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TV Azteca comes to U.S.

Hits waves second quarter of 2001

MEXICO CITY — Mexico’s No. 2 web, TV Azteca, has joined forces with Pappas Telecasting to launch another Spanish-lingo broadcast net in the U.S.

Azteca has long been interested in entering the U.S. market, but an economic crunch forced it to shelve international expansion plans in 1998.

Azteca and Pappas are plowing $500 million into the station, Azteca America, which will go on air in the second quarter of 2001.

Most of that coin, to be raised internally by Pappas Telecasting, will be spent on acquiring new television franchises.

TV Azteca will make available all of its programming from its two Mexican channels, including half of the Mexican top division’s soccer games; in return, it will own 20% of the station. It will also name two to the 15-member board and be guaranteed income of $15 million per year.

Visalia-based Pappas Telecasting, which claims to be the largest chain of privately owned TV stations in the U.S., will hold the other 80%.

Pappas Telecasting founder Harry J. Pappas will be prexy-CEO of Azteca America. Station’s corporate HQ will be in Los Angeles, its operational center in Dallas.

Only last year, Azteca signed a multiyear production and programming sharing agreement with No. 2 U.S. Hispanic net Telemundo. A Telemundo spokesman said the net still has some Azteca shows in inventory that have yet to air.

But the two had also agreed to co-produce two original nighttime soap operas and jointly develop several others. It’s not clear how this new deal will impact that accord.

“TV Azteca’s popular programming and the low costs of production combined with our experience of operating TV stations in the U.S. and transmission technology will allow us to become an excellent opportunity for advertisers in the U.S. Hispanic market,” said Pappas.

Coverage will initially reach 45% of the 33 million Latino TV viewers in the U.S., rising to 65% by 2002, including the cities of L.A., Miami, San Francisco, Houston, Dallas, Phoenix and San Diego.

TV Azteca prexy and CEO Ricardo Salinas Pliego said the new station would stake a claim to a large slice of the exploding $1.9 billion U.S. Latino advertising market, long dominated by Univision.

“I think Azteca America will put an end to the concentration of the Spanish-speaking market in the U.S. in the same way that TV Azteca finished the television monopoly in Mexico,” said Salinas Pliego, referring to his web’s 1994 launch and the end of top network Televisa’s monopoly.

Salinas Pliego is seemingly ignoring the existence of Telemundo and overstating his own success at home.

While Telemundo has seen its ratings recover from last year’s trough, and has made major strides in ad sales, its network of O&Os and affils still only reaches 85% of the U.S. Hispanic market; Univision’s reach is 92%-plus.

More importantly, Univision claims 85% Hispanic viewer market share. According to a company spokeswoman, the net welcomes a new player because “it underscores the validity of this market.”

For the 2000-01 season, Univision reported upfront sales of $501 million; Telemundo, $175 million.

Under programming accords that are in place through 2017, Univision has its pick of the best of Televisa shows, including its primetime telenovelas (which regularly trounce Azteca’s in the Mexican ratings) and the other 50% of the Mexican division soccer games.

Fort Worth, Texas-based Hispanic TV Network (HTVN) is also trying to compete against Univision and Telemundo. With agreements and letters of intent and O&Os, HTVN will have 25 stations.

Azteca and Pappas said they will also work together in news production. “We are also planning various local and national news bulletins,” said Pappas. “We will probably have co-productions between Azteca American and TV Azteca.”

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