Will the real Univision Communications Inc. please stand up?

Is it the company that reported an 8 percent rise in third quarter net income, driven by stronger ratings and advertising sales? Or, is it the company that just cut its workforce 5.9 percent and still suffers from advertisers' unwillingness to pay top dollar for its Hispanic viewership amid heightened competition?

Most likely, a little of both.

Longtime followers say that Los Angeles-based Univision is acting more like the profitable diversified media giant it has become cutting costs and viewing companies such as Walt Disney Co. as rivals even as it continues to face challenges specific to Hispanic broadcasters.

"When you look at how often Univision beats the English-language networks on certain nights, they really are no longer operating in a niche, they're competing in the general market," said Rosa Serrano, senior vice president, multicultural group accounts, for the media buying agency Interactive Media.

But there is the issue of its ad rates, which have consistently lagged behind its English-language competitors because of advertisers' demands for a discount. Local spots on Spanish-language stations still sell at a 30 percent discount to their English-language counterparts.

That's despite the Univision network averaging 1.26 million viewers in the age 18-34 demographic during prime-time in the most recent quarter, the second highest of all broadcast networks, according to analyst Jonathon Jacoby, who follows Univision for Banc of America Securities.

One change that Jacoby said could close the disparity in advertising rates would be Univision's inclusion in the standard Nielsen Television Index, which would enable media buyers to easily compare the Univision network with the major English-language broadcast networks.

Moody's Investors Service Senior Vice President Glenn Eckert, author of a recent report on Spanish-language media, said that advertisers allocate 5 percent of their media buys to Spanish-language media even though Hispanics now comprise more than 14 percent of the U.S. population. "Hispanic household net worth still remains lower than that of the general population, potentially making them a less-attractive target for some high-end advertisers," he wrote. But Eckert also cited studies that Hispanic disposable income is growing more than 10 percent annually.

Officials with Univision did not return calls for comment.

Making investments
Univision owns the Univision and TeleFutura broadcast networks, the Galavisi & #243;n cable network, 59 television stations and 66 radio stations, as well as three record labels, while its Univision.com portal is the top Internet destination for U.S. Hispanics.

Locally, Univision-owned KMEX-TV Channel 34 has had the top-rated 6 p.m. newscast in either language for several years, with a particularly strong following among bilingual Hispanics. And two of its radio stations are the top-ranked Spanish-language outlets in the Los Angeles market.

In order to secure its place as a leading network, Univision recently agreed to pay a record $325 million double its previous contract to FIFA, the Switzerland-based international soccer governing body. That will retain its Spanish-language broadcast rights to World Cup soccer through 2013.

A joint bid by NBC and its Spanish-language sister network Telemundo likely contributed to the record amount Univision had to pay. But Univision reassured analysts that the investment to retain the World Cup rights, which it has held since 1978, would pay off, given that it already has $180 million in advertiser commitments to the 2006 tournament in Germany.

This is not the only front on which it has faced competition from General Electric Co.'s Telemundo network, which has targeted its programming to a younger demographic, forcing Univision to start up the TeleFutura network in a counter programming move in 2002.

Telemundo has gained traction from its emphasis on U.S. produced original programming geared toward the experiences of U.S. Hispanics, but Univision continues to take roughly 50 percent of Hispanic market media buys in the broadcast segment, according to TNS Media Intelligence, a London-based media consulting and data-tracking firm.

Univision is continuing to benefit from a long-standing programming agreement with one of its largest shareholders, Mexico's Grupo Televisa, producer of some of the most popular Spanish-language shows. Just this year, Telefutura passed Telemundo as the No. 2 Spanish-language network status to Telfutura.

On the radio side, Univision agreed to drastically cut its financial stake in Santa Monica-based Entravision Communications Corp., the largest outside owner of Univision and TeleFutura TV affiliates. That was needed in order to get federal approval of its 2003 acquisition of No. 1 Spanish-language radio owner Hispanic Broadcasting Corp.

"Gaining the radio stations created a wider platform to sell to advertisers," said George Nadel Riven, partner in charge of broadcast services for Miller, Kaplan, Arase & Co., a Los Angeles-based accounting firm that tracks media.

Nadel Riven notes that Univision Radio is now in the 15 Hispanic markets that produce two-thirds of total Hispanic advertising revenue. "The goodwill that Univision has built with its TV business gets them in the door with a wider variety of radio advertisers," he said.

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