DAN TURNER Staff Reporter
Behind the recent appointment of Henry Cisneros as president of Univision Communications Inc. is one very shrewd Jerrold Perenchio.
As chairman of the huge Spanish-language network, Perenchio is credited with knowing the market, but analysts say he has struggled to get advertisers to sit up and take notice.
That’s a problem that the high-profile Cisneros, who just left the Clinton administration as Secretary of Housing and Urban Development, is expected to correct.
The one-time mayor of San Antonio, Texas, and one of the most prominent Latino leaders in the country, Cisneros will be able to serve as an effective “front man” for Univision in negotiating with advertisers.
“Cisneros is what I describe as a ‘bridge’ personality,” said Ray Durazo, president of downtown L.A.-based Latino marketing firm Durazo Communications Inc. “He bridges between the mainstream and Latino cultures.”
Analysts agree that Cisneros’ main role at Univision, which claims to reach 92 percent of the Spanish-speaking television audience through its group of 18 TV stations around the country and its huge programming network, will be to convince mainstream advertisers that the Latino audience is worth targeting.
There is a substantial gap between the amount of advertising dollars spent on mainstream television and the amount spent on Spanish-language television. Media buyers agree that Univision and other Spanish broadcasters charge far less for ad time than mainstream broadcasters that reach a comparable number of viewers.
In 1996, $354.2 million was spent on Spanish-language TV advertising in the top 10 Latino television markets, according to HispanTelligence, the research department of Santa Barbara-based Hispanic Business Magazine Inc.
Far more was spent on Spanish-language TV ads in the Los Angeles market than in any other U.S. market (see accompanying table). Specifically, $124 million was spent on Spanish-language TV ads in Los Angeles in 1996, more than twice the amount spent in No. 2-ranked Miami-Fort Lauderdale and 35 percent of the total for the top 10 U.S. markets combined.
While the amount spent on Spanish-language TV ads in the United States is growing rapidly, it still represents only a fraction of the $35.6 billion that the Television Bureau of Advertising estimates was spent for commercial broadcast TV time last year.
“Univision doesn’t need any help attracting viewers,” said Durazo. “What they need to work on is convincing Fortune 500 companies to advertise on their network.”
Univision is, in the words of one stock analyst, “cranking on all cylinders.” After raising $200 million to pay down debt in a public offering last September, the company is poised for a steep growth curve, analysts say.
Jessica Reif, an analyst at Merrill Lynch & Co., projects year-end revenues of $365 million in 1996 (actual year-end figures are not yet available), followed by a projection of $430 million for 1997 and $505 million for 1998.
The company is owned through a complex arrangement that was carefully engineered to comply with federal restrictions on foreign ownership of American broadcast operations.
In 1992, Perenchio, Mexico City-based Grupo Televisa SA and Venezuela-based Venevision International Ltd. each paid $33 million in cash and together assumed $415 million in debt to buy the company from Hallmark Cards Inc.
Perenchio ended up with a 75 percent ownership stake in the station group and a 50 percent share of the network, thanks to FCC rules that forbid foreign investors to own more than 25 percent of a television station or group (Televisa and Venevision each ended up with a 12.5 percent stake in the station group).
The public offering resulted in a complex restructuring, and the company now has four different classes of stock. Public shareholders hold about 19 percent of Univision’s equity under one class; Televisa and Venevision each own shares worth about 11 percent, and Perenchio owns a special class of stock giving him 10 votes per share.
This gives him 53 percent of Univision’s equity and 92 percent of its voting power. His shares are believed to be worth about $435 million.
Since taking control of the company, Perenchio who refused to be interviewed has used his alliance with Televisa to rapidly expand Univision’s audience. Televisa produces a popular lineup of “telenovelas,” Spanish-language soap operas produced in Mexico that are distributed on Univision’s programming network which has 740 cable and 21 broadcast affiliates, not to mention Univision’s own station group.
According to figures from Nielsen Media Research, of the 20 top-rated Spanish-language shows in the nation (most of which are telenovelas), all 20 are carried by Univision.
Although he operates behind the scenes and is not himself Latino, those who have worked with him say Perenchio has a deep knowledge of the Latino broadcasting business.
“I used to wonder if (Perenchio) was just the money man, or somebody knowledgeable on the business end, until I met him,” said Roberto Orci, president of West L.A.-based Latino ad agency La Agencia de Orci & Asociados. “He’s very, very well-informed, and he’s made some very good decisions.”