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Not so fast, Pappas - Broadcasting & Cable

Not so fast, Pappas

Before launching, Azteca America net still needs stations in key markets
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Only weeks ago, the backers of Azteca America were talking about a June launch, with upfront deals lined up and projected coverage of 42% of the U.S. Spanish-language market.

But as June ended, a series of setbacks altered the projections and has delayed the launch by at least a couple of months, and some skeptical broadcasters think it could be worse than that.

Last week, the venture from Pappas Telecasting and Mexico City-based TV Azteca lost its station in El Paso, Texas, as KDBC-TV dropped out after numerous delays by Azteca America and said it plans to renew its affiliation with CBS for the next five years.

That loss followed Azteca America's losing its deal with Southwest Sports-owned KXTX-TV Dallas, where Azteca had already set up a network-operation facility. Sources said Azteca has been attempting to buy the Dallas station for more than a year but couldn't close the deal.

And days after those negotiations ended, the station was purchased by Spanish-language rival Telemundo Communications at a price, sources said, that, at $65 million, was lower than the negotiated Azteca price.

According to informed sources, the lack of funds is the cause of the Azteca failures. "They're trying to kick off a network," said one broadcaster familiar with the network's plans, "but the timing is bad because of the way economic conditions have turned, and they don't have the financing. They also don't have L.A., they don't have New York, and now they don't have Dallas. Meanwhile, its competitors have gotten stronger."

Top Hispanic broadcaster Univision plans a second network of its own in this country and recently nailed down some key programming deals. Both Univision and Telemundo, which, with the KXTX-TV deal, will own stations in each of the top eight markets, have been discussed as possible targets for media giant Viacom.

Azteca plans to have a Los Angeles station, but it's not quite there yet. KAZA-TV, currently under construction in Glendale, will be the network's flagship, said Mike Angelos, special assistant to Pappas Telecasting owner Harry Pappas.

The network says it pulled out of a deal for a Connecticut station because of concerns regarding coverage of the New York DMA.

Angelos insists that many station options remain in the markets in which Azteca wants to operate and that the network is still hoping to launch in August with 40% of the market covered.

David Joyce, an equity analyst who covers Spanish-language media, remains a believer. While the network's plans to raise at least $300 million in the high-yield market hit a snag "when the high-yield market went south," he said, "I still believe they're going to get it done. In every market where they've said they want to have a station, there is a station available. And there are still media and financial players willing to partner for a new network."

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