Telemundo turns up the heat

It trails Univision, but its new NBC ownership could quickly change that
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Local ratings in the summertime are pretty much an afterthought, since TV viewership is down and reruns rule TV schedules. In Los Angeles, though, there was a bit of a surprise among the Spanish-language stations this summer. Telemundo's KVEA-TV, long a laggard in the market, suddenly saw viewership of its 6 p.m. newscasts surge nearly 50%. The Nielsen score for its 11 p.m. news more than tripled.

At the same time, the dominant Spanish-language station, Univision's KMEX-TV, saw its newscasts dip 20%-30%.

The big difference: NBC. The No. 1 broadcaster acquired Telemundo and its local stations in April for $2.7 billion. After a few years in the hands of Sony and Liberty Media, the long-floundering Spanish-language net is in the hands of a serious, well-heeled broadcaster that could bolster both local and national programming.

There were a couple of similar, smaller shifts in other heavily Hispanic markets, including New York and Miami. Just blips in a giant television sea: Overall, Telemundo's viewership is a fraction of Univision's.

But some industry executives are starting to consider how NBC's entry could shake up the Hispanic-TV game.

"It's the local story that no one's paying attention to," says one media analyst, who is restricted from speaking about Univision publicly. "News is the gateway to prime time, and Univision for the first time faces a formidable rival."

Univision expresses confidence in its longtime strength. "We're certainly going to be aggressive in the way that we compete against Telemundo," says President and COO Ray Rodriguez. "It makes everyone better. We do have some advantages."

The biggest one, he noted, is long-term supply agreements with the largest Latin American TV networks and producers. Add that to Univision's historical strength among Hispanics and a much stronger base of O&Os and affiliates, and NBC faces quite a challenge.

Univision has other problems. The company has warned that its third-quarter results will fall short of expectations. Astonishing ratings for the fringe-hour World Cup soccer broadcasts didn't yield as much ad revenue as the company had hoped.

Startup costs of its Telefutura are higher than expected. Estimated upfront buys of Hispanic TV grew sharply last spring to $750 million, but two analysts say Telemundo got most. (Goldman Sachs' Niraj Gupta disagrees, saying that Univision secured $50 million more than the $475 million that others have estimated.)

Univision is reacting defensively, not always a good sign, say analysts. Example: Its deal to buy Hispanic Broadcasting Corp. (at 40 times cash flow) was a response to NBC's talks with the radio group.

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