May 16, 2007
New Upfront Looks Like Old Upfronts
There will be little new at this year’s upfront. Sure, there will be the usual batch of distribution and programming announcements. But, also as usual, a good number of the shows announced at the upfront will never make the jump from press release to air.
One surprisingly durable topic, given its scheduled September disappearance, is the Nielsen Hispanic Television Index, which continues to be a source of contention among Nielsen, network executives and media buyers. The NHTI ratings for all four Spanish-language networks have varied from the ratings of the all-inclusive Nielsen Television Index. For the most part, the differences are minor and within standard statistical variations but in some cases the differences are significant. And in the case of the less-popular networks even a minor decrease hurts.
There will continue to be plenty of talk at the upfront about cross-platform buys. And interactive advertising, in particular, is likely to jump but from small amounts. The appetite for product integration seems set to grow for a while longer, which in turn helps fuel the increase in reality shows.
The largest Hispanic cable networks will continue to see sharp increases in advertising from small bases. The smaller and unrated Hispanic cable networks will have to rely on direct response, product integration and program sponsorships.
This year advertisers may begin testing Hispanic VOD, local cable spot sales and wireless but none of these will ring up huge dollars.
And the perennial question remains how much increased interest in Hispanic television will there be this time around from general market advertisers. Additional spending and new clients are a given but the extent of an industrywide increase is guesswork.
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Hobson's $9.6 Million House, Rodriguez's Country Club Membership and Uva's Bonus
A few of the provisions in the Univision’s contracts with CEO Joe Uva, COO Ray Rodriguez and CFO Andrew Hobson stand out.
As part of Hobson's relocation from Los Angeles to New York City, Univision is buying his house for $9.6 million. Hobson's home address is listed in Federal Election Commission campaign contribution records. His former Beverly Hills address includes a six bedroom and nine bathroom residence on a 6,794 square-foot plot, a swimming pool and tennis court, according to the real estate Web site Zillow.com.
Rodriguez’s benefits include a company-paid annual physical exam, country club membership and guarantee of first class travel.
Uva's contract doesn't specify first class travel but he did receive a $1 million "sign on bonus" for agreeing to take the job. Univision also picked up the tab for Uva's lawyer to negotiate the employment agreement. (Separately, Uva's contract also specifies he will "report solely and directly to (a) the Board and any committee thereof and (b) to Haim Saban personally as a member of the Board.")
All three employment contracts, of course, call for full time work by each of the executives. No such obligation is in place for the private equity buyers who will receive 2% of each quarter's EBITDA and for whom "no minimum number of hours is required to be devoted by any [of the buyers] on a weekly, monthly, annual or other basis." This fee for "management, consulting and advisory services" comes atop the $200 million "transaction fee" paid by Univision to four of the five buyers for completing the sale.
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Univision Posts Loss Due to 'Merger-Related Expenses'
Univision reported a loss of $67 million for the first quarter of the year primarily due to more than $144 million in "merger-related expenses," which included substantial direct payments to its new private equity owners.
First-quarter net revenue was $437.3 million, which was up 8.6% from the same period a year, according to the SEC filing. The television business saw a 5.5% revenue increase from the first quarter of last year. Revenue growth in the television business came, in part, from owned-and-operated stations in Chicago, New York, Phoenix and San Antonio.
Aside from the whopping bill for "merger-related expenses," television earnings were also hit by Univision's $24 million "voluntary contribution" to the U.S. Treasury as part of the FCC consent decree. The payment is a fine by another name and the result of Univision's failure to meet the minimum programming requirements of the Children's Television Act.
Univision paid out another $6.5 million in this quarter alone as part of its two year-old legal dispute with Televisa over alleged copyright infringements and violations of the program licensing agreement between the two companies. Univision relies heavily on Televisa-produced programming.
Radio was the big gainer with an almost 20% revenue increase, a strong performance in an industry where general market ratings and revenue have been mostly flat. During an earnings conference call, CFO Andrew Hobson attributed the increase in radio revenues to format changes over the past year. Interactive saw growth of almost 27% for a total of $9.5 million in revenue.
