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Hispanic networks to get a bigger piece of the upfront pie

Apr 30, 2001  •  Post A Comment

Success in business is often about timing. For Spanish-language networks, the recent census data showing a huge jump in the U.S. Hispanic population couldn’t come at a better time-or a worse one. The bad news is it comes during an economic downturn; the good news is it validates what the networks have been pitching to advertisers since they first launched.
According to the data, the Hispanic population in the United States grew by 58 percent during the past 10 years to about 35.3 million. “We’ve got the census on one hand, but given the economy, the timing is awful,” said a Galavision executive who asked not to be identified by name.
Still, none of the big-three Spanish-language networks-Univision, Telemundo and Galavision-is complaining, since all appear to be in a better position heading into this year’s tumultuous upfront marketplace than most broadcasters, for whom the total take is expected to be down.
Telemundo CEO and President James McNamara predicts the total Hispanic broadcast market will be up by more than 20 percent compared with last year. Telemundo took in about $175 million in last year’s upfront, while Univision registered at $525 million, he said. This year, he expects the combined total to be north of $800 million.
“The shift to reflect the proper percentage of the audience we are reaching is taking place,” Mr. McNamara said. He also anticipates that Telemundo will benefit not only from the encouraging census data but also from the network’s ratings increase this year, since its prime-time numbers for adults 18 to 49 grew by 48 percent in the 2001 February sweeps compared with the prior year.
Galavision is pacing 25 percent above where it was last year for the upfront, according to the Galavision executive. “I have been getting more calls and getting more calls returned from advertisers,” since the release of the census data, said the executive. “I feel the census data legitimizes what we’ve been saying all along.”
The census has been the story of the past 60 days when talking to advertisers, said Tom McGarrity, co-president of network sales for Univision. While he hasn’t put a number on his upfront expectations yet, he does say he is “wildly optimistic.” The network will be airing the World Cup in 2002 and will also be selling ads for its yet-to-be-named second network, the 14 stations it purchased from USA Networks late last year.
He expects the Hispanic market will be even more attractive given the specter of strikes since Univision’s programming would not be affected by a possible writers’ or actors’ work stoppage.
Telemundo will be rewarded for its ratings growth and for finally presenting competition to Univision, said Ida Levitan, CEO of Publicis, Sanchez and Levitan in Miami, an agency specializing in the Hispanic TV market. While the Hispanic market is not immune to the economy, she still expects an increase in ad dollars and predicts the upfront take could be about 10 percent greater than last year for the Hispanic market. She expects most of the increase will come from new advertisers.
But some buyers aren’t convinced. With ad budgets down overall, it’s hard to envision a scenario in which advertisers would spend more money in the Hispanic market while spending less in the general market, said Arthur Schreibman, executive vice president, director national broadcast, for Initiative Media in New York.
Still, he does predict that buyers and sellers in the Hispanic market will both be pleased with their negotiations. Since ratings are up, unit costs will rise. Conversely, since there will be more ratings points or impressions to purchase, the cost per thousand (CPM) could be less.
“In this situation, you could end up with everyone happy as sellers get a higher unit cost and at the same time CPMs might be down, which is good for the buyer,” Mr. Schreibman said.
While a booming economy is preferable, the downturn in ad budgets could help the Hispanic market, suggested Univision’s Mr. McGarrity. “In an odd way it’s almost an advantage because marketers need to make sure every ad dollar is being spent smartly and being stretched,” he said.
Mike Goodman, a senior analyst with the Yankee Group, said the Hispanic networks may be poised to benefit in this upfront indirectly, only because they have more of a “cushion” due to their strong growth. They shouldn’t expect CPM increases greater than anyone else, but their overall audience has grown so revenue will increase as a result.
SiTV, which intends to launch as an English-language Latino-themed cable network in 2002, will not be an active player in this year’s upfront.
Nonetheless, Chief Operating Officer Leo Perez predicts Spanish-language advertising will outpace the general market this year. “The pie has gotten bigger for the Spanish-language networks,” he said.