The New World of Hispanic TV

Population boom creates a changing landscape for hispanic TV
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When KWEX San Antonio became Univision's first U.S. outlet in 1961, the media industry got its first inkling of the strength of the Spanish-speaking market. And now, with Hispanics representing more than 14% of the total U.S. population and nearly $1 trillion in buying power, the audience is more alluring than ever.

However, in figuring out how best to reach that audience, marketers are aiming at a rapidly moving target.

“The dynamics that are driving the changes within the Hispanic community have to do with immigration and the amount of time a Hispanic family or individual has been in this country,” says Scott Schroeder, president/CEO of Cohorts, a Denver marketing-information company that specializes in reaching the demographic. In short, the second-generation Hispanic teenager doesn't have much in common with the laborer who just arrived.

The competition of several networks and a new measurement of Hispanic audiences due later this year from Nielsen Media mean that this market is in for big changes. Here are five major shifts to watch for.

1 Univision Faces a Reality Check

Later this month, Spanish-language TV will undergo a huge adjustment. That's when the $13.7 billion sale of Univision, the singularly dominant Spanish-language network, should be finalized.

Just last week, Univision tapped Joe Uva, an advertising heavyweight who is currently president/CEO of OMD Worldwide, to become chief executive once the deal closes.

As successful as the network is, Univision's new owners, fronted by TV entrepreneur Haim Saban (most famous for making a fortune selling Teenage Mutant Ninja Turtles and his controlling interest in Fox Family Channel to Disney-ABC), will need to stand guard.

The trouble: While Hispanics are becoming bilingual and are increasingly likely to watch English-language TV, Univision is in danger of losing viewers with a schedule that is composed nearly entirely of Mexican programming.

Although Univision dominates, there's an abundance of competition. Brian Wieser, senior VP/director of industry analysis at Magna Global, estimates that there are 74 cable outlets targeting Hispanics, four broadcast networks and 160 stations—some in English, most in Spanish.

Univision's major competitor is NBC Universal-owned Telemundo, which has expanded into original Spanish-language productions and bilingual programming in an effort to woo U.S.-born Hispanics.

“We created a business model based on relevance,” says Telemundo President Don Browne. “Language is important, but cultural relevance is more important.” While its audience is up 9% from a year ago, it's still less than a third the size of Univision's.

But the strategy may make sense. “If you're born here, you don't have the same affinity for the home country,” says Miami-based media consultant Julio Rumbaut. “That's why U.S.-produced programming is much more appealing to that demographic. It reflects people's lifestyles.”

The English-language networks are also reaching out to this lucrative group. ABC struck early and successfully with Ugly Betty, a show adapted from the Colombian production Betty la Fea. Programs like Desperate Housewives also have Latino actors in key roles. Fox's MyNetworkTV jumped into the fray with English-language novelas, although that idea hasn't caught on.

David Joyce, an analyst with Miller Tabak + Co., thinks Univision's new leadership will first concentrate on mending strained relations with Televisa, which owns an 11% stake in the network and provides the bulk of its programming. Televisa and Univision have been embroiled in legal battles for years, although Televisa has a contract to provide Univision programming through 2017.

2 Nielsen Changes the Playing Field

Nielsen plans to overhaul its system to measure Hispanic viewers this September. Already, Nielsen has been providing ratings for Spanish-language channels alongside the traditional networks, showing that Univision often outperforms the English-language networks, particularly in younger demos.

The new Nielsen ratings should be a game-changer: Media-buying agencies will have access to Hispanic ratings in every demographic. That means buyers can better evaluate how to reach Hispanics, through both English- and Spanish-language networks.

The new ratings are being applauded on both sides, but they aren't complete, according to Robert Rose, CEO of AIM TV, which syndicates English-language shows like American Latino TV. He points out that Nielsen isn't incorporating any information on viewing by foreign- versus U.S.-born Latinos. Nielsen says it will test with those parameters later this year.

“What we're asking Nielsen to do, which they do with every other facet of their sample, is match the population,” Rose says. “They have to match the U.S.-born with foreign-born because that is the overriding characteristic that determines if someone watches TV in English or Spanish.”

