In a few years a handful of predominantly English-language cable channels have done something remarkable: promote to advertisers the value of selling their wares to a new generation of Hispanic customers — a rapidly growing audience that they say is not being served by large Spanish-language broadcasters.
Take, for instance, SíTV, which has a total reach of just under 11 million subscribers in the U.S. The network now claims fifty national advertising clients, including Suzuki, the U.S. Army and ABC. The pitch? To reach a huge audience of U.S.-born Hispanics, which according to 2004 Census Bureau figures numbered 22 million, with a median age of 11 among second-generation Latinos.
Even so, persuading cable and satellite operators remains a challenge.
“An extremely tough sell” is how Cesar Cruz, president of consulting firm Mi Gente and former multicultural marketing director at Cox Communications Inc., describes these channels' pitch on reaching second-generation Latinos. “It is a very difficult business, an abstract business based on culture and trends and being in tune with a youth vibe. There is clearly a future with this audience [but] you have to convince the MSOs, and they only have space for certain things.”
Four channels — LATV, MTV en Español, mun2 and SíTV — have made it their business to target a bilingual and bicultural Latino audience whose identity is shaped by the experience of being the children and grandchildren of immigrants from Latin America. All but SíTV rely heavily on music-related programming. SíTV instead relies on a mix of talk shows, reality shows and syndicated programming.
But there have been some indications that four players may be all the market will bear. Voy LLC initially planned to launch a cable channel targeting young Latinos in 2004. The firm's public relations representative said Voy is “still in the throes of contract negotiations with all the MSOs and telco providers.”
“Cable operators tell us they need compelling programming to compete. However, from the MSO perspective, it is getting crowded,” SíTV chief operating officer Leo Perez said. “There is room on the bus, but the ticket is expensive”
With its distribution stuck at under 4 million subscribers for the last two years, LATV has been forced to take another tack. “We have content that has had critical success, with our audience, [but] we haven't been able to translate that into a national audience,” said network president Daniel Crowe. “We are now learning the best way to get through this distribution labyrinth.”
LOOKING FOR ALTERNATIVES
The “best way” means exploring a wide range of options including multicasting, syndication and Internet protocol TV. LATV made its first trip to the National Association of Television Program Executives gathering this year and recently signed its first syndication deal for cash and barter with KUSI-TV of San Diego to transmit its half-hour show dedicated to regional Mexican music, Mex 2 the Max.
LATV is also pursuing deals for carriage on the digital channels of various broadcasters in California and Texas. The move puts it potentially in conflict with local operators whose carriage deals explicitly rule them out in many occasions. Essentially, LATV will forego carriage in those markets where it can secure multicast coverage.
On the other hand, operators have been encouraging channels to provide specific programming for their video-on-demand services. Even though SíTV and LATV have enjoyed high VOD response rates, neither one has attempted to monetize their on-demand programming. SíTV sees video on demand as primarily a “customer relations tool,” and LATV is trying to determine how best to generate revenue from video on demand. LATV still has “relations with cable and satellite operators” but Crowe believes there are other “viable ways to distribute our [programming].”
Miami-based production company Barrio 305 is turning to IPTV as its primary distribution platform, along with podcasts and a Web site. Much of its content — reggaeton dance music, women and cars — is available online where co-owners Antonio and Noah Otalvaro say young Latinos can easily find it.
“There has never been a better time to be a content producer,” said Antonio Otalvaro. In part, he is referring to the fact that it is much easier to negotiate a distribution deal with an IPTV firm than to secure cable or satellite carriage. The other factor is the spread of broadband usage by Latinos. A recent study by Forrester Research determined that 64% of U.S. born Hispanics are online and 51% have broadband access.
“I think IPTV is great and definitely is the future … yes, there is an opportunity and I really believe we should explore it,” said Matías Perel, CEO of interactive marketing firm LatinThre3. “Yet, I am not sure how fast it is going to take off. This is all about money, and you don't want to waste money.”
In an era of online video sales and Apple Computer Inc.'s iPod, plus increasing broadband access by young Latinos, there is modest potential for real revenues. But for now, the big money remains in traditional distribution platforms.
“Broadband might be one delivery method. If you are simply broadband without any analog, cable network or syndicated programming it isn't going to work,” said Robert Rose president of Aim Tell-A-Vision. “In order to have compelling content you need the money. [IPTV] by itself will not be a legitimate critical mass success.”
Given the challenges of securing cable and satellite carriage, some networks like MTV en Español have decided to acquire their own distribution outlets. In January, MTV Networks completed the purchase of ten low-power stations in California and Texas that were previously owned by the Caballero Television Group. Financial terms of the deal were not disclosed. The stations have been carrying the MásMusica television network, a music channel geared towards young Latinos not unlike MTV en Español, and will continue to do so until at least later this year when MTV en Español says it will announce its plans for the station group.
Another tactic is convincing cable and satellite operators that Latino-themed channels are not just for Latinos. “Mun2 has a broad appeal not just to the general market but to the U.S. as a whole,” said NBC Universal Cable vice president of marketing Lynette Pinto. “Hispanic, in general, is hot. There is a real trend, a real embracing of Hispanic culture, so we feel this channel has appeal beyond a Hispanic digital package.”
Or as Perez puts it “You don't have to be Latino to enjoy our programming.”
Still, these channels' unique selling point is in targeting the young Latino market and, for now, that is both their biggest asset and primary obstacle to securing widespread carriage.