Mexico's media companies are looking north of the border, where almost two-thirds of the 40 million U.S. Hispanics are of Mexican descent, for expansion.
"We hope San Antonio is just the first step," said Jorge Melendez, VP-new media at Grupo Reforma. His company has researched U.S. cities and visited leading U.S. newspapers in half a dozen cities with large Mexican-American populations, such as Los Angeles, San Francisco, Chicago, Houston and Dallas. (New York has more Puerto Ricans and Dominicans, and Miami more Cubans). "From our side, we're ready to go," he said. "The newspapers have to make a commitment."
Inspired by Univision
Reforma has been inspired by the example of Univision Communications, the leading U.S. Spanish-language network, whose success is based at least in part on heavy reliance on Mexican TV programming imported from Mexico City-based media giant Grupo Televisa.
"Univision made it click for us," he said. "Our thinking is that Univision, by strategy or luck, realized a good chunk of the Hispanic population has close ties to Mexico, and they're like a Mexican network in the U.S. We said, 'Why can't we do something similar for print?'"
Mr. Melendez's target is Hispanics with close ties to Mexico, who return every year to visit and send a total of $20 billion a year in remittances to their home country. Reforma's first U.S. partner is Hearst's San Antonio Express-News. The 25,000-circulation free newspaper launching this week is called Cancha (Spanish for soccer field), named after Reforma's sports sections in Mexico. In the U.S., Cancha's content will be about 60% sports coverage, and the rest will be news and entertainment from Reforma's nine newspapers in Mexico, where the group has a daily circulation of more than 1 million.
Spanish-language titles have suffered setbacks recently. Meximerica Media ambitiously launched paid Spanish-language dailies called Rumbo in four Texas cities over the last two years, but has been forced to close one and convert the other three to free distribution, cutting frequency from five days a week to three.
Mr. Melendez and Sergio Salinas, exec VP-general manager of the San Antonio Express-News, aren't discouraged. "Rumbo were the new kids on the block," Mr. Salinas said. "They started from ground zero, and their costs were so high."
Cancha will use content from Reforma's Mexican papers, and plug into the Express-News' sales force. In a city that is more than 60% Hispanic, about 182,000 of San Antonio's 850,000 Hispanics fit Cancha's targeted readership of 18- to 54-year-old Spanish-speakers who go to Mexico frequently, Mr. Salinas said. Another 300,000 to 350,000 are English-speakers, and the remaining Hispanic population is bilingual and bicultural, he said. Dovetailing nicely with Cancha, the Express-News already has a paper for English-speaking and bilingual Hispanics, 2-year-old free weekly Conexion.
"That's two solutions and two audiences we can offer advertisers," Mr. Salinas said. "It's good segmentation."
He said Conexion, with a circulation of 50,000, attracts mainly big-box advertisers, such as Best Buy, Sears Roebuck & Co., Macy's, Office Max and Home Depot. Despite an initial misstep of trying to charge for Conexion, then quickly switching to free distribution, Mr. Salinas said the paper has been profitable from the start. Ad rates for Cancha, priced 40% lower, are pegged more to small retailers, although the U.S. Army has signed up to advertise, he said.
"If you don't have a Hispanic strategy," Mr. Melendez said, "you're leaving all the advertising dollars to Univision."