Officials at Los Angeles-based Univision Communications Inc. are preparing to launch a second broadcast network by this coming January, marking the latest salvo in the escalating war between Spanish-language broadcasters looking to gain a bigger slice of the exploding U.S. Latino consumer market.
The move follows rival Telemundo Group Inc.'s recent decision to refocus its cable network, and is all part of a large-scale push by Spanish-language TV companies to shift into cable-style niche programming.
Univision, which already reaches about 90 percent of the U.S. Hispanic households through its broadcast network and cable channel, plans to put its new network on the 17 stations it is in the process of acquiring from Barry Diller's USA Networks Inc. for $1.1 billion. That station-acquisition deal is expected to close by the end of this month.
Univision's new network, which will immediately reach 80 percent of Hispanic households in the United States, is being narrowly focused on Hispanic men, teenagers and children.
"Univision is on top of the trends in the Hispanic audience," said David Miller, an analyst with Sutro & Co. "In the next five to 10 years you are going to see the core Hispanic audience become a very niche audience."
David Joyce, an analyst with Guzman and Co., agreed, saying that in the next few years Spanish-language networks will offer similar channels to Nickelodeon for children; MTV, which targets teenagers; and VH1, which is geared for the 21-to-35 crowd.
The moves into niche programming are being motivated by a desire to gain audience share in the booming Spanish-language TV market. At a time when advertising revenues are sinking for English-language TV networks, and for English-language media in general, revenues continue to climb for U.S. Spanish-language networks.
Advertisers spent $1.9 billion last year to run commercials on U.S. Spanish-language TV, up from $730 million in 1992, according to analyst Miller. And that trend is expected to accelerate in the years ahead.
"They (Spanish-language TV companies in the United States) will enjoy a slew of new advertisers, as consumer product companies look to capture a demographic whose buying power is expected to almost double within the next 10 years," Miller said. "By 2010, the (U.S.) Hispanic community will purchase $900 billion of goods and services on an annual basis, up from the $443 billion spent last year."Newcomer entering fray
Joining Univision and Telemundo in the scramble for those burgeoning dollars is TV Azteca, Mexico's No. 2 broadcaster, which is teaming up with station owner Pappas Telecasting Cos. to start Azteca America this summer.
"I don't think Univision is thrilled that Azteca America is entering the market before its new network is launched next year," said Miller. "But ultimately, it's reach that matters, and at 80 percent of the market (for Univision's second network), it's going to be a solid network."
Univision's new network is clearly an attempt to counter-program traditional Spanish-language television in order to reach Hispanic viewers seeking alternative programming.
"With a sizable number of Hispanic households without cable, Univision's second network will offer more sports and children's programs," said Miller. "The new network will also aggressively target Hispanics who currently watch a significant amount of English-language television."
The new network would "counter-program" against Univision's main network in order to avoid overlap, the way movie channels do on cable.
The USA Networks' stations being acquired for the new network overlap geographically with Univision's existing stations in several key Hispanic markets, including Los Angeles, New York and Miami.
"They are currently determining the network's name and programming schedule," said Stephanie Pillersdorf, a Univision spokeswoman. "The new network is expected to carry soccer's 2002 World Cup, a nightly sports program and youth-oriented programming."Launch costs
Pillersdorf declined to discuss how much officials plan to spend on launching the new network, but the company disclosed in its first-quarter earnings statement that it expects to have a $5 million decline in its pretax earnings due to expenses related to the new network.
The channel will feature 24-hour first-run programming, and will not feature reruns of popular Univision programs, such as "Sabado Gigante," the longest running and most successful program shown on Spanish-language television.
The new network is expected to replay some of next year's World Cup soccer games in prime time after they are shown earlier in the day on Univision.
Jorge Delgado, the former general manager of Univision station KUVS, Channel 19, in Sacramento, will lead the new network nicknamed by analysts as Univision 2.
Univision currently dominates the Spanish-language broadcasting market in the United States, easily outpacing smaller rival Telemundo.
Gems, Telemundo's cable network, currently offers programming geared toward women, but in September will begin airing a nontraditional programming lineup aimed at 18-to-34-year-old Hispanics under a new name Mun 2. The network reaches 2.8 million homes in 18 of the top 20 Hispanic markets.
The U.S. market is currently highly concentrated, with Univision capturing approximately 80 percent of spending.
The company will use its dominant market position to sell advertising packages that will combine its two broadcast networks and its cable unit, Galavision.
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