Staff Reporter

Sony Pictures Entertainment’s takeover of Telemundo Group Inc. is still months from being finalized, but the Culver City studio is already launching a major effort to overhaul the Miami-based Spanish-language network.

The moves include developing original Spanish-language programming based on Sony’s successful U.S. television shows, starting with “Who’s the Boss,” and targeting Mexican-American viewers.

In the past, Telemundo’s programming has been Spanish-language movies and newscasts aimed at a very broad Hispanic audience. And because Telemundo is based in Miami, some say its programming has had a distinctly Cuban flavor.

That looks to change as Sony seeks to challenge the dominant Spanish-language network, Los Angeles-based Univision Communications Inc.

“Seventy percent of (U.S.) Hispanics are Mexican,” said Andrew J. Kaplan, executive vice president of Sony’s TV arm, Columbia TriStar Television Group. “This will be the dominant force. There will be shows that emanate out of Miami for Cubans and New York for Puerto Ricans, but when you consider that Mexicans are the majority, they will have a strong presence in our thinking.”

Univision has an 81 percent share of the prime time U.S. Hispanic audience in the crucial 18-to-49-year-old category, according to Nielsen Media Research. Telemundo holds only a 19 percent share in that category, and lags well behind Univision in all other categories as well, Nielsen data shows.

The key to Univision’s staggering success in prime time is soap operas, called novelas, which it gets from Mexican and South American networks.

Sony is betting U.S. Hispanics will prefer Spanish-language versions of its tried-and-true hits, beginning with a new show based on “Who’s the Boss,” the TV sitcom starring Tony Danza as a macho ex-baseball player who becomes a domestic servant for a high-powered female advertising agent.

“We are in pre-production,” said Kaplan. “It will be a contemporary 1998 version based on the original idea but customized to the Hispanic culture. (Telemundo) is an American network and this will be an American show.”

Sony’s takeover of Telemundo opens a multitude of programming possiblities, with the studio owning the rights to numerous vintage TV shows including “Starsky & Hutch,” “Charlie’s Angeles” and current prime time hits, such as “Mad About You,” “The Nanny” and “Party of Five.”

Kaplan declined to disclose specific programming plans beyond “Who’s the Boss,” but did divulge Telemundo would probably draw upon Sony’s highly successful music division for variety shows and music specials. Sony’s film division, which has some 4,000 films in its library, would also become fodder for Telemundo, once dubbed into Spanish.

The new series based on “Who’s the Boss” won’t star Tony Danza or Judith Light of the original show, but Latino actors. In all likelihood, the series won’t be produced at the Sony lot in Culver City, but in Mexico where production costs are much cheaper. The programming quality will not be comparable to Hollywood-based productions, Kaplan conceded, but would be superior to current Spanish-language product being produced south of the border.

Under terms of the pending $539 million takeover, Telemundo will be split into its TV stations and its network, which provides the programming.

Sony Pictures Entertainment, a division of Japan-based Sony Corp., and Denver-based Liberty Media Corp., the programming arm of Tele-Communications Inc., will own 50 percent of the network, but the Culver City studio will be in charge of all programming and marketing for Telemundo.

Also partnered in the deal are New York-based Apollo Management LP, which is headed by Leon Black, and Los Angeles-based Bastion Capital Fund, the nation’s largest Latino-owned equity fund, headed by Danny Villanueva. Apollo and Bastion previously together owned a 40 percent stake in Telemundo, and under the new deal will jointly own 50.1 percent in the seven TV stations.

Sony Pictures will own 24.95 percent of the stations, just under the 25 percent upper limit for foreign companies. TCI’s Liberty Media division will own the balance, but with only 4.95 percent of its voting stock. This complies with the rules on cable and broadcasting cross-ownership.

Telemundo will remain a Miami-based broadcaster, but will be guided by Sony TriStar officials in Culver City. Kaplan reports to Jon Feltheimer, president of Columbia TriStar Television Group. Neither executive speaks Spanish, although they are studying the language.

Kaplan said a new head of Telemundo would be chosen once the merger is complete, and he expects the network will continue to have a significant number of Latinos in senior management.

“We want to put more talent under contract and make deals with the Latino creative community,” Kaplan said. “We don’t want to be a rerun network.”

The Sony-Telemundo merger reflects the rapid growth of the burgeoning Spanish-language market in the United States.

“We saw Telemundo as an opportunity,” Kaplan said. “We thought it would be a terrific investment, an undervalued asset, very conservatively run without an eye toward the future or an opportunity to take advantage of the growing ad revenue base, which hopefully will come as a result of the growing population.”

Founded in 1987, Telemundo reaches about 85 percent of the U.S. Latino TV-viewing audience. In addition to Los Angeles’ KVEA-TV Channel 52, Telemundo owns TV stations in Miami, San Francisco, Houston, Chicago, San Jose and San Antonio, Texas.

The network also has 60 affiliate stations in TV markets around the country and 250 cable affiliates.

In 1996, Telemundo posted a $1.2 million net loss. Last year, the network was in the red for $13.4 million, but the company, according to Sony, anticipates a loss of only $2.9 million in 1998.

Bishop Cheen, a financial analyst who covers Telemundo for Charlotte, N.C.-based First Union Capital Markets, said Sony’s acquisition of Telemundo could change the rules of the game.

“Telemundo has never been adequately capitalized,” Cheen said. “Sony helps solve those problems because of its deep pockets.”

With its programming muscle and capital, Sony clearly plans to level the playing field. One strategy Sony plans to pursue, Kaplan said, is to aim its new programming efforts at a younger audience, a move that has made Fox a significant power player among English-speaking networks and The WB as an up-and-coming network.

“We are going to try to appeal to a younger demographic than Univision programs toward,” he said. “We are going to program toward the American experience of the American Hispanic.”

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