When NBC bought Telemundo, it seemed like a no-brainer. The general television market is mature and fragmented, and growth has ground to a halt. On the other hand, the Hispanic market is the fastest-growing segment in the U.S. The Census Bureau expects the country's Hispanic population to increase 2.8% annually every year through 2020, compared to 0.8% for the total U.S. By the end of that growth spiral, Hispanics will make up nearly 20% of the U.S. population.
Unfortunately, not many of them are watching Telemundo. Univision still dominates with about 60% of the market share. In fact, the up-and-coming Telefutura, launched two years ago by Univision, already matches or beats Telemundo among the key young adult Latinos that both networks seek. Telemundo gets about 20% of the share.
Univision's lead is reasonably simple to understand; much of its programming is provided by Mexico's Televisa. This is the programming that Mexican immigrants already know.
But NBC argues that the pie is plenty big enough for everyone. Telemundo doesn't dominate, but its growth story is strong. Its 15 full-power and nine low-power stations grew 14% in terms of revenue in 2004 from 2003, thanks in part to the Olympic Games.
And in the past five years, several Telemundo stations have grown by leaps and bounds. New York's WNJU has increased its average rating by 184%, Miami's WSCV by 258%, Houston's KTMD by 100% and Chicago's WSNS by 94%.
Advertisers Pick Up Steam
“What we know now, as we knew then, is that the opportunity of Spanish-language television is immense,” says Paula Madison, president and general manager of KNBC Los Angeles and regional general manager for NBC Telemundo Los Angeles. “Anyone who is looking at buying TV stations today has to look at Spanish language.”
“Overall, the Hispanic market is increasing in double digits in terms of spending,” says Rosa Serrano, senior vice president, group account director, multicultural, at Initiative Media. “Clients are increasing their budgets year-to-year, and new clients are coming in with much greater investments than I've seen.”
That advertisers want in on the action makes sense too. Total consumer spending by Hispanics reached $531 billion in 2002, or $51,208 per household, representing 81% of the U.S. average. Personal spending by Hispanics is expected to increase at an average annual rate of 9.1% from 2002 through 2020, which far exceeds the national rate of 6.0%.
As a result, the U.S. Hispanic television market has become highly competitive, with three major players now battling it out.
The NBC and Telemundo duopolies in big markets also work together to sell advertising, but stations maintain their own sales forces. (In Los Angeles, NBC actually owns three stations—KNBC, the Telemundo station KVEA and Hispanic independent channel KWHY.) While salespeople seek their own accounts, NBC sends some advertisers to Telemundo, and sometimes account executives will make sales calls together.
“Advertisers are responding to this and adjusting their way of business as they are able,” says Ibra Morales, president of Telemundo's station group.
Success at WNJU
In New York, the NBC and Telemundo stations offer advertisers something few station combinations can: access to an unduplicated audience. By purchasing an ad on both stations, an advertiser can hit the whole market while reaching two completely different audiences.
That situation is a little different in Los Angeles, where 40% of the market is comprised of Latinos. But with two Hispanic stations, NBC has even more ways to serve the marketplaces.
While most Telemundo stations came in second or third to Univision and Telefutura in the November sweeps, WNJU Telemundo Channel 47 in New York has been hitting its stride.
In July, the station took over as No. 1 in afternoons and prime time among adults 18-49, growing more than 20% in 2004. Part of Telemundo's improvement comes from the network's decision to produce more telenovelas—those wildly popular Spanish-language nighttime soap operas. But another factor in WNJU's success is a simple practice all good stations follow:
“The reason we do best is that we're totally locally driven,” says Manuel Martínez-Llorián, vice president and general manager of WNJU Telemundo 47. “We're providing our audience with more local news, more local programming and a lot of local specials,” showcasing important cultural celebrations including holiday events and New York's Puerto Rican Day Parade.
The NBC stations also take a local approach, but it is even more important in the Hispanic market, where community is a high priority.
“News is extremely important to Hispanics. They want to see news about their neighborhoods, but they are also interested in news from the home country,” says Telemundo's Morales. “We try to focus our local news on the way it affects Hispanics.”
NBC and Telemundo executives say that sharing news resources in the company's duopoly markets helps all stations involved.
For example, in December, a huge fire broke out in Chicago on a Monday night. All the local stations deployed news trucks, but as it got later into the night, police removed them all from the scene except for Telemundo's WSNS van. Because that station was allowed to remain, NBC-owned WMAQ also was able to get footage that other stations in the market didn't.
“We were able to do direct and live shots from that truck,” says Larry Wert, general manager of both Chicago's WMAQ and WSNS, and overseer of NBC's joint marketing operation with Paxson station WCPX.
“That was a tremendous benefit we wouldn't have had if we weren't in that partnership.”