Although competition is growing in Spanish-language television in the United States, Univision Communications remains the dominant player. Its Univision broadcast network, available in more than 90 percent of U.S. Hispanic households, towers over the competition in both visibility and audience share.
“Our network is the fifth-largest network overall, outdelivering both WB and UPN in head-to-head competition,” said Ray Rodriguez, president and chief operating officer of Univision.
So overwhelming is Univision’s lead that during the third quarter of this year, every one of the top 20 programs among Hispanic viewers was broadcast on Univision.
Univision’s influence over the Latino audience is akin to that enjoyed by CBS in the very early years of television. And that, said Telemundo CEO James McNamara, just may be Univision’s Achilles’ heel.
“Their programming is more like the old-style CBS,” Mr. McNamara said. “We are more like NBC. We are trying to target a younger, more affluent demographic.”
Both networks concentrate on the staple telenovela format during prime-time hours. Because of its close ties to Grupo Televisa, Mexico’s No. 1 broadcaster, Univision has access to some of the most popular programs among Spanish-speaking audiences worldwide.
Telemundo, purchased by NBC in a $2.7 billion deal earlier this year, looks to tap into the programming expertise of its new owner in an effort to overtake Univision’s huge lead in audience share.
“NBC has certainly brought us a lot more resources and has been very aggressive with us in terms of their willingness to invest in the business,” Mr. McNamara said. “We are going to spend in the range of $5 million to $10 million next year for new programming. That’s much more than we have ever spent before.”
Mr. McNamara looks forward to the day when the bulk of Telemundo’s programming is original production, rather than acquired material from Mexico, Venezuela and Colombia.
The affiliation with NBC may bring Telemundo additional resources, but some critics of the deal foresee a clash of corporate cultures.
“I don’t know that NBC clearly understands that the Hispanic marketplace is different from the general market, and I don’t know whether they are letting the people at Telemundo have the freedom that they need to succeed,” said Hector Romero, director of finance at rival Azteca America.
Opening the floodgates
If Telemundo itself cannot topple Univision, it is possible that a flood of new broadcast and cable competitors will begin chipping away at the leader.
“The major thing happening now is a new competitive dynamic has been introduced into the Hispanic TV market. The limited number of outlets that have catered to the Hispanic audience have had a free ride because there has been nowhere else to go,” said Howard Horowitz, president, Horowitz Associates, a marketing and consulting firm based in Larchmont, N.Y.
Univision launched its second network, TeleFutura, early this year in an effort to thwart the emergence of broadcast competitors. The service is carried on about 30 Univision-owned stations and reaches 75 percent of U.S. Hispanic households.
A proposed fourth national network, Azteca America, launched by Mexico’s No. 2 broadcaster, TV Azteca, and independent TV station owner Pappas Telecasting, is trying to gain traction in the U.S. market, but is having a rough go of it. The partners are embroiled in a legal battle in which Pappas has accused TV Azteca of failing to act aggressively enough to establish Azteca America as a viable national program service.
Analyst Alissa Goldwasser of William Blair & Co. acknowledged that success is a long shot for Azteca America.
“We have already seen the bulk of the new [broadcast] competition attempted,” she said. “It’s going to be difficult for a fourth Spanish network to get any momentum.”
The expansion of Spanish-language offerings on cable could well be the most significant programming development during the next few years. Almost every major U.S. media company either has or is planning a Spanish-language service.
Scripps Networks announced its planned 2003 launch of a channel that sounds like a Spanish-language hybrid of HGTV and Food Network. Scripps has not given the proposed network a name.
“We must consider the programming, the promotion and the branding. We will launch no network before its time,” said Kristen Jordan, VP of international operations.
The Hispanic audience is growing, but still represents only a fraction of the U.S. population, so a network’s start-up costs must be amortized over a much smaller base.
“In the end, I think you’re probably going to have a few networks owned by companies like Univision and Telemundo and maybe one or two others, because of the deep pockets of their owners,” Mr. McNamara said. “It’s going to be tough to cover the losses in the early years before you see a payback.”