The fortunes of each Spanish-language broadcast network are largely defined by their telenovela strategy, and each major player has a distinct strategy with its own strengths and weaknesses.
Univision is by far the most successful telenovela programmer in the U.S. On any given week, at least 20 of the top 25 highest-rated shows are telenovela episodes. Typically, the network's lowest-rated primetime novela has more than double the audience of Telemundo's highest-rated telenovela. Univision's primetime dominance is overwhelming, even though Telemundo has posted 11 consecutive months of ratings gains.
But Univision's success has a soft underbelly: its dependence on Televisa for its successful slate of novelas.
“Right now, Univision cannot survive without Televisa's telenovelas,” said telenovela expert and University of Georgia associate professor Carolina Acosta-Alzuru.
What might happen to Univision without Televisa's telenovelas is more than a purely academic question.
In 1992, the two broadcasters signed a 25-year program-licensing agreement. Televisa says Univision has violated the conditions of the PLA and is aggressively pursuing legal redress in federal court. The growing mountain of complaints, counterclaims and amended counterclaims make clear the stakes of the dispute. Court-ordered arbitration sessions with a retired judge led nowhere. Both parties seem intent on an all-or-nothing legal battle.
Televisa's current management believes the fees set out in the PLA are laughably low — the agreement provides for payment of 15% of combined network time sales to Televisa. Univision has maintained the PLA is ironclad. Televisa collected over $100 million from Univision in 2005 for novelas and other programming. Univision earned $1.36 billion in broadcast revenue that same year. The case is scheduled to go to trial in June 2007.
Univision declined to answer questions about anything other than the ratings performance of La Fea Más Bella (The Prettiest Ugly Girl), which is currently the most popular telenovela. When asked what happens to Univision if they can no longer air Televisa telenovelas, a prominent Hispanic media buyer responded succinctly, “they're screwed.”
Concern about depending on outside program suppliers was part of what prompted Telemundo to pursue an in-house production strategy. Parent General Electric Co. has provided the funding for the expensive and long-term strategy.
“After three years of controlling our own destiny, the results are satisfactory. Our audience has doubled and our ratings are growing as fast as they can,” said Patricio Wills, head of production for Telemundo Studios. Ratings have increased significantly but from a low base and continue to pale in comparison to Univision's ratings. “One always wants the big goals to be met more quickly,” said Wills.
FOCUS ON U.S.
From the outset, the stated goal was not only to shift production in house but to focus production on the perceived needs of the U.S. Hispanic audience. Telemundo executives noted the production of “culturally relevant” telenovelas would differentiate them from Univision, which simply imported Televisa-produced Mexican novelas for a Mexican audience.
Telemundo executives have toned down talk of “culturally relevant” novelas. One particularly weak novela, La Ley del Silencio, was filmed in Dallas in 2005. “We are still able to address issues of interest to the U.S. Hispanic. That's our view of it. We don't want to overplay or exaggerate the U.S. domestic issue of location. To us, it is more what are the issues that interest the U.S. Hispanic,” said Telemundo senior executive president of network entertainment Ramón Escobar. “The novelas are originally made for the U.S. Hispanic. We are not making them in Mexico for anyone other than U.S. Hispanics.”
But Oswald Mendez, director of integrated communications at The Vidal Partnership, is skeptical. “Just because you have street signage in Miami and you may have some Spanglish in there and some U.S.-relevant issues, the novela is not necessarily for the U.S. Hispanic market,” he said. “What you are doing, which is a competitive advantage that you can claim is [that] we see it first. Not the imported product that gets seen first in Latin America and then comes here.”
Two-thirds of Telemundo's novelas are produced in Colombia and Mexico, mostly with foreign actors and actresses. Escobar cited the diversity of available location shoots. Cost is, no doubt, also a motivating factor.
Telemundo stressed that the writers of its novelas are Latinos. Some are graduates of the network's telenovela writing workshops, which are designed to build up the talent pipeline needed to keep the production of novelas going on a permanent basis. In order to support the hectic pace and finance the high cost of continuous production, Telemundo may have no financial option but to make most of its novelas abroad.
Furthermore, Hispanic audiences may very much want scenes of Latin America as escapist entertainment. Nostalgia, real and imagined, is part and parcel of telenovelas. Two-thirds of Hispanics are Mexican immigrants or their descendants. For the immigrants, seeing the programming of Mexican broadcaster Televisa reminds them of home and that clearly has some effect on their viewing preferences. “Telemundo is 'Mexicanizing' its telenovelas in order to compete,” said Acosta-Alzuru.
Because Televisa's novelas air first in Mexico before airing in the U.S. they generate a cross-border buzz, which boosts Univision's ratings.
