High Hopes for Low-Power Stations - Multichannel

High Hopes for Low-Power Stations

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The expansion of Azteca America, Spanish-language independent broadcasters and MTV Tr3s have significantly boosted interest in low-power television stations over the past five years.

The ratings growth of Liberman Broadcasting’s television stations, as well as other independents, has demonstrated there is room for more than just network fare — at least in large markets. And while the demand for Hispanic broadcast signals has jumped overall, there is still little interest in multicasting.

Question of Economics

Much of the current investment is in low-power television stations. “When we started, it was really a question of whether the economics could support full-power signals in many of our markets and our analysis indicated we could not,” said Randy Nonberg, president and chief operating officer of Una Vez Más, which is one of Azteca America’s largest affiliate groups.

Una Vez Más opted to create “virtual full-power” stations by combining the low-power over-the-air signal with local cable and satellite carriage. It secured carriage by paying for it.

The McGraw-Hill Cos. was able to secure cable carriage for its three low-power Azteca America affiliates in Bakersfield, Calif., Denver and San Diego by leveraging the power of its full-power ABC affiliates in those same markets. Natalie Quaratino, McGraw-Hill’s director of operations for its Azteca America stations, said the purchase of the three stations over the past 18 months is motivated “obviously by the ability to reach an entire market with both English-language and Spanish-language properties.”

Hispanic low-power stations are not unique to Azteca America — Univision and Telemundo have long owned such stations. Still, Azteca America relies more heavily on low-power stations than any other Spanish-language broadcast network.

And it’s not just the networks: Independent low-power stations are also catering to the Spanish-language audience.

“Low power for us was a great entry point into the market,” said Patricia Torres-Burd, executive vice president of programming for LAT-TV. “The cost of entering some of these markets has become extremely high. At the same time, it fit very well with our strategy of becoming a very community involved broadcast media.”

LAT-TV owns four low-power stations in Texas and one in Arizona.

The business model consists of “going after the nontraditional advertisers that don’t have the big bucks,” said Torres-Burd. Many local, Hispanic-owned retailers in large Latino markets have been priced out of television by the advertising rates at Univision and Telemundo.

As of a few months ago, Torres-Burd said, Univision’s Houston affiliate was charging $3,000 for a 30-second primetime spot with Telemundo charging some 60% that amount. In sharp contrast, LAT-TV charges $70 for a primetime spot.

“We do not pretend that we are going to compete with Univision,” said Torres-Burd. Nonetheless, she expressed confidence that there is money to be made.

The Latino market is large enough to accomodate four networks and independent stations, said Association of Hispanic Advertising Agencies president Carl Kravetz.

“They have the opportunity for really covering their local market in-depth, and finding the windows of opportunity and the niches that the big guys are not covering, by their very nature of having to appeal broadly to the audience across the country,” said Kravetz.

It’s important for those outlets to offer fare that’s distinct from Univision’s or Telemundo’s, he added. In practice, that means airing something other than telenovelas in primetime.

“You can be a viable alternative with interesting concepts,” said Cynthia Hudson-Fernandez, executive vice president and chief creative officer for the Spanish Broadcasting System-owned MegaTV in Miami. “Not everyone is only hooked on telenovelas.”

Not everyone, indeed, but most. The station’s highest-rated program, Paparazzi TV, airs at 7 p.m. and attracts a modest-sized audience against what is typically the weakest telenovela slot for the big networks. MegaTV is not about to overtake either Telemundo or Univision, but it is making some headway locally. That’s due to some very creative programming and the use of well-known talent such as Peruvian author Jaime Bayly, who hosts an interview show weeknights at 10 p.m.

MegaTV’s programs are being syndicated by VeneVision International, which is unusual for an independent that has been on the air for less than a year.

MegaTV is also helped by its relationship to local SBS-owned radio stations in Miami.

“We find we are able to benefit from each other. We have many of the same clients on television as we do on radio. I think it is complementary,” said Hudson-Fernandez. It also doesn’t hurt to run promos of MegaTV on local radio.

MegaTV boasts a service-oriented focus for local advertisers and will shoot a commercial for a client if they don’t already have a spot. That doesn’t mean they don’t get some national advertising as well. ABC recently bought advertising on MegaTV to promote the series premiere of Desperate Housewives.

Arguably the most significant and successful group of Spanish-language independents is owned by Liberman Broadcasting. The firm has radio-television station duopolies in Dallas, Houston, Los Angeles and San Diego. Liberman executives declined to be interviewed, citing a Securities and Exchange Commission-mandated “quiet period,” in advance of an initial public offering.

