Back in 1971, before he became the king of Spanish-language TV in the U.S., 71-year-old A. Jerrold Perenchio was the boxing promoter who put together the first heavyweight bout between Muhammad Ali and Joe Frazier. Nowadays, Perenchio, chairman of Univision Communications Inc., is throwing a few punches of his own.
Last year, when Univision started losing ratings to Telemundo, its top rival, Perenchio's response was a quick upper cut: Univision swooped in to sign an agreement with the Brazilian producers of Telemundo's hottest show, Betty La Fea ("Betty the Ugly"). That gave Univision the rights to the show's sequel. Perenchio then delivered another blow by signing a pair of long-term deals with two other Telemundo programmers.
In the always fierce world of media battles, few are as pitched right now as those between Univision and Telemundo. Based in Los Angeles, Univision commands more than 70% of the estimated 3 million nightly Hispanic TV viewers with its novelas, soccer matches, and music shows. But Telemundo, in Hialeah, Fla., which drew just 9% of the prime-time audience in 1999, has seen ratings rise over the past three years. Then late last year, NBC snapped up the network for $2.7 billion. "Univision is on top of the mountain, and there's only one place to go," says NBC President Andrew Lack, "and that's down."
Univision executives declined comment, but the company's actions speak volumes. Two months after NBC announced its Telemundo deal, Univision rewrote deals with its two largest suppliers, Mexico's Grupo Televisa and Venezuela's Venevision, so it would have exclusive rights to their programming. Both had provided Telemundo with shows. When rumors circulated that NBC was also looking to buy Hispanic Broadcasting Corp., the country's largest chain of Hispanic radio stations, Univision moved in, striking a $3.5 billion stock deal to buy the 55-station group in June.
The two companies are fighting over the fastest-growing media market in the U.S. The U.S. population of 32.5 million Hispanics is projected to grow by 15% by 2010, according to the Census Bureau. About one-third of that segment speaks little or no English at home, according to Nielsen Media Research. Moreover, Hispanics tend to be younger, have larger families, and watch nearly 10 hours of TV a day, about two hours more than non-Hispanics. So ad spending on Hispanic TV is expected to rise by 10% in 2002, double the overall media increase, according to ad-tracking company CMR.
The clear leader so far is Univision. Since 1992, when Perenchio and partners Televisa and Venevision bought it for $550 million, Univision has become a Hispanic colossus. This year, it is projected to have revenues of $1.1 billion, up 26% over 2001, due largely to strong upfront advertising sales, figures Merrill Lynch & Co. analyst Jessica Reif Cohen, who forecasts a 5% increase in cash flow, to $328 million. It has even been an acquisition target itself, spurning a rumored $7 billion bid last year by Viacom Inc.
Univision has long been known for its sharp elbows and not being afraid to spend big to fend off competitors. When Mexico's second-largest network, TV Azteca, announced plans in 2000 to launch its own network in the U.S., Univision headed it off by buying several available TV stations. Its biggest deal was the $1.1 billion purchase of 13 stations from Barry Diller's USA Networks Inc. in 2000. Within weeks, Univision announced its own new network, TeleFutura.
NBC and Telemundo won't be deterred so easily. In mid-August, Telemundo clinched a three-year deal to broadcast NBA and WNBA games in Spanish. As part of NBC, Telemundo, with $500 million in revenues last year, can promote its shows heavily. To lure eyeballs for Telemundo's Billboard Latin Music Awards, NBC scheduled host Celine Dion to appear on its Today Show. NBC will also give Telemundo the Spanish-TV rights to the Olympics and Miss Universe contests.
More important, Telemundo continues to find hits, despite Univision's efforts to shut off producers. Nielsen puts Telemundo's ratings up 14% so far this year, cutting into early gains that Univision's TeleFutura had made by showing World Cup games and dubbed Hollywood movies. More confrontations are ahead. "We're going to show them that they're not the only fighter in this ring," says NBC's Lack. It may not star Betty, but this match is looking more than a little ugly.
Corrections and Clarifications
``Mano a mano in Hispanic TV'' (Entertainment, Sept. 9) should have clarified that TeleFutura, launched earlier this year by Univision Communications Inc. to target a bilingual Hispanic audience, offers programming only in Spanish. And we erred in describing Betty La Fea as a Brazilian production. It was produced in Colombia.
By Ronald Grover in Los Angeles, with Aixa M. Pascual in Atlanta
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