MADE IN MEXICO
Telemundo is seeking to create a similar phenomenon by heavily investing in production and distribution in Mexico. Telemundo has made a restricted investment in Palmas 26, a firm controlled by Mexico's Grupo Xtra, in an effort to create a broadcast network to compete against Televisa and TV Azteca on their home turf.
“The more people see Tele-mundo in Mexico, the more word-of-mouth that arrives in the U.S.,” said Escobar. “One of the biggest things that Univision has going for it is that people in Mexico say, 'Yeah, I saw [that novela] and this is what happens. That is a gap we are trying to close.”
Telemundo has significantly closed the gap with Televisa in terms of international syndication, though. The network's novelas compete effectively head-to-head against Televisa's novelas in much of Latin America. Tepuy International, the firm that handles international syndication, is headed by Marcos Santana, who is also Telemundo's lead development executive. Telemundo's success in selling its novelas overseas has been a largely unexpected bonus for the company.
“We may beat Televisa in Spain, we may beat Televisa in Argentina, we may beat Televisa in Colombia and Venezuela. But what about the U.S.? In the United States we are talking about a huge head start by the competition, a history and a loyalty and a tendency to view a certain product over the years, and that is going to take time to go up against,” said Escobar.
But Telemundo has already overtaken Univision in product placement and integration. Univision does not control the production of its novelas and cannot offer product placement to its advertisers, and that is a significant advantage for Telemundo.
“With Telemundo right now allowing you to use novelas more strategically and being able to have your brands written into a storyline and being able to create subplots online, I think it is going to take the genre to another level,” said Mendez.
Increased primetime ratings have, in turn, produced product placement opportunities that are much more attractive to advertisers. Telemundo remains a distant second to Univision and will for the foreseeable future. Unless, that is, Univision loses the right to run Televisa's telenovelas, in which case all bets are off. However, even a minor closing of the gap with Univision represents a sharp jump in revenues for Telemundo. Being a distant second in the growing Hispanic television market is still a lucrative position.
For that matter, even being a distant fourth in the Hispanic television market can be a modest moneymaking proposition as is the case with Azteca America.
That programmer relies on a string of mostly low-power station affiliates to broadcast its signal throughout the U.S. Its most successful programs to date have been Mexican soccer league matches and its reality talent show franchise La Academia. Its novelas have not done as well as might be expected given TV Azteca's successes with the genre in Mexico.
Still, Azteca America vice president of programming Joshua Mintz is making some big boasts. “I will go head-to-head with Univision. Azteca is super-competitive with its novellas,” he said. “In two years we will have a 10% audience share. It is the same as when TV Azteca competed against Televisa for the first time in Mexico.”
Univision-owned Telefutura's primetime strategy has always been one of counter-programming. The idea being to capture non-novela fans by offering them movies. Interestingly, though, Telefutura commissioned an original telenovela Por Amor from Colombian broadcaster Canal RCN. The novela began airing in September at 6 pm. “I think they are being smart and preparing for the worst-case scenario,” said Mendez.
The worst-case scenario being, of course, that the Univision-Televisa PLA is voided. Such an outcome seems unlikely but not impossible. Another possibility, pending the outcome of a case in Los Angeles Superior Court, is that Televisa will be able to transmit its novelas online. The PLA does not explicitly cover the possibility of Internet transmission as it was drafted in 1992. If Televisa wins that case, then, an industry source said Televisa “could do Univision a world of hurt”.
Many media buyers and media executives seemed surprised when told entire episodes of La Fea Más Bella are available online. Broadband video provider YouTube alone has some 1,200 clips related to the telenovela, which have collectively been viewed several hundred thousand times. Another site, www.lafeamasbellaonline.tk, features dozens of the novela's episodes.
For now, this hasn't seemed to dent broadcast viewership and the issue of pirated broadcast material online has not captured the full attention of the Hispanic television industry.
If nothing else, the presence of La Fea Más Bella episodes online indicates that there is a young and Web-savvy audience for Spanish-language telenovelas. Telemundo has placed highlights of its novelas on its Web site since 2003 with no apparent loss of viewership. Telemundo is adding Web-exclusive material related to novelas and garnering heavy traffic.
The viewing of Telemundo's material online along with the illicit downloads of La Fea Más Bella episodes added to the Nielsen ratings that show strong viewing by young Latinos indicate there is a future for telenovelas.
Acosta-Alzuru, who admitted she is a fan said, “The novela is part of our cultural roots. I don't know if telenovelas will be around in a hundred years. But, twenty years from now you will still be able to watch telenovelas on Univision and Telemundo.”