News Column

The New Frontier

July/August 2004, HISPANIC BUSINESS Magazine

Joel Russell

Jeff Valdez, chairman of SíTV in Los Angeles.
Jeff Valdez, chairman of SíTV in Los Angeles.

Alarmed by a rapid drop in 18- to 34-year-old viewers, TV networks are scrambling to find new ways to appeal to this demographic. One glance at the stats shows that primarily English-speaking Hispanics are increasingly the dominant force in this age group. Now three networks are taking direct aim at this market, but you'll need cable TV to see them.

Two cable channels targeting English-speaking Hispanics are already on the air: SíTV, which began broadcasting in February, and Mun2, Telemundo's cable operation. VOY Network, originally scheduled for a July launch but now delayed, will join the other two networks in chasing the growing audience of young English-speaking Hispanics.

"People are getting involved in the category because the numbers are so massive," says Jeff Valdez, chairman of SíTV in Los Angeles. "They can't ignore it and survive in business."

"I'm seeing a lot of competition and that validates the market," says Javier Maynulet, director of finance at Mun2 in Miami. "But there has always been interest in the market. We see Mun2 as a perfect complement to Telemundo's Spanish-language programming."

Mr. Valdez realized the demographic power of the market last year when mainstream network executives wrung their hands over the disappearing audience of men ages 18 to 34. "No one said, 'Hispanic and black men comprise nearly half of this audience that is disappearing. Is there a cultural disconnect here?'" Mr. Valdez recalls. "In many markets, [minorities] are more than 50 percent. You can't be over 50 percent and be a niche. That's called the majority. Everyone in the [television] industry needs to realize that the 18-to-34 category has changed."

Census Bureau projections estimate the Hispanic 18-to-34 market at 12.4 million, or 31.2 percent of the U.S. Hispanic population. A study by the Pew Hispanic Center reports that 46 percent of second-generation Hispanics are English-dominant, and 78 percent of the third generation.

Mr. Maynulet describes the target Mun2 viewers as "18- to 34-year-old U.S. Latinos, semi-acculturated, and second or third generation. Also early adapters – those who are learning U.S. culture but feel strongly about their roots."

Mun2 exists as a subsidiary of NBC Universal, a unit of General Electric. Financial support from the parent corporation allows the channel to ignore money-raising and concentrate on program development. According to Mr. Maynulet, Mun2 currently produces 90 percent of its lineup in house.
SíTV, however, must satisfy a group of investors, including Time Warner Investments, EchoStar Communications, Columbia Capital, Rho Ventures, Syndicated Communications Ventures, and Llano Partners.

"Nobody in Hollywood would give me 10 cents," Mr. Valdez says, noting that the money came from Boston, Texas, Colorado, New York, and Washington, D.C. "We went to Wall Street and everybody said, 'This makes too much sense.' It was too good to be true."

At first, Mr. Valdez figured it would take six months to launch SíTV; instead, it required six years. He spent much of the time convincing local cable systems of the need for a channel to reach young English-speaking Hispanics. "Investors won't give you money unless you have distribution," he says, "and distributors won't take your channel until you have money. It creates an interesting chicken-egg situation."

"The decision to launch or not to launch a given channel is … a local decision made by local managers who are closely in touch with what television product is in demand by customers," confirms David Jensen, vice-president of International Programming for Comcast, a cable operator that distributes SíTV on some of its systems. He adds: "The proliferation of digital bandwidth allows the launch of channels aimed at increasingly narrow demographic targets, whereas previously this would have been difficult or impossible."

After getting money from investors, Mr. Valdez must get more from advertisers. He has pitched SíTV to both Hispanic agencies and major mainstream ad shops, and talked directly to corporate brand managers. The channel's charter advertisers include Wal-Mart, Sears, General Motors, and the U.S. Army.
Mun2 sells to Hispanic and main-stream agencies, and directly to branded companies. "It's mostly an educational pitch," says Mr. Maynulet. "We don't fit one category or the other 100 percent, so we have to tell them what ... audience we are bringing."

"Advertisers have various goals, which include reaching a broad audience with a broad message, and also targeting specific desirable demographics," says Mr. Jensen at Comcast. "A premium is put on reaching younger viewers and the female decision-maker for household purchases. This is certainly true in the Hispanic market."

Audience measurement looms as the major challenge in the English-language Hispanic cable market. For example, says Mr. Maynulet, Mun2 is measured by Nielsen boxes in Hispanic households that are mostly Spanish-speaking. Unfortunately, he laments,"Spanish-dominant is not what we target."

"I doubt [Hispanic cable channels in English] have much in the way of hard data, as they are not launched sufficiently to be metered with any accuracy," says Mr. Jensen. In fact, Mr. Maynulet doesn't believe the measuring infrastructure will catch up to reality anytime soon. Because of this, Mun2 wants to experiment with non-conventional feedback for advertisers, including live events and interactive shows that track calls from text-messaging cell phones or online computers.

In the programming department, all three companies are looking to find or develop shows that will connect well enough to create a buzz in their target markets.

Mr. Valdez hopes to find one or two original programs that will define SíTV for both viewers and advertisers. He likes "Urban Jungle," a new contest show that places nine privileged youngsters in the tough neighborhoods of South Central and East Los Angeles.

The VOY Network "has a dual target market: Latinos in the U.S. and non-Latinos who are discovering our culture," says CEO Fernando Espuelas. The channel's flagship show will be a talk-reality hybrid about Mr. Espuelas helping guests achieve a goal, reflecting the channel's message of "optimism and self-empowerment."

At Mun2, Mr. Maynulet points to "Fuzion," an entertainment news show focusing on the films, music, and personalities relevant to Hispanic youth. Variety show "The Roof" features music, games, and humor in an interactive format.
SíTV's Mr. Valdez agrees that the goal is "validation of self, and TV is such a validating experience," especially when viewers see people like themselves on screen. The former producer of Nickelodeon's "The Brothers Garcia" hopes to craft a schedule appealing to youth of any ethnic background. "There is no exclusion to this channel, and on the air what we say [reflects who we are]," he says. "Because at the end of the day, a TV channel is judged by its shows."



Source: HISPANIC BUSINESS Magazine


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