The Hispanic Television Network is so far a network in name only. Launched early last year, HTVN reaches scarcely 15% of the country. It's essentially a patchwork of 20 TV stations and agreements with cable systems, most of which have yet to air their first salsa music hour. In the 18 months since launching, HTVN has lost $51.7 million on $1.8 billion in revenues. But those numbers haven't deterred several of the largest media companies from going to Fort Worth to sound out potential deals. "They're names you'd recognize," says HTVN Chief Operating Officer Michael Fletcher. "I don't think anyone can be in the business [of Hispanic TV] right now and not get calls like this."
In fact, to media giants caught in the frenzy to consolidate, no business seems hotter these days than Spanish-language TV. For months, Telemundo, the No. 2 Hispanic TV network, based in Hialeah, Fla., has been fielding inquiries from Walt Disney, Viacom, AOL Time Warner, and General Electric's NBC, industry insiders say. According to these sources, Viacom made a bid earlier this year--rejected as too low--for Los Angeles-based Univision Communications Inc., the top network in the field, with an estimated 80% of the Hispanic market. Viacom President Mel Karmazin says there was never a "formal offer" for Univision. But at Viacom's annual meeting in May, he put shareholders on notice that he's set to buy Hispanic TV assets at the right price. Univision refused comment.
At a time when other TV audiences are shrinking, Hispanic TV is a media darling because its viewership just keeps on growing. So far this year, an average of 3.7 million viewers catch Spanish-language movies and south-of-the-border telenovelas (soap operas) on either Telemundo or Univision, according to Nielsen Media Research, an 8.7% jump over the year before. Those numbers helped the two networks record double-digit ad-sales growth for the coming season even as the slowing economy has slashed ad sales elsewhere in TV-land. The U.S. Hispanic population, now 33.6 million and the country's fastest-growing segment, is expected to top 43 million by 2010 (charts).
SERIOUS VIEWERS. What's more, Hispanics tend to watch more TV, on average, than other viewers, are younger, and have rising disposable income. By 2010, U.S. Hispanics will spend $1 trillion a year on goods and services, up from the $444 billion in 2000, according to Standard & Poor's/DRI, a unit of The McGraw-Hill Cos., BusinessWeek's publisher. With those numbers, "they're no longer an afterthought for us," says Andy Donchin, director of broadcast for media buyer Carat North America, which has stepped up ad sales on Hispanic TV for clients such as Pfizer Inc. and Alberto Culver hair products.
Big Media's new interest in Hispanic TV is part of a push to collect niche programming, such as the Walt Disney Co.'s recent purchase of the Family Channel. And ethnic TV is especially hot. Last year, Viacom paid $3 billion in stock for Black Entertainment Television, a price industry insiders say was 20 times BET's cash flow, or nearly double what traditional TV outlets command. "Viacom was saying to the rest of us that niche players matter and that they were willing to pay up for them," says one media executive.
HOT PROPERTY. Those kinds of multiples have driven up the price for Univision, which draws an average 1.7 million households a night, five times BET's audience. With its 32 TV stations and Galavision, the top-rated Hispanic cable channel, Univision could more than double its value within a year, to $11 billion, or $55 a share, predicts P. Gordon Hodge, an analyst with Thomas Weisel Partners LLC. Earlier this year, Viacom offered $30 a share, or about $7 billion, say industry sources, but was rebuffed. Instead Univision, controlled by former boxing promoter A. Jerrold Perenchio, expanded last year into music and in early 2002 intends to launch a second network aimed at English-speaking Hispanics. Its drawing power is huge. Last year, its Spanish-language movie Las Delicias del Poder drew 1.1 million more Hispanic viewers than NBC's highest rated movie, Titanic. And its nightly Noticiero TV news show often outdraws the Big Three network offerings.
In this climate, once-troubled Telemundo is also drawing intense interest. The privately held network has rebounded from a 1993 bankruptcy to build its audience by 48% after revamping its programming in 1997. It delivers only one-fourth of Univision's audience, but Telemundo's ratings in the May sweeps climbed 30% among the prized 18-49 age group with hot shows such as novela Betty La Fea (Betty the Ugly). Taking on Univision's popular afternoon talk show Cristina, Telemundo's Laura en America became a huge hit with 1 million viewers daily. The bidding so far for Telemundo is said to have hit $3 billion, a sharp hike from the estimated $700 million paid by its majority owners Sony Corp. and John C. Malone's Liberty Media Corp. in 1997. The company has been adding distribution, spending $304 million last year to expand its station group to 24, including in top Hispanic markets Los Angeles and Dallas.
A bid for Telemundo, expected in the coming weeks, could spark bidding for other Hispanic TV assets, including those that produce programs. Some cable companies such as AOL Time Warner and AT&T are said to be pursuing Mexican TV producer TV Azteca, whose year-old plan to launch a network with TV station owner Pappas Telecasting Cos. has been slow to roll out. As for the fledgling HTVN, Michael Fletcher says he's got his cell phone handy.
Corrections and Clarifications
In "Media giants are glued to Latino TV" (Media, Sept. 24), the revenues in the past 18 months for the Hispanic Television Network were stated incorrectly. They were $1.8 million.
By Ronald Grover in Los Angeles
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