Azteca takes bite of Hispanic market

Pappas Telecasting fails to raise coin to purchase stations

MEXICO CITY — Azteca America is undergoing a radical shake-up in its ownership structure with Mexican web TV Azteca to take a 100% stake in the fledgling U.S. Spanish-lingo network.

The move follows the failure of Pappas Telecasting to raise the coin needed to purchase a string of local stations covering the US’s Latino markets.

It also reflects TV Azteca’s increasing confidence in its ability to snatch a major slice of the exploding Hispanic advertising market north of the Rio Grande, now worth more than US$1.5 billion a year.

TV Azteca will now own the network and may take a stake of up to 25%, the legal limit for foreign companies, in local affiliates. Revenues will be split 50-50 between the web and the stations.

Previously, Pappas, the US’s largest chain of private TV stations, was to purchase the stations and own 80% of Azteca America, with TV Azteca holding the rest and providing content.

“While our ownership structure is somewhat different than originally planned, the economics are essentially comparable, with a better alignment of interests.,” said Pedro Padilla, TV Azteca’s new CEO.

Despite plans to launch in the second quarter of this year with signals reaching 45% of the US’s 33 million Hispanics, rising to 65% by 2002, Azteca America so far has only one station running, KAZA-TV Channel 54 in Los Angeles, covering some 20% of the national Latino market.

Currently, that market is 85% dominated by Univision, whose main content supplier is Televisa, Mexico’s number one web and with roughly 75% audience share here, with TV Azteca taking almost all of the rest.

“This is a much more attractive proposition for TV Azteca,” said JP Morgan’s Jean-Charles Lemardeley. “They may feel the need to produce dedicated programming for markets like Miami, which is more Cuban and Puerto Rican than Mexican, but essentially they will be increasing revenues while not taking on more costs.”

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