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Hispanic radio is suddenly melting the top slots in the biggest cities and winning increased ad dollars, but stations serving the community still face major hurdles such as "no Hispanic" dictates.

"It's been a fantastic year for network radio," says Tony Hernandez, president of three-year-old radio network Cadena Caracol.

Cadena Caracol's ad sales for the first half of this year increased 50% over 1997 revenues, with strength coming from more spending by American Airlines, Continental Airlines, Sears, Roebuck & Co. and J.C. Penney Co. Others also report bigger budgets from telecommunications companies AT&T Corp., MCI Communications Corp. and Southwestern Bell.


Though Wal-Mart Stores has been marketing to Hispanic consumers for years, it entered radio for the first time this year.

NationsBank, in the market for five years, is spending more in Hispanic radio this year than in other media.

According to Maria Alonso, national Hispanic marketing manager for NationsBank, the medium allows the bank to "target better, especially with a streamlined media budget. It's a very well-developed medium."

Alex Negrete, president of ad agency Lopez Negrete, Houston, says: "The industry as a whole has grown dramatically, but are we where we need to be? No. When I opened my agency in the '80s, no one in the ad community covered anything Hispanic."

Despite increasing awareness, many were shocked last spring when an internal memo at the Amcasts division of major sales rep Katz Radio Group became public -- it discouraged buying media on too many ethnic stations because "advertisers should want prospects, not suspects."


While Hispanic radio industry executives cite consistently good marketers -- Albertson's, American Honda Motor Co., Coca-Cola Co., McDonald's Corp., NationsBank, Pepsi-Cola Co., Sears and Wal-Mart -- weak categories remain, perhaps in part due to a lack of understanding of the market. Computer products, cosmetics, gasoline retailers and apparel are often mentioned as missing altogether.

Like many in the industry, Radio Unica's Joaquin Blaya can rattle off daunting statistics about the market: the U.S. Hispanic population is roughly equal to Canada's total population; Hispanics represent 11% of the U.S. population and 7% of consumer spending but just 1% of media budgets. Many say budgets should be between 8% to 12% to reflect the population.

Still, Mr. Unica says radio is winning 27% share of all Hispanic media spending, compared to about 8% that radio usually gets of all mainstream media dollars. Mr. Unica led both major U.S. Hispanic TV networks, Telemundo Group and Univision Communications, as president before launching Radio Unica at the end of last year.


Also educating the advertising industry about the Hispanic market is Carey Davis, general manager of Spanish Broadcasting Systems' WSKQ-FM and WPAT-FM in New York.

"We're nailing this `no Hispanic' dictate" some advertisers have, he says. "We've gotten good results just by going in and saying `This has got to stop.' "

But on his first day at the station more than a year ago, Mr. Carey and a Dominican sales associate sat in the office of "one of the most important ad buyers in New York who said, `I think Dominicans should be sent back.' " he says. "My jaw dropped."

The Katz memo may have been a blessing in disguise. At the end of July, WSKQ landed new business from Matsushita Electrical Industrial Corp., Kraft Foods' Maxwell House and Macy's, which never advertised on Hispanic radio before.

Also, pressure on local banks to open facilities in ethnic neighborhoods has paid dividends to the station -- eight banks now advertise, compared to one last year.

"I don't think it's any grand conspiracy; it's an ongoing education," says Mr. Carey.

The fact that Hispanic radio is gaining ground and ratings is making things easier. New Yorkers are solidly tuning into the tropical salsa and merengue mix of No. 1-ranked WSKQ-FM. And for years in Los Angeles -- the country's largest radio market -- Spanish stations have been hot.

The No. 1 and 2 stations there now are Hispanic-focused romantica and regional Mexican music formats on KLVE-FM and KSCA-FM.


For the first time, radio ratings giant Arbitron Co. this summer began to regularly measure Puerto Rico -- automatically providing the island's regular data to major U.S. ad agencies. Puerto Rico becomes the No. 11 U.S. measured radio market and second-largest Hispanic market, though consumers there think of themselves as different from mainland Hispanics.

"When I got into this business 15 years ago, I couldn't imagine a Hispanic station hitting No. 1 in New York or LA," says Caracol's Mr. Hernandez. "It's fabulous to see."

Previously VP-general manager of cable channel ESPN/Latin America, Mr. Hernandez leveraged his contacts and knowledge to bring professional sports to Spanish-language radio. News-talk-sports Caracol's 87 affiliates have Major League Baseball, National Football League, the National Basketball Association and Major League Soccer.

The one thing they didn't land rights to broadcast the World Cup.

Mr. Blaya -- who views competitor Radio Unica as the "third national advertising platform" after the two TV networks -- got those rights.

"We used the World Cup as a platform to launch," he says.

Mr. Blaya founded the 24-hour network, with 17 hours of original programming daily, after concluding there was a dearth of news-talk-sports radio -- the No. 1 format in both the U.S. and Mexico -- in Spanish. Unica now runs on 47 affiliates (eight owned stations) and hits about 83% of the Hispanic marketplace.

"We're the Univision of radio," he says, noting clients such as AT&T, Barton Beers' Corona beer, Century 21 Real Estate Corp., Procter & Gamble Co.'s Tide and First Data Corp.'s MoneyGram.

The concept of a national radio network is somewhat controversial, as many believe the diversity of Hispanic cultures -- Cuban, Domincan, Mexican, Puerto Rican and others -- is too great to unify.

"I've been hearing that for 30 years," counters Mr. Blaya. "Good programming works and bad programming doesn't. When I was building Univision, we proved that it did work," citing hosts from Chile, Cuba and other countries.

Yet Cadena Caracol's Mr. Hernandez says, "We're a people divided by a common language and if you try to mix too much it's like a feathered fish -- it can't swim and it can't fly. Telemundo and Univision are successful for no other reason but a tremendous lack of competition in TV; but we have over 15 Spanish-language stations in Miami."

Either way, Spanish radio is gaining a foothold in the U.S.

Mr. Negrete, who moved from Mexico in the 1980s, recalls that back then "everybody was talking about assimilation of Hispanics. But being Latino is easier now -- today we incorporate our lifestyle and habits, we don't have to dispose of our culture and language."

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