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for Azteca America
Out-foxed by rivals, it must build market by market
By Gabriel Spitzer
Eighteen months ago, Mexican television giant TV Azteca let it be known that it was launching a Spanish-language network in the U.S.
It might have done better to have kept mum a bit longer.
Rivals Univision and Telemundo moved quickly, grabbing up stations Azteca was eyeing to fill out its network.
When Azteca finally launched last July, it did so with just one station, in Los Angeles.
Since then it has added three more stations, and is seeing encouraging ratings for Los Angeles, but Azteca America is still not a network in any real sense, let alone in a position to become the U.S.'s No. 2 Hispanic network.
What it will become is very much unclear. What is clear is that it will take a lot longer to get there.
"They were pretty much saying, we’re going to have coverage in all these markets and we’re going to be a network. And now the bottom is falling out of that strategy," says Jessica Pantanini, chief strategy officer at Tapestry, a San Antonio-based agency specializing in Hispanic media.
"It’s hard to jump from saying ‘we’re a network’ to ‘we’re a spot station in LA.’ Really, what you’re talking about is an independent station."
In addition to Los Angeles, Azteca America has stations in Houston, San Francisco and Reno, Nev., all owned by Azteca America's half-parent company, Pappas Telecasting. Pappas has stations in 14 other markets, and may soon convert several of them to Azteca America.
The new stations extend Azteca America’s coverage to 28 percent of the Spanish-speaking TV market—still not enough to be considered for network ad buys, media buyers say.
"To be a network you’ve got to cover a certain percentage of the target audience, maybe 50 to 70 percent of the national audience," says Hector Orci, co-chair of La Agencia de Orci in Los Angeles.
Making things even tougher for Azteca America is that both Univision and Telemundo have launched sibling networks since Azteca America went live six months ago. Univision’s offspring, Telefutura, launched Monday with the avowed goal of creating a Univision duopoly at the top of the Hispanic TV heap.
That will make it even harder for Azteca America to carve out its own identity.
"As a media person, I don’t believe they’ve distinguished themselves," says Cindy Gough, senior partner and director of Hispanic marketing at Mindshare.
"That is going to be difficult to do. If you look at Univision, it can cross-promote both its networks. Azteca America doesn’t have that advantage, so it has to go outside to help develop its market. Programming-wise, you just hope that people find you on the dial and that they happen to be Nielsen families."
In Los Angeles, it seems that people have been finding KAZA, the Pappas station that broadcasts Azteca America programming. KAZA had a decent sweeps period in November, frequently reaching high-single-digit shares of the Spanish-speaking audience.
What makes that performance impressive is that KAZA did it while reaching only about 23 percent of cable households in Los Angeles. Since then, it has expanded into 86 percent of them, and the network expects to reach full coverage in early 2002.
"Where they are on the air, they are doing really well. The numbers indicate that they have a possibility of competing for the No. 2 slot behind Univision," says Orci.
"They’ve got the programming. There is room in the market for more Spanish-language services. What we know about Latinos is that they’re not stuck to Univision, and they’re not stuck to Telemundo. I expect them to make inroads."
The key for Azteca America may be not to pretend that it is a network and to concentrate on its existing stations.
"If they were to ask me, I d recommend they get strong in individual markets and increase revenue so they can invest back into a network proposition. If they start to expand too quickly, they’re not going to be viable," says Pantanini.
"I don’t know how much promotional money is being spent in each individual market, but that’s going to be important to them. They’ve got a lot of work to do."
In fact, in a release at the end of sweeps, Azteca America stated with some pride: "These results have been accomplished without any off-air advertisements having been purchased by KAZA-TV; promotions have consisted strictly of on-air announcements."
Such cost-cutting seems to have enabled Azteca America and Pappas to be flexible on ad pricing.
"They are competitive. And they’re responsive on rates," says Orci.
The one major factor Azteca America has going for it is demographics. Figures from the last census demonstrate that the Spanish-speaking television audience is only going to increase in the near future. And, by now, every advertiser and marketer in the country knows it.
Further, it seems that Spanish-speaking viewers are amenable to change, so Univision ought not to get too comfy.
"Latinos are great on word of mouth," says Orci. "Latinos are great on switching channels and sampling. This is a very experimental community, because many of us are experimenting just by being here."
January 17, 2002 © 2002 Media Life
-Gabriel Spitzer is a staff writer for Media Life.
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