3 The Advertising Gap Narrows

The cost that advertisers pay for one rating point on Spanish-language networks is estimated to be only 70% of that for a comparable point on English-language TV. Having these networks side-by-side will almost certainly give the Spanish-language networks the leverage to raise prices.

Ad spending has been surging on Spanish-language TV for years, growing 19% on a year-to-year basis in the first three quarters of 2006, to $3.2 billion, according to TNS Media Intelligence. However, Spanish-language TV gets only about 3% of total ad spending, even though Hispanics make up 14.4% of the population.

Kagan Research last month predicted that ad spending on Hispanic media will outpace the overall ad market this year. Spending on Spanish-language stations is forecast to grow an average 6.5% a year through 2010, versus 2.2% for TV overall.

Miller Tabak + Co.'s Joyce says the ad gap will continue to close: “For the past four of five years, the Hispanic market has added 15-20 of the top 300 advertisers each year. There has been slow and steady progress.”

But he says that about 110 of the top 300 advertisers aren't using Spanish-language TV and some may never cross over.

4 Marketers Pinpoint Viewers

Hispanics, like any other ethnic group, are not all the same. For years, though, the vast majority had similar traits that made it relatively easy for media outlets and advertisers to reach them. Specifically, most population growth was coming from immigration, mostly from Mexico. Nearly two-thirds of Latinos in the U.S. are of Mexican descent.

But as marketers and programmers better understand the complex new market and the way Hispanics use media, they will create new ways to reach the audience. “Rather than our industry focusing on Latinos who are Spanish-dominant and figuring that, once they start speaking English, they're no longer Latino, we've redefined what it means to be Latino in terms of culture as opposed to language,” says Carl Kravetz, chairman of the Association of Hispanic Advertising Agencies (AHAA) and chief strategic officer at ad agency Cruz/Kravetz: IDEAS.

Today, 60% of Hispanic population growth is coming from people born in the United States, says Sonya Suarez-Hammond, VP of multicultural marketing insights for marketing consultancy Yankelovich. It is the exact opposite of the growth trend of only a few years ago.

“The Hispanic population is acculturating to a great degree, but they are very much holding onto their heritage,” she says. “What our data are indicating is that the Hispanic population isn't necessarily assimilating, and we don't believe they will ever assimilate the way Europeans of decades ago did. Instead, they are acculturating where they have the best of both worlds and adapting to both cultures.”

Boston-based consulting firm Global Insight reports that this population shift is affecting the language used by Hispanics. The Hispanic population last year surpassed 44.2 million, according to Global. Of this group, just over 44% are foreign-born. That figure will dip to 37% over the next two decades. And, while nearly 77% speak Spanish at home, only 24% speak Spanish exclusively, a figure projected to steadily decline—and one that Spanish-language Univision must address.

The language shift has a direct affect on the media that Hispanics use. Research company Encuesta of Miami last year found that 23% of Latinos prefer to watch TV in English, with an equal percentage preferring Spanish and 47% watching equal amounts of English- and Spanish-language TV.

5 Only the Strong Survive

After the 2000 Census revealed a surprisingly huge Hispanic population in the U.S., a flurry of media companies fell all over each other to tap into the $3.8 billion Hispanic ad market.

They can't all last. MagnaGlobal's Wieser expects only the players with deep-pocketed backers to survive. That would include Univision and Telemundo and their sister networks, Fox Sports en Español, CNN en Español, Discovery en Español, and a few others.

Some networks will gear themselves toward English-speaking, or bilingual, Hispanics. English-language Sí TV last month celebrated its third year on the air, and syndicator AIM TV has been distributing programs like American Latino TV for several years. Spanish-language digital network V-me launched in partnership with PBS this month, and MTV launched its bilingual MTV Tr3s in September.

But as larger numbers of the Hispanic population learn English, their viewing options will grow. Could Spanish-language TV go away altogether?

“We're seeing an increased number of options in Spanish, and we're seeing the birth of what is really still in its infancy: English-language, culturally Latino broadcast media,” says AHAA's Kravetz. “It's more complex, but it's a natural evolution of Hispanics' reaching parity.”

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