Hispanic Nets Try New Formulas

Author:
Publish date:

Latino programmers are serving notice that their services
are no longer just about outdated movies and tacky telenovela imports.

The Latin TV market that Univision once had largely to
itself has evolved suddenly into a serious game that's sent tentacles into cable,
digital, direct-broadcast satellite (DBS) and beyond. At the same time, the growing clout
of Latino networks Galavision, Telemundo and Gems still has to be measured against the
continued apathy toward Spanish-language programming demonstrated by operators.

Liberty Media Corp.'s freshly launched digital tier of
Spanish-language networks has not only intensified a growing competitive environment, but
demonstrates that maybe it's finally time to take the Hispanic audience seriously.

Even in areas with high concentrations of Hispanic
families, such as Los Angeles, "You see one, maybe two cable channels in
Spanish," Gems president W. Gary McBride noted. "Then the operators sit around
wondering why the cable penetration is only 35 percent to 40 percent for Latinos. Cable
remains severely underpenetrated among the Hispanic community."

Things are, however, beginning to change. The reason is an
evolving perception of Spanish-language programming and a broadening concept of just who
Hispanic viewers are and the kind of product they want to see on TV.

Until just a few years ago, the Hispanic viewers'
choices were woefully inadequate and unhip. Industry broadcast leader Univision and
long-trailing rival Telemundo primarily imported programs from Latin America and Mexico.
There was little that one would call sophisticated, a typical example being the eclectic,
outrageous Saturday variety marathon Sabado Gigante. There was little for young
Hispanic-Americans to embrace.

"It's been crazy to try to turn things
around," admitted Nely Galan, Telemundo's president of entertainment. "To
have Latinos in this country receiving all of their TV shows from Latin America is akin to
all African-Americans receiving only programming from Africa."

It was with this in mind that Galan and an executive team
led by former CBS Entertainment chief Peter Tortorici have worked under new deep-pockets
owners Sony Entertainment Corp. and Liberty Media to transform Telemundo into the
Spanish-language equivalent of a primetime American network.

Telemundo debuted a new schedule in September that featured
such originals as the Miami Vice-inspired Reyes y Rey, the Spanish Who's
the Boss?
clone Una Familia Con Angel and Latin-flavored knockoffs of Rescue
911
and Candid Camera. It also aired, in November, Second Chances, a
short-run CBS romantic drama starring a pre-fame Jennifer Lopez that had been dubbed in
Spanish.

"Our strategy is based around the philosophy that
people in this country are attracted to stories about their lives in this country,"
Galan said. "If you're a Latino who grew up in the United States, you feel
American, so you don't want to see shows that are set in a different country."

So far, the strategy that Telemundo promotes as "the
best of two worlds" appears to be paying off. Ad revenues are up 20 percent to 50
percent, and through-October ratings had risen a couple of share points in primetime,
according to the network. The overhaul has also stretched to weekday mornings, where in
November it began running a two-hour block of Nickelodeon shows (including Rugrats
and Blues' Clues) dubbed in Spanish.

While Telemundo has begun to make inroads, Univision
continues to easily dominate the Latino market with its significant edge in coverage.
Univision reaches 92 percent of Hispanic households in the United States via its 21
owned-and-operated and 27 affiliated stations as well as on cable systems; Telemundo
reaches 85 percent of the country through 23 owned and operated stations (15 of them
low-power), 43 affiliates and cable.

Univision has remained on top by feeding the Hispanic
audience a steady diet of short-run (between four- and six-month) telenovela soap operas,
the long-running weekly smash Sabado Gigante, news shows and the talk show Christina
featuring Christina Saralegui, a Latina version of Oprah Winfrey. The network gets much of
its programming from sources in Venezuela and Mexico.

If Telemundo has given itself a full-body makeover in
primetime, Univision is hoping to do the same in daytime, weekend and late night. It is
debuting seven shows that it hopes will shore up those dayparts. In primetime, its
viewership routinely dwarfs that of UPN, the WB and ESPN.

Yet the real battle isn't between Univision and
Telemundo. It's Univision's sister Spanish-language web Galavision that
Telemundo is after. Galavision, after all, had adopted the strategy of courting a young,
bicultural audience well before Telemundo went after it in earnest.

