Univision split vision

Net grapples with disconnect between ratings and dollars

Univision, the nation’s dominant Spanish-language net, handily beats UPN and the WB in the ratings. And when the dust clears on the merger of the two netlets, it may be Univision, not the CW, that calls itself “America’s Fifth Network.”

Univision has long claimed it competes with — and often beats — the English-language nets, especially in the young 18-34 demo.

Those feats, however, haven’t always been taken seriously because the net wasn’t measured by the same Nielsen sample as CBS, ABC, NBC and Fox.

But as of January, Univision converted from Nielsen’s Hispanic Television Index (NHTI) to the NTI, or the National Television Sample, in a bid to go head-to-head with the English-language nets in advance of the upfront ad selling season in May.

“In other years, whenever we were compared, it was with the NHTI and there was always an asterisk and people looked at it with a discounted attitude,” says Tom McGarrity, Univision sales co-prexy.

Indeed, one media buyer says the lingering suspicion was that the math behind Univision’s numbers was sketchy and the model never very exact.

But now the numbers show that Univision consistently beats at least one of the Big Four networks in 18-34 and is a solid fifth place in 18-49.

So, the question is: When will Univision be taken seriously?

Next month’s upfront could be crucial since it will demonstrate whether Madison Avenue gives the Hispanic heavyweight the dollars its ratings suggest it deserves.

The Hispanic market is still perceived as a niche, and if an ad budget isn’t ear-marked for Spanish language, it’s probably going elsewhere.

“No one downplays the Hispanic market; it’s huge,” says advertising analyst Joe Mandese. “The question is how do you reach them?”

The challenge for Univision is to dispel confusion over just who among Hispanics is likely to watch what these days. After all, the Big Four are mounting their own English-lingo telenovelas, and Hispanic rival Telemundo is betting on more contempo sudsers to lure the younger Spanish-speakers.All of Univision’s TV networks — including Telefutura and Galavision — took in $1.3 billion in ad revs last year, a total expected to grow 11% in 2006. The overall TV ad spend is expected to be flat or slightly down from last year.

But even with flat budgets from advertisers, the collapse of UPN and the WB into one net will reduce ad inventory and add a few hundred million dollars looking for ad spots.

“There is going to be a lot of money in play this year; of that, some will shift to young-skewing cable and the Spanish-language nets,” says Carat director of national broadcast Andy Donchin. Univision “could grow its share a little.”

Hispanics represent 14% of the U.S. population but Spanish-language media only accounted for 2.9% of the U.S. ad market in 2005, according to TNS Media Intelligence.

Hispanics represent 6.5% of all TV viewing, but are targeted with 3% of all TV dollars. That gap reps hundreds of millions in lost sales for the Spanish-language nets.

Of the top 300 TV advertisers, only 175 buy time on Univision.

Take away the World Cup and Univision made about as much as the WB in last year’s network upfronts, with several tenths of a ratings point more viewers. While it gets equivalent ad rates for primetime, other dayparts lag 20% behind the English-language nets.

Why? Some believe they can reach the Hispanics they want through English-language TV. That’s reflected in English-language ads with Hispanic-oriented creative.

The Univision sales force is formidable in its deals with endemic advertisers — for whom reaching Hispanics is central to their business — but less competent at luring blue-chip advertisers who might not view it as a requirement, or may have not even created Spanish-language ads.

Univision hasn’t been able to crack big pharma or financial services in any significant way, but many categories that don’t buy Spanish-language media still market to Hispanics through English-language outlets. Fast-food, soft drinks and automakers are increasingly casting Hispanics in their English-language ads because they know that especially on young-skewing Fox or UPN, they’re getting plenty of Hispanics, too.

“The younger you go in age the quicker they are acculturated into the mainstream,” says Roberto Garcia, director of Hispanic marketing for Cingular Wireless. “It’s typical for a young Hispanic, whether second or recent arrival to be watching ‘The Simpsons,’ ‘Friends,’ the WB, UPN or Fox.”

The flip side of that is there are plenty of English-speaking Hispanics who prefer Univision’s Mexican-style novelas or who live in households where the parents control the television.

“Our ratings for bilingual viewers are just as high as those for Hispanics in general,” says Univision’s director of research Deborah Shinnick.

In any case, Univision wants to capitalize on the moment.

Founder and controlling shareholder A. Jerrold Perenchio, 75, is looking for an exit strategy, and has finally put the company on the block for a whopping $13 billion.

hough its dominance of the Hispanic market is attractive, Univision is a broadcast business with little control over its most popular programming, the primetime telenovelas produced and owned by Mexican broadcaster Televisa.

Just about every media conglom — not to mention private equity groups — has kicked the tires on the company, but because of its 11% stake and content licensing deal, Televisa and its 37-year-old CEO Emilio Azcarraga Jean, is the linchpin to any potential deal.

Several private equity groups are courting Televisa to get it to join a consortium. Complicating matters, Univision and Televisa have sued each other over the terms of their content deal, with the latter wanting a richer share of the profits.

Univision’s market price reflects a near $40 a share valuation, a 20% premium over analyst estimates of its worth, but analysts expect a successful bid could come between $37 and $38 a share, unless Televisa decides to put the squeeze on Perenchio, in which case Univision may come off the block as quickly as it went on.