He’s numero uno

Jan 21, 2002  •  Post A Comment

Jim McNamara never thought growing up Irish in the Spanish-language culture of Panama City would prepare him to preside over Telemundo, a Hispanic broadcast upstart that will soon become a subsidiary of NBC.
At age 47, he confesses to be a classic sum-of-the-parts success story: an aspiring pro golfer who wound up managing talent and then sold TV time and negotiated production deals for outfits such as New World Entertainment and Universal Television before joining Telemundo in 1999.
But the most lively chapter of his professional life may come when NBC closes its pending $2.7 billion acquisition of Telemundo. Analysts say the affable Mr. McNamara, who speaks fluent Spanish, is key to NBC integrating and capitalizing on the rapidly growing Hispanic market. Telemundo’s CEO and president says growing audience share and advertising dollars opposite sector leader Univision requires more than mastering the language. Understanding the Hispanic culture and people is essential.
EM: Telemundo and NBC have said they want to buy more stations, but your deal has upped the ante for TV station prices. Will that hinder you?
Mr. McNamara: NBC is not going to make its $2.7 billion investment in acquisition costs and debt assumption grow through cost-cutting. There no doubt will be cost savings as you merge the organizations, but that’s not a reason to do a deal. It’s a 6 percent share of the audience at any given time, with only 1.5 percent of the advertising spending in the U.S. to go along with it. That dynamic has to change.
Right now we’re handicapped outside of our main owned-station markets, where there is growth but Spanish-language broadcasting is not developed.
There are no Spanish-language stations out there to speak of. That’s a major problem in Phoenix, Orlando, Tampa and Washington, D.C. Anyone who owns an English-language station there isn’t going to convert to Spanish-language. We and NBC together will figure out a solution, which may mean having to pay full market price.
EM: How formidable will it be to compete with AOL’s new strategic marketing alliance with Univision?
Mr. McNamara: Everybody is committing themselves to the Hispanic demographic. This is nothing more than what AOL and Univision have been trying to do. Univision has probably spent hundreds of millions of dollars on air, inundating their screen with direct and indirect advertising. We’re going to work with NBC in these areas. It’s much more important for us to focus on programming. The cross-media extension is important, but it is not the endgame.
EM: What areas have you budgeted for increased spending in 2002?
Mr. McNamara: Novelas. We’re doing eight internal productions instead of buying them off the shelf from someone else so we can tailor them. We’ll be going to 60 percent of our novelas domestically generated in 2002 from about 25 percent in 2001, when we ran into some production delays. We’re bringing partners in that will keep down the cost of the novelas, which we’re still shooting on location.
EM: Are there new program forms you will experiment with to shake things up, as you did when you first arrived at Telemundo?
Mr. McNamara: I think the direction in which we’ll be headed is to emulate some of the things that have been done over the years by NBC and by other Spanish-speaking broadcasters. One I am fond of is TV Globo of Brazil. The way they schedule programming is, in the long run, the way we would like to, which is as a variety of serialized programs, because that’s the form the audience is most comfortable with: period dramas, urban drama, teen dramas. We’ll also use the weekends to build new forms like miniseries and movies of the week, which can be done in video instead of in film because the audience has accepted it. So it doesn’t have to cost what it does at NBC.
EM: How much repurposing of NBC product do you envision?
Mr. McNamara: There is a place for repurposing, but it is not the driver. There are shows that can work on both. For instance, `Fear Factor’ crosses the culture barrier. But I’m not sure we’ll be doing `Law & Order.’ It depends on the show. We’ll be doing some reality-based stuff or programming that NBC has the English-language format rights to. There’ll be other programming NBC doesn’t have the rights to that we’ll be doing. There’s one show we’ll be doing early in 2002 called `Protagonista,’ a reality-based show in which actors and actresses compete for starring roles in the novelas.
EM: What about Spanish-language programming?
Mr. McNamara: NBC has made it clear to me it doesn’t want to change the Latin American culture. They recognize the importance of supply lines. In light of the recent restructuring of Univision’s alliance with Televisa, which we expected, there is a need for us to continue to do programming agreements with other suppliers. We’ve got our major suppliers and ramped up production. The good news is it will now be easier to schedule against Univision because their schedule will be more predictable. They will be obligated to airing a certain style of programming. We have Globo and the Colombians. Eventually, circumstances and the marketplace may bring us in a closer alliance with Azteca for a strong supply of Mexican programming.
EM: Will the recession hinder your growth? You have forecast your first full year of earnings under NBC to be $250 million on $600 million in revenues.
Mr. McNamara: To imply the recession has had no effect on us is totally wrong. We have felt it. It’s just that we had a good ratings story.
EM: What do you see in the next 18 to 24 months for your company?
Mr. McNamara: We want to continue growing, become a better broadcaster and get more advertisers into our business. I see improved programming that will translate into higher ratings and shares. We will close the gap with Univision. I think it will be a more competitive marketplace. The second Univision network, Telefutura, which launched this month, will get some traction and take some audience away from us and even more away from Univision. There will be other people trying to get into the market, but I don’t think upstarts will have much success in establishing a beachhead.
EM: What new services will you roll out in 2002??
Mr. McNamara: We’re working on a movie channel by the end of the first quarter or the second quarter that can be rolled out fairly quickly from movies we have licensed. I think you will see a bouquet of new programming services that we and Univision will roll out. They have access to Venevision and Televisa, so they may have an edge, but we will be countering them. We already have a younger-skewing Mun2 channel, but we may add a men’s channel with action-adventure and sports.