UNIVISION STOCK PLUMMETS AS NEW RIVAL PREPARES TO LAUNCH IN U.S.

News that a third Spanish-language television network will launch in the United States sent shares of industry behemoth Univision Communications Inc. of Los Angeles plummeting on Sept. 7, the day after the announcement.

But while upstart Azteca America Inc. took a quick bite out of its competitor's stock price, it will likely take much longer before the network, which will launch in L.A. next year, begins eating away at Univision's market share.

"What (Azteca is) doing makes sense," said David W. Miller, entertainment and media analyst for Sutro & Co. "But it's going to take a long time for them to match the reach that Univision currently has."

Azteca America, a joint venture between TV Azteca S.A. de C.V., the No. 2 Mexican television network, and Pappas Telecasting Cos., the largest private owner of TV stations in the United States, expects to fully launch its network of 13 stations by the second quarter of next year. In Los Angeles, Pappas has acquired Channel 54 and is currently negotiating for a second station, although only one of the two will likely be assigned to the Azteca America network, officials said.

Azteca America will import much of its programming from TV Azteca, an arrangement that gives the startup a low-cost alternative for program development because the shows are produced at TV Azteca's expense and Azteca America can cherry-pick those that attract the largest viewing audiences in Mexico. The arrangement mirrors what Univision has done with its Mexican affiliate, Grupo Televisa.

"Think of all that avoids, compared to the context of what English-language broadcasters face," said Harry J. Pappas, chairman and chief executive of Azteca America. "We know that (in the English-language marketplace), you put 10 shows on the air and you're lucky if three work. By contrast, in essence, Mexico is a low-cost production center where the risk is washed out of a show."

In addition to selections from about 9,500 hours of original programming produced at the Mexican network, Azteca America plans to include a range of news and sports programming in its lineup. The network will broadcast about half of Mexico's soccer league games, programming that was previously sold to (and aired in the U.S. by) Telemundo Network, the country's No. 2 Spanish-language network.

Advertisers welcome new entrant

Although Univision commands about 90 percent of the Spanish-language viewing audience in the U.S., many industry observers believe there is room for a third Latino network, even in Los Angeles where there are currently four Spanish-language television stations. (Those stations are independent channels KWHY-TV Channel 22 and KJLA-TV Channel 57, along with Univision's KMEX-TV Channel 34 and Telemundo's KVEA-TV Channel 52.)

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