Galavision has become a huge Spanish-language success story
of late in cable and satellite with its hipper-than-Univision blend of music, sports,
news, comedy, specials and the occasional telenovela as well as a highly successful Sunday
bilingual block. It even offers Spanish-language home shopping for three hours a day.

Galavision's formula has shown steady growth in both
audience and penetration. Its cable distribution has risen 25 percent in 1997 to 9 million
homes passed (2.6 million of them Spanish-speaking households) in the United States.
Counting its recently completed Echostar Communications Corp. DBS deal, the network's
10.5 million-home penetration is roughly double that of Gems. Galavision also expects to
reach 3 million Hispanic households by year's end.

An executive inside Galavision, who requested anonymity,
said that the network's youthful programming is beginning to win over skeptical cable
operators.

"But we are now in 57 percent of Spanish-speaking
cable homes," the executive added, "and the growth potential is vast because
Hispanic cable penetration is growing at a rate nine times that of the general
market."

But operator resistance remains despite a clear Latino
embracing of cable in recent years.

"They basically don't want to put more than one
Spanish-speaking network on their systems," the Galavision executive said.
"It's really almost an untapped market."

That is perhaps one reason why Galavision began making
noise over the summer about launching a digital Spanish-language programming tier. While
no commitments have been made, any digital setup would likely include product from Grupo
Televisa S.A. of Mexico and Venezuela's Venevision, both of which are part-owned by
Univision.

The tier talk began to catch fire at Galavision in the wake
of similar discussions at DBS-service DirecTV and the Aug. 4 launch of Canales ñ by
Liberty Media.

The collection of eight digital video channels includes CNN
en Espanol, Discovery en Espanol, CineLatino, CBS TeleNoticias, Argentine superstation
Canal 9, Fox Sports Americas, music vidcaster BoxExitos and fellow Latin video outlet
BoxTejano. Eight DMX Latino-formatted audio channels include salsa, mariachi, tejano and
flamenco music, among other Latin styles.

As of Dec. 1, Canales ñ was in front of 1.2 million
Tele-Communications Inc. subscribers, roughly half of which are primarily Spanish-speaking
households, said Liberty Media vice president David Jensen. They cover some two dozen TCI
systems, the largest being in south Texas and south Florida.

"We expect to have deals in place that will double
those numbers by early '99," Jensen said.

He added that two additional video channels are poised to
be added to the tier, with "four to six more" planned after that.

"By this time next year," he said, "we hope
to have at least 15 video channels operating for a retail between $10 and $13."

Then there is Gems, the female-skewing,
five-and-a-half-year-old network whose goals are both more modest and more ambitious. It
is committed to slow growth from its base of better than 5 million U.S. cable homes, but
it is attempting to re-educate Latinas with a more upscale programming mix very much in
line with that of Lifetime Television.

Gems' scheduling of a single hour of telenovelas in
primetime is practically revolutionary, given the cultural pervasiveness and popularity of
the genre. It offers plenty of the novelas during the day, but at night it turns to things
like the Lifestyles of the Rich & Famous clone Famay y Fortuna, the Entertainment
Tonight
knockoff Hollywood Espectacular, variety hours, movies, comedies and
more.

"We originally tried to go with the telenovelas,"
explained Gems president McBride, "but for a variety of reasons it just wasn't
as successful as we had anticipated. We've found that women are more likely to watch
novelas when they are by themselves during the day than when the men and kids are there at
night."

Of course, Univision has fared just fine by packing
primetime with novelas. But McBride stressed, "Our research has told us that the
Latino cable consumer is more likely to be bilingual and better educated. We serve women
who are searching for information about the role they play in their homes. And price tag,
of course, is the final denominator."

Well, yes and no. The final denominator is, in the cable
world, the operator. Several who were contacted for this story declined to comment, with
one citing that trying to gauge the Hispanic audience is "one of the most frustrating
parts of being in this business."

"It's just a fact that operators have been
negligent in providing good-quality Spanish programming as part of their overall system
mix," McBride said. "Now that the quality has improved so greatly
across-the-board, things will begin to change."

Related