Telemundo’s new destiny

Fresh from bankruptcy, Miami-based Telemundo Group Inc., the nation’s second-largest Spanish-language network, is hoping that newly appointed can revive the faltering station and create an essential ratings boost.

Last week Hernandez – a director since 1989 and one of the network’s largest shareholders – replaced former president/CEO Joaquin Blaya, who for now remains a consultant.

“Blaya’s departure was initiated by the board,” says a source close to the network. “Obviously, he walked in and resigned, otherwise he would have been left with less leverage in the settlement of (his) contract.” Before Blaya left Telemundo, he reportedly tried to get the board to relinquish control and allow him to bring in his own group. He could not be reached for comment.

Before joining Telemundo six years ago, Hernandez helped launch a Dallas-Fort Worth television station, which became a Telemundo affiliate in 1988. “We’re looking to remake Telemundo,” he says. “Financially, we’re well-positioned to spend what’s necessary to make the network more competitive.” At press time, he would not reveal 1994 revenues. Revenues for 1993 were $178 million.

He says network changes will include a revamped program lineup to be implemented within the next eight weeks. This will include three hours of programming produced weekdays in Los Angeles – a departure from the network’s traditional Miami-based production.

“We’ll probably be more able to efficiently reach a wider audience,” he says. “Certainly the Mexican population represents a major part of our audience, and the production from Los Angeles will play well into that audience.” He says new programming will include an entertainment/gameshow scheduled to broadcast live from Los Angeles at 7 p.m. Pacific time, 9 p.m. Central and 10 p.m. Eastern. “This is revolutionary, because historically we’ve tried to keep time-slots uniform,” Hernandez says.

Telemundo’s nemesis has been Univision’s monopoly on Mexican programming, particularly in the popular telenovela arena. Since Univision’s purchase in 1992 by Mexico’s Grupo Televisa SA and Venezuela’s Venevision, it has cornered the market. After an unsuccessful attempt at original programming, Blaya had tried to mirror what Univision had been doing for years: import low-cost shows from foreign producers.

Blaya also signed co-production deals with TV Azteca, Mexico’s No.2 television network, to produce dramas, and with Multivision of Mexico for 52 made for TV movies, scheduled to debut in June. A source close to the network says that, since the shakeup, the TV Azteca deal has been stalled but that Multivision is still a go.

Word is that, shortly before Blaya’s resignation, he had been talking with Televisa’s Protele about buying three telenovelas, all conceivably headed for Univision. “Televisa ran into significant problems over the last couple of months because of the drop in the peso… They were contributing 90% of programming and only getting about 24% of the profit because of FCC regulations,” a source says. “Blaya was excited about these deals, but they were not approved. Blaya said it seemed the board would rather re-run existing programming than spend money on new shows.”

Hernandez says Telemundo is still interested in buying from Latin American programmers. “We’re talking to the large Latin American producers… Venevision, RCTV, some independent producers… And I’d love to purchase from Televisa. I’m looking forward to starting a relationship with them.”

Under Blaya’s leadership, Telemundo also launched Telenoticias, a 24-hour news channel, in December. The channel is a joint venture between Telemundo and Reuters Holdings PLC. Each own 42%; with 8% owned by broadcast network Artear (Canal 13), a subsidiary of Argentina-based Clarin, and Antena 3 in Spain, which owns the other 8%. The channel reaches nearly 13 billion homes – 2.1 million via cable – across Latin America.

And time will tell if Hernandez can provide a boost to Telemundo. It’s been a rocky few years for the network: A request for protection under Chapter 11 was approved by the U.S. Bankruptcy Court in New York in July 1993. The network emerged from reorganization last December with outstanding debt slashed from $300 million to $117 million. As part of its retooling, the network had downsized its advertising budget, laid off 80 employees last September, and closed its international sales office.

Despite cuts, cash flow has remained flat for the past six months, according to Richard J. Makoujy Jr., an equity analyst with New York-based B.D. S. Securities Group. “I would not be surprised if at some point, Telemundo entered into a joint venture or was acquired by a larger entity with deeper pockets to enhance programming.”

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