It's a deal: NBC buys Telemundo

It's a deal: NBC
buys Telemundo

Major boost in race against larger rival Univision

By Elizabeth White

    The Spanish-language colossus that is Univision just got out-colossaled.
    As widely expected, NBC yesterday bought Telemundo, the distant-second Hispanic network, in a move that is expected to have broad implications for the television marketplace.
   NBC has agreed to pay $1.98 billion in cash and stock to acquire the network from Sony and Liberty Media, its principal owners.
   At the least, the deal will further mainstream Hispanic media and programming, putting NBC, the nation's No. 1 English-language network, in a position to offer advertisers packaged deals across the two properties.
    More immediately it will most likely up the pressure for a takeover of Univision, which has also long been the subject of rumors, most recently with CBS parent Viacom the aggressor.
    Most certainly, the deal will provide Telemundo with the resources and clout to finally challenge Univision, both by bringing in new viewers and by strengthening its position with advertisers.
    This last achievement, should it come to pass, would especially delight media buyers, who have rooted for the No. 2 network through innumerable ups and downs over recent years, much as one might pine for a perpetual-underdog baseball team.
    Buyers have long seen the growth of Telemundo, and more recently a handful of emerging Hispanic cable networks, as critical to the emergence of the Hispanic marketplace into the mainstream.
    Diversity is always a sign of vitality, and the feeling was that Univision's sheer size served to discourage innovation, not only on its part but among competitors.
    On a more practical level, a stronger Telemundo would also give buyers negotiating leverage with Univision.
    That would seem sorely needed, with Univision holding four viewers to the one who watches Telemundo.
    In this past upfront, Telemundo sold inventory of between $200 million and $250 million, which represented an increase over the prior year of almost 20 percent. Univision brought in more than twice that, $550 million, representing an increase of 10 percent.
    In the past several years, Telemundo gained market share, largely through improved programming, notably its selection of novelas, the Spanish-language soap operas that had long been the strength of Univision.
    Then in June Univision struck a deal that effectively stole away Telemundo's best novelas, notably "Betty La Fea," which had more than doubled Telemundo’s adult 18-49 rating for its time slot in the February sweeps.
     While Wall Street analysts think NBC paid too much for Telemundo, they are quick to note that the network's underdog status may be among its most attractive qualities. They see it as a growth opportunity in an Hispanic marketplace that is itself growing rapidly, with no sign of easing up in the coming years.
    Hispanics now represent 13 percent of the U.S. population and number 35 million. The most recent census data show that in just the past several years Hispanics have moved from traditional entry cities to spread out across the country. Telemundo reaches nearly 90 percent of that audience.
    In the deal, NBC also picks up 10 TV stations in the nation's top Hispanic markets.

-Elizabeth White is a staff writer for Media Life.

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