However, in an interview several months ago, executive vice president Lenard Liberman spoke at length about his firm’s operations and strategy. “We focus on the market and cater our programming to Mexican Hispanics. We own radio stations in the same markets and cross-promote and cross-program. We use great personalities in radio and transition them to television,” Liberman said.

He also spoke of the firm’s desire to acquire more full-power stations.

“I am not a big believer in low-power. I think it is just a cheap entry point and don’t think they are particularly successful,” he said.

MTV Tr3s in Mix

The boldest distribution low-power television strategy belongs to the recently launched MTV Tr3s cable network. TV-industry observers have said parent MTV Networks has been “quite agressive” in pursuing low-power carriage for the network.

Earlier this year, MTVN took the unusual step of buying the Más Música television network and, more importantly, the low-power stations that transmitted it. Since then, according to an SEC filing, they have reached an agreement to be carried on a number of stations owned by the Equity Broadcasting Corp, which owns Univision affiliates in many secondary Hispanic markets.

Multichannel News interviewed MTV Tr3s general manager Lucia Ballas-Traynor on the day the channel’s launch was announced.

At that time, she explained their distribution strategy this way: “Analog is basically gone. [When a network such as] mun2 and ourselves, when we launch on cable, we are relegated to the Hispanic digital tiers.

“If you were to squeeze the maximum potential out of cable, it is 17% to 20% of the market. Add satellite and the maximum universe is 40% of Hispanic homes. You’re not reaching critical mass.”

Ballas-Traynor said it was a “little different” for a Hispanic cable network to purchase a string of low-power stations and pursue widespread broadcast distribution. That, however, is an understatement.

Ballas-Traynor expects to reach 5.67 million homes, one-half of the Latino TV universe, by the close of October, and 6.1 million (55%) by year’s end.

Currently, the network has deals with Comcast Corp., DirecTV Inc., Cablevision Systems Corp., Time Warner Cable, Charter Communications Inc., RCN Corp. and Cox Communications Inc., said Ballas-Traynor.

No word on whether MTV Tr3s might pursue multicast carriage, which is the last space for Hispanic broadcast real estate — and one that’s largely been unexplored.

The entire Hispanic broadcast industry lags well behind a small Spanish-language religious network when it comes to a multicast strategy. TBN Enlace USA is the unexpected leader when it comes to multicast distribution. No one else comes close. The programming is available as a digital channel on 28 full-power stations.

“TBN has always been at the vanguard of technology and has decided to strongly embrace multicast,” said Cesar Español, marketing and public relations director for TBN Enlace USA. “We are getting ahead of the game and investing a great deal of time and effort explaining to local Hispanic Christian leaders about multicasting.”

TBN began rolling out its digital signals a year and a half ago, Español said.

Telemundo is in the midst of developing multicast plans. “Multicasting is an incredibly hot topic and a very important one around here right now,” said Steve Mandala, Telemundo’s senior vice president of sales. But a multicast strategy is still being formulated. The focus in larger markets is very much on full power. “Our first desire would always be to have a full-power station. We’ve spent a lot of time and resources in the last year paying attention to that,” said Mandala.

Telemundo purchased full-power stations in Denver and Phoenix earlier this year. In both markets, Telemundo was transmitting via low-power outlets.

In smaller markets, multicast carriage is a viable option. Earlier this year, WSMV, the Meredith Corp.-owned NBC affiliate in Nashville, began multicasting the Telemundo signal.

LATV is actively marketing its programming as a multicast signal. Aside from that, though, there isn’t much activity or interest by Hispanic broadcasters.

“They are going to have to do it. I mean, the government has mandated it. TV sets are going to start to change,” said Kravetz. “And I think we are going to see a rapid escalation of digital signals over the course of the next year.”

For the next several years, little Hispanic advertising will be sold on multicast signals. Local advertising will be the mainstay of Latino low-power stations although national brands are placing buys. The expansion of full power Spanish-language independents seems inevitable thanks to the growth of the Hispanic audience. Less certain is the outcome of MTV Tr3s’s low-power distribution strategy.

With the low-powers and full-power independents, you can measure success in terms of ad sales, cable carriage and net investment. In the case of full-power independents, ratings are also available. Either way, the amount of money and viewership pales in comparison to Univision and Telemundo. Yet, it is clear that low powers are an inexpensive way to secure widespread coverage in the Hispanic market.

Speaking in general terms of low power and independent broadcasters Kravetz said, “As long as they do something different that is truly responsive to their local community they absolutely have the opportunity of getting a nice chunk of ratings in their markets.”

Additional reporting by Mike Reynolds.

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