Univision reiterated its intention to sell its music business and use the money from the sale to pay down debt. During the conference call, Hobson also made clear they intend to sell some of the smaller television stations. The filing also said Univision will actively consider acquiring new businesses.
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New History Channel en Español Doc
The History Channel en español's first original full-length feature is an emotional hour-long documentary that chronicles the heroic death of Marine Sgt. Rafael Peralta and its impact on his mother and siblings. El Honor De Un Sacrificio (Act of Honor) premieres on The History Channel en español and The History Channel on May 19 at 7pm.
"We did not wish to create a love letter to the military, we did not wish to create a polemic against the military" said Marlene Braga director of programming and production for the History Channel en Español. "We were clear that we were making a film about a family of origin and a family of choice -- the Peralta family and the Marines."
The documentary was filmed over the course of seven months and features interviews with members of his platoon and family.
Sgt. Peralta's mother, Rosa Peralta, participated in a panel discussion and screening held last month in Herndon, Va., and hosted by the local Cox system. The event also featured U.S. Sen. James Webb. A similar event is planned for San Diego later this week.
When asked why no other network had taken up a documentary of the well-publicized story Braga responded "I do believe God wanted us to produce it. You know what, it is so perfect for the History Channel en español."
For more about the documentary please see the program review below.
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‘El Honor De Un Sacrificio’
El Honor De Un Sacrificio is a well-produced and heart-rending documentary. Even macho viewers will fight back tears.
The program tells the story of Marine Sgt. Rafael Peralta who was killed in Fallujah and died saving the lives of other men in his platoon. After entering a house on Block 412, Peralta was shot and fell to the floor. Insurgents threw a grenade and Peralta reached out and deliberately pulled the grenade under his chest sacrificing his own life but almost certainly saving the lives of three perhaps four Marines who were right behind him. For this act of heroism, Peralta was posthumously nominated for the Medal of Honor.
The story of his death is told through interviews with several members of his platoon, footage shot by Joint Combat Camera photographers and most dramatically through home video taken by a member of Peralta's platoon. The dead sergeant appears on film shot two days before he was killed.
Almost as compelling is the related storyline of Sgt. Peralta's surviving younger brother. The 16 year old Ricardo Peralta intends to enlist in the Marine Corps. Rosa Peralta, his mother, half-seriously says she tells Ricardo "I'll kill you here before letting you get killed over there" but recognizes there will come a time when the teenager will be old enough to enlist without her permission.
Sgt. Peralta was a native of Mexico and moved without papers from Tijuana to San Diego as a teenager. He enlisted in the Marine Corps the day his green card went through.
The documentary's most significant weak point is its failure to address the question head-on of why Sgt. Peralta so strongly embraced his adopted country and the ethos of the Marine Corps. What motivated an illegal alien to willingly die fighting as a member the United States military? The unanswered question lingers unsatisfactorily throughout an otherwise fine documentary.
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Alex Alonso, multicultural director for media planning agency Carat USA, covered an awful lot of ground during a recent 12-minute telephone interview. Cuban born and Miami raised, Alonso started his career at Starcom Hispanic (Tapestry's predecessor) before moving to Anheuser Busch and most recently to Carat where he buys media for clients such as Adidas, Hyundai and Radio Shack. An edited transcript of his conversation with Hispanic Television Update follows:
Q: What, if anything, do you expect will be different about this year's upfront?
A: I think the NTI/NHTI argument will continue to be problem [and] at the head of a lot of negotiations with planners and buyers and their deals with the networks. Beyond that I think [it will be interesting] how each one of the networks position themselves in light of those changes. Univision, of course, has presented themselves for the past year or so with their recent data [as] being the fifth largest network. They are in a very good position, obviously, to substantiate the argument. I think Telemundo's reaction is going to be very interesting and how they are able to look forward and position themselves.
Q: Why do you think the NTI/NHTI discussion still continues? Is it the differences in ratings measurement between the two services? What exactly is driving that concern?
A: I think the research aspect as to whether things are accurate and whether they are reliable. That is always going to be a question when we transition from one measurement device to another. I think the larger question is going to be among the Hispanic shops, the ones who typically don't subscribe to NTI data. I think that transition and that forced integration of having to look at Hispanic and general market on the same page is really going to be very, very interesting. And [it] is going to offer solely Hispanic shops a good opportunity to compare vis a vis general market and Hispanic. I think it is going to open that door for them. I think it is going to be a challenge because some of the networks they have probably worked with closely developing integration will
have quite a bit of a hurdle especially because NTI is not going to be very kind to a lot of the smaller Hispanic networks.
