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Univision Sparks Heated Debate In Two Languages


June 22, 2003
Copyright © 2003
THE MIAMI HERALD. All rights reserved. 

It would be as if NBC had taken over the nation's biggest radio network, a major record label and a huge cable channel.

That would be the situation facing the Spanish media audience were Univisión, the nation's largest Spanish-language media company, to acquire Hispanic Broadcasting Corp., the country's biggest Spanish-language radio network.

The Federal Communications Commission is expected to rule on the $2.8 billion deal in the next several weeks. But it's already generating a vociferous debate among Hispanics and some of Washington's most powerful politicians. In recent weeks, it has spawned a volley of full-page ads both pro and con in major newspapers like The New York Times and The Washington Post. Lawmakers and Hispanic groups are flooding the FCC with missives.

Critics charge that the merger would create a monolith that would dominate Hispanic media and entertainment, commanding 67 percent of the $3 billion-plus Hispanic advertising market.

''We are addressing a very dangerous merger that has the potential of controlling what most Hispanics see and buy and think in terms of music and television and radio, and I would definitely describe it as a monopoly,'' says Ilan Stavans, a professor of Latin American and Latino culture at Amherst College in Amherst, Mass.

Supporters say the merger would help bring the Hispanic media market on even footing with the nation's media conglomerates.

''We need to have the same abilities to compete as Viacom and the other big English-language media companies, which have radio and TV and can approach advertisers with all those properties,'' says Ray Rodríguez, president and chief operating officer of Univisión's television division. ``Why shouldn't a Hispanic company be able to do what the large English-language companies have been able to do?''

FCC officials would not comment on the merger. But those watching say a key issue is whether the Spanish-language media market is separate from the English-language market. In a 1995 ruling on HBC's purchase of four radio stations, the FCC said language did not define a separate market.

But the attention focused on this deal -- and with Hispanics the nation's largest minority group, at 38.8 million -- may force the FCC to look at the issue again, experts say.

Univisión is already a giant in its field. It includes the Univisión Network, which has an 80 percent share of Hispanic TV viewership; the Telefutura Network, launched last year to reach younger viewers; 52 television stations; Galavision, a top-rated Spanish-language cable channel; Univisión Music Group, a major Latin record label; and Univisión Online, a top Internet site.

Enter HBC, which it agreed to acquire last June in an all-stock deal currently valued at $2.8 billion. (Univisión would have to reduce its 27 percent share of Entravision, the country's third-largest Latin radio chain, to 10 percent if the deal goes through.)

HBC owns 66 stations in 15 of the top 20 Hispanic markets, including four in South Florida, WRTO 98.3 FM, WAMR 107.5 FM, WAQI 710 AM and WQBA 1140 AM. It controlled 51 percent of Spanish-language radio revenue in the top 10 markets in 2002, according to BIA, a media financial-analysis firm.

The new company would dwarf its closest competitors, Telemundo, which is owned by NBC and has only 20 percent of the Spanish-TV audience, and the Miami-based Spanish Broadcasting Systems, which has 27 stations in seven of the top 10 Hispanic markets, including Puerto Rico.

Executives at Univisión and HBC note that while Univisión may dominate the Hispanic market, it garners only about 5 percent of total U.S. TV viewership and 2 1Ú2 percent of total ad spending.

''If you look at the top 300 advertisers in the country, only a little more than a third are advertising on us or any of our competitors,'' said Mac Tichenor, chairman, president and CEO of HBC.

Financial analysts agree.

''If you can have large media conglomerates in English, why can't you have them in Spanish as well?'' asks David Joyce, a research analyst with Guzman & Co.


Competitors counter that Univisión is claiming to boost Hispanic competitiveness to bolster its own fortunes.

''For almost a year, they haven't been able to point to some public benefit by this merger, other than to say they will be able to increase Spanish advertising revenues,'' says Raúl Alarcón, chairman, president and CEO of SBS. ``Increase them for whom? They're just trying to grab more market share.''

The question of whether Spanish constitutes a separate market will be key to the FCC's decision. Univisión says you can't separate the two markets.

''Hispanics do watch English TV and English radio,'' Rodríguez said. ``There is no separate Hispanic market, because everybody in media tries to get dollars to reach Hispanics.''

In its pitches to Wall Street and to advertisers, however, Univisión plugs Spanish-language TV's superior ability to reach Hispanics. Univisión's president of entertainment, Mario Rodríguez, told Television Week that ``Hispanics choose Spanish-language television over general-market TV every hour of every day of the year.''


Studies have shown that advertising in Spanish is significantly more effective in reaching Hispanics than English.

''Univisión has built its position by saying it's a unique market, and now, for regulatory purposes, they're saying they're not,'' says Robert Suro, director of the Pew Hispanic Center.

Language also limits Hispanics' viewing choices. A 2002 survey by the Tomas Rivera Policy Institute found that a quarter of U.S. Hispanics watch television exclusively or primarily in Spanish while 50 percent watch TV in Spanish half the time.

Yet only two major U.S. Spanish-language news networks exist, compared with more than half-a-dozen English-language news outlets.

''Isn't the Hispanic community, as is the community at large, better off when there is fierce competition for their viewership or listening pleasure?'' says Rep. Robert Menendez, D-N.J., and chairman of the House Democratic Caucus.

``Whether it's mainstream consolidation or consolidation in Hispanic broadcasting, we're talking about less Hispanic ownership.''

Menendez, like many critics of the deal, is concerned that the big players running Univisión are not Hispanic.

Jerrold Perenchio, Univisión's chairman and chief executive officer, and Tichenor, HBC's CEO, are non-Hispanic. Four of Univisión's seven board members and four of HBC's five board members are non-Hispanic.

Univisión says 80 percent of its employees are Hispanic, including the heads of its television, music and Internet divisions. One-third of HBC's general managers and nearly all its program directors are Hispanic, the company says.


The debate has spilled over into the Hispanic community.

Figures like New Mexico Democratic Gov. Bill Richardson and Hispanic advocacy groups like the National Council of La Raza say Univisión is being singled out because of its Hispanic roots. (Richardson received $150,000 from Perenchio for his 2002 election campaign.)

''Politicians are . . . saying we can't have such a big Spanish-language entity,'' says Alex Nogales, head of the nonprofit Hispanic Media Council. ``A lot of people who are critics of this merger have never gone after English-language networks in terms of diversity.''

Politicians, too, are stepping in. Senate Majority Leader Bill Frist, R-Tenn., is the most prominent among mostly Republican supporters, who include Florida representatives Lincoln Diaz-Balart and Ileana Ros-Lehtinen.

On the Democratic side, Senators Hillary Rodham Clinton and Edward Kennedy and Senate Minority Leader Tom Daschle are among those who have critiqued the deal.

Republicans accuse critics of politicizing a business transaction and trying to relegate Hispanics to a smaller, separate market.

''Creating a separate Hispanic market to limit the growth and competitive capabilities of broadcasters who choose to serve Hispanics is nothing more than regulatory gerrymandering,'' wrote Congressmen Henry Bonilla, R-Texas, and Patrick Toomey, R-Pa., to the FCC.

Blair Levin, a former chief of staff at the FCC who is a financial analyst with Legg Mason, predicts the FCC will approve the deal along the same 3-2 split that cinched the change in media-ownership rules this month.

''My understanding is that the FCC staff has recommended to the commissioners that there is not a separate Spanish-language market,'' he said, ``and I believe there are three commissioners who generally believe that is right.''

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