in the past five years. “The pie is only going to continue to grow, with cable and sports channels leading the way,” says John Fitzgerald, VP, multimedia advertising sales at ESPN Deportes, which launched in January 2004.

Unlike Fox Deportes, which will be joined by Utilísima and NatGeo at a May 17 upfront event at the New York City Public Library, ESPN Deportes will be joining ESPN at their morning presentation on that same day, something the network began to do a few years ago.

“We look at the marketplace as a single-market approach,” says Lino García, general manager of ESPN Deportes, in explaining why there will not be a dedicated stage for his Spanishlanguage network. Instead, ESPN Deportes’ sales executives are currently visiting clients and agencies around the country in a process that is expected to extend through June.

The growth in cable audiences has not escaped Univision, which earlier this year announced the upcoming launch of three cable networks: a telenovela-only channel expected to launch in July and two more dedicated to sports and news that will debut some time in the next 12 months. Cable programmers seem to welcome the idea.

“There’s the power of cable right there,” says ESPN Deportes’ Lino García when asked about Univision joining the cable frenzy, something he thinks only bodes well for the cable category as a whole. “The more the merrier,” he says.

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