With Spanish-language television continuing to surge, NBC gets in on the action by acquiring Telemundo.
By Derek Reveron
HISPANIC BUSINESS® magazine, Dec. 2001
Despite the economic recession and lower corporate marketing budgets, Univision and Telemundo continue to gain advertising revenue, even as many general-market networks post double-digit declines.
Telemundo and Univision are the nation’s two fastest-growing television networks, and both companies plan to attract more advertising through new networks aimed at younger viewers. In October, Telemundo relaunched its Gems Television cable network as Mun2, or “mundos,” which means “worlds” in Spanish. Univision, which already operates the cable TV network Galavision, plans to launch Telefutura in January.
Despite the poor economy, the new networks will attract enough advertising to succeed, according to industry observers. “There is advertising strength among Spanish-language networks, as compared to the general-market sector where revenue is flat or down,” says David Joyce, senior media analyst for Guzman & Co., a Miami investment-banking firm.
Univision, which is about three times the size of Telemundo, remains the dominant network. Several of Univision’s stations, including those in Miami and Los Angeles, regularly finish first among adults age 18 to 34, beating NBC, CBS, ABC, Fox, and Telemundo. But the number 2 Hispanic network is gaining ground. Two years ago, Telemundo attracted about 10 percent of Hispanic adult viewers age 18 to 49, compared to Univision’s 90 percent. During the May audience sweep this year, Telemundo commanded about 30 percent of such viewers, says Steve Levin, executive vice-president of sales for Telemundo.
The bigger market share brought more advertisers and higher rates for Telemundo, says Mr. Levin. He declined to provide specifics, but industry insiders say that advertisers, who routinely split their buys between the two networks, now have more reason to provide Telemundo its share.
“The confidence level in Telemundo has increased since they have been reprogramming and gaining audience,” says Rochelle Newman-Carrasco, chief executive of Enlace Communications, a Los Angeles ad firm that targets Hispanic audiences. “With increased ratings comes a bigger share of the buy.”
Telemundo believes it can make more headway against Univision after completing its merger with NBC. In October, the peacock network acquired Miami-based Telemundo for $1.98 billion in cash and stock. Under terms of the agreement, NBC also will assume about $700 million in Telemundo debt. “We are looking to make even more progress because NBC brings great news, programming, and distribution resources to the table,” says Mr. Levin.
Univision declined requests for interviews. Compared to Telemundo, however, the Los Angeles–based network continues to book about twice as much crucial “upfront” advertising that networks sell before the start of each fall television season. Univision sold about $550 million in advertisements for the 2001 season, a 10 percent rise over 2000, according to industry analysts. Telemundo sold $200 million to $250 million in advertisements, a 15–20 percent rise over 2000, says Mr. Levin.
Analysts predict that Univision’s 2001 total revenue will reflect growth of about 3 percent, down from the 7 percent figure predicted earlier this year. The network will record revenue of $1.7 billion in 2002, up 21 percent from 2001 but down 8 percent from earlier estimates, according to Merrill Lynch analyst Jessica Reif Cohen.