Q: You mentioned Univision's strengths -- do you see them as sufficient to attract many more general market clients?
A: I think that is a no-brainer. Univision is going to try hard to do that. They have very strong case studies even without the NTI argument. This fulfills a lot of general market client's needs from a research perspective and understanding the size of the prize. [NTI] makes it a lot more blunt for general market advertisers.
Q: Are you seeing more interest among your client roster for sharply increased Hispanic spending or is it more marginal growth?
A: I wouldn't say sharply increased spending. I think the dialogue with some of the clients that haven't been active in Hispanic has been pushed to the fore. It becomes a topic of conversation a lot quicker now than it did in the past. I think the general market clients are a lot more willing and receptive to talking about it than they were in the past.
Q: You don't seem to believe this will translate into much more Hispanic spending this year. Perhaps next year?
A: The jury is still out but I don't think it is going be as strong and as quick of a turnaround as a lot of people are expecting. I think it will take some time.
Q: You mentioned that how Telemundo positions themselves will be interesting. How so?
A: Telemundo has tried to develop their offering very aggressively over the past few years. Coming into the NTI survey is probably going to affect them in a very dramatic way. I think a lot of the general market shops who aren't familiar with Telemundo will obviously be interested in the fact that they can do custom programs, they can do made-for-you programs and those types of integrated opportunities. But if they are not familiar with them and if they look back and look at some of the history and the fact that their share of voice in the market when compared to NTI will not be as strong [that] will probably be a deterrent for them.
Q: And Azteca America -- do you think the news related to the Pappas Telecasting stations is going to hurt them?
A: That is definitely going to be a strong bone of contention for a lot of planners, a lot of buyers.
Q: In terms of cable we've seen significant increases from a low base -- do you think that will be more sizable this time around?
A: I think the measured cable nets will probably do just fine. The unmeasured, the unrated cable networks will probably have a difficult time especially with the transition to NTI. That is definitely going to hurt them. The measured ones will always continue to be fine.
Q: Last year's upfront stretched out for a long time. Do you expect this upfront to be as drawn out as the last?
A: I think it will probably be as long as last year. It may be a little abbreviated but again there is so much debate as to whether the NTI is really accurate, whether it is really fair. And I think if you naturally increase the number of advertisers coming in, especially if you have general market advertisers now playing the Hispanic market, they are definitely going to take their time with it.
I think Univision will definitely be poised to success for 2008 in terms of how much they are going to be capturing of the upfront dollars. Across the board there will be a natural increase. The question really is how much of an increase there will really be. That is a tough question to answer.
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Univision Teams with Disney-ABC on ‘Desperate Housewives’
(Excerpted from a May 14 article on the Multichannel.com)
Top U.S. Spanish-language network Univision cut a deal with Disney-ABC International Television Latin America that involves the production of ABC’s hot Desperate Housewives series for Hispanic viewers in the United States. The series will be called Amas de Casa Desesperadas, and will air next season in primetime on Univision, the network said Monday.
ESPN Deportes Gets Pan American Games
(Excerpted from a May 8 article on the Multichannel.com)
The Pan American Games, last televised on ESPN in 1999, will make a comeback of sorts on the sports-programming giant. ESPN Deportes acquired the exclusive Spanish-language multimedia rights throughout the United States and Puerto Rico for the competition, and it will present more than 160 hours of coverage from Rio de Janeiro July 13-29.
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The Washington Post reports that the announcement of V-me TV's launch in Maryland has sparked critical reactions. "When the station announced the show 10 days ago, the talk radio airwaves sizzled, led by Del. Patrick L. McDonough, (R-Baltimore County), the father of the oft-failed bill to make English the official language of Maryland. Firing up the controversy further, Ivan Betancourt, a member of the Governor's Commission on Hispanic Affairs and an Ehrlich holdover, said on the show that Hispanics should not be accommodated with separate services in Spanish."
For more ...
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