Latino Power
Big media tune in to the nation's largest minority
America's media giants aren't just gearing up to cover a war. They're gearing up to fight one--on American soil, in Spanish. This week, Spanish broadcasting colossus Univision Communications is expected to seal its $3.5 billion deal for Hispanic Broadcasting Corp., the nation's largest Latino radio network. The acquisition will give Univision control of more than half the $2 billion spent annually on advertising to Latinos, the fastest-growing segment of the U.S. population. That makes the Los Angeles-based company, known for its steamy soap operas and flashy variety shows, one of the country's most powerful communications players in any language. It also underscores the growing clout of Spanish-language media, which has shown itself to be both recessionproof (ad revenues were up 11 percent last year) and capable of pulling advertising dollars away from its English-language counterparts.
The HBC deal will only make the taking easier. With 63 new radio stations added to its 50 TV stations, two broadcast TV networks, cable TV network, online service, and music business, Univision will finally be able to offer advertisers the cross-promotional opportunities that have fueled an entire wave of media mergers, albeit with varying results. "Now that Univision can drive ears and eyeballs from music to the Web to radio and television, the steal is on," says an executive at a major advertising agency that services English-language clients. "Even more dollars are going to be headed into Spanish-speaking media at the expense of mainstream outlets."
And it's not just Univision reaping those dollars. While major networks such as ABC, Fox, and CBS--to say nothing of their print brethren--are trying to reverse a long advertising slump, Spanish media are flourishing. Magazines such as People en Español and Latina, a women's magazine, and TV networks such as Telefutura and Telemundo have been seeing steady ad increases. Every major market in the country has at least two Spanish radio and TV stations, and some, like San Diego with 25, are exploding.
There is no end in sight. "The growth in this market is going to be incredible," says Alissa Goldwasser, media-industry analyst with William Blair & Co., in Chicago. Goldwasser predicts that media spending geared to Latinos will grow two to three times faster than spending for the general population. It's not hard to understand why. There are 37 million Hispanics in the United States, more than the population of Canada, and they now outnumber African-Americans as the nation's largest minority. In some cities, like Miami, Hispanics are the majority. Their buying power is awesome: $580 billion a year and growing at a rate of 12 percent annually. By 2010, Hispanics are expected to have more than $900 billion to spend, making them an incredibly juicy target.
With that in mind, NBC last year spent $2.7 billion for Telemundo, the No. 2 Spanish network. And Viacom, parent of CBS, reportedly made a $7 billion takeover bid for Univision before the HBC deal and continues to seek options to court Hispanic audiences. Disney is launching a Spanish-language version of ESPN, and the Dallas Morning News is doing the same for its newspaper. And AOL Time Warner, which owns People en Español, HBO Latino, and CNN en Español, is looking to expand its Spanish offerings across the board from music to the Internet.
But knowing how to target Hispanic consumers can be complicated. Although many second- and third-generation Hispanics flip freely between English and Spanish TV stations, for instance, most prefer to communicate in Spanish, says Loretta Adams, head of TNS Market Development, a San Diego market research firm. "There's a lot of interest in holding on to language and tradition," she says.
To that end, much of Spanish programming centers on news, variety shows, and novelas, the soap operas that run anywhere from a few weeks to many months. They are far from tame, unlike the advertising that supports them. It is typically warm, fuzzy, and educational. "Advertising to Hispanics is not about distracting them and inserting a brand image," says Hector Orci, cochairman of La Agencia de Orci, a Hispanic ad agency in Los Angeles that counts Honda and Allstate as clients. "It's very straightforward. It's not entertainment."
What's more, ads must be precisely tailored to the audience; simply dubbing an English ad won't do. Consider a popular mayonnaise commercial in which a boy makes a sandwich. "A Hispanic mother would never leave her young child alone with a knife," says Rosa Serrano, director of multicultural planning for Initiative Media in Los Angeles. In the Spanish version of the ad, the mother watches her son from across the kitchen.
Culture clash. Many programs don't translate either, especially the crude-and-rude variety. Spanish-language TV, for instance, will likely never air Married by America, a Fox series in which contestants let the audience choose their marriage partner. "For cultural reasons, that show just wouldn't adapt for a Hispanic audience," says Mimi Belt, vice president of programming for Telemundo in Miami. Aggressively seeking greater market share, Telemundo did find the right reality mix last season in Protagonistas de Novela, where actors competed American Idol style for a role in a novela. The show, as well as the similar Protagonistas de la Musica, were hits, and the winners have become celebrities. One of them will soon be singing at the White House during a state dinner at the request of President Bush, who speaks some Spanish.
Reality programs are unlikely to conquer Spanish TV the way they have the mainstream networks. But they could help attract second- and third-generation bilingual viewers, particularly males, who tend to be better educated than recent immigrants and have higher incomes. All of which makes them more appealing to advertisers.
Telemundo is also trying to rev up ratings by airing NBA and WNBA games, with Spanish play-by-play. Ditto for the Olympics and the Miss Universe pageant, sure-fire ratings boosters. Meanwhile Telefutura, Univision's recently launched network for younger viewers, has had success with soccer matches and dubbed Hollywood movies. "The audience is out there," says Orci. "But we still need the programming to reach them."
Not everyone is succeeding. Azteca America, owned by TV Azteca, a huge Mexican TV production company, entered the U.S. market in 2001 amid much fanfare, only to falter after enough available stations couldn't be found. (Thanks to Univision, which went on a pre-emptive buying spree.) Some analysts believe it may yet find its footing. Fort Worth's Hispanic Television Network, shaky from the start, filed for bankruptcy protection last year. And Home Shopping en Español, the Spanish-language arm of the Home Shopping Network, recently called it quits.
Not to be ignored. Similarly, for all the talk about an advertisers' paradise, ad rates in the Hispanic market have not kept pace with audience growth. In many major markets, Spanish shows, particularly news broadcasts, draw more viewers than those of mainstream networks. Yet ad rates remain 20 percent to 50 percent lower than those of English stations. Advertising experts believe the market will eventually catch up for the simple fact the population has been overlooked for years. Only 3 percent of advertising dollars are targeted to Hispanics, although they compose more than 13 percent of the total U.S. population. "They are the New New World," says Adams. "They are too big and growing too fast to be ignored."
But there is no guarantee that they won't be the ones doing the ignoring. "As the younger generations get more acculturated, they may outgrow the Spanish networks," says David Joyce, media analyst for Guzman & Co., a brokerage.
And if they do, the slowpoke mainstream networks, which have been adding Hispanic characters in dribs and drabs, might end up in the money after all. Last season, for example, ABC introduced George Lopez, a comedy about a Hispanic family. It is just the type of show that Telemundo and Univision should be afraid of. Its audience dwarfs that of anything on Spanish TV. Its popularity with young viewers attracts all the right advertisers. And it has even lured the first lady of Spanish talk shows, Cristina Saralegui, for a guest role. The "Spanish Oprah" wants to expand into English TV. Should she fail, she can still be found during prime time--on Univision.
GETTING BIGGER
Latinos are now the fastest-growing U.S. minority, accounting for 13 percent of the population.
YEAR NUMBER
1980 14.6 mil.
1990 22.4 mil.
2001 37.0 mil.
Source: U.S. Census Bureau
This story appears in the March 17, 2003 print edition of U.S. News & World Report.