NBC, Telemundo spice up hot market

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NBC's acquisition of Telemundo Communications Group makes the No. 2 Spanish-language network a more formidable competitor to Univision, which controls close to 80% of Spanish-language audiences and ad dollars. The deal, with its potential for sharing programming and ad sales, will further heat up the Hispanic market that continues to be the rare media growth spot in a shaky economy.

In the largest deal yet in the Hispanic market, General Electric Co.'s NBC will pay $2.7 billion, including assuming about $700 million in debt. Telemundo's primary owners, Sony Pictures Entertainment and Liberty Media, bought almost 80% of the network for $589 million in 1997.

Jim McNamara, the Telemundo president-CEO who has boosted ratings and ad dollars in the last two years, said he anticipates almost 20% growth in ad sales this year and at least a 20% increase next year.

"You can't get away from the massive growth story in the Hispanic market and how underrepresented it is in the ad market,"' he said. "That gap alone is going to drive our growth rate for five to 15 years."

Mr. McNamara, who speaks flawless Spanish, said at any time 6% to 10% of TVs in America are tuned to either Univision or Telemundo but that only 1% to 2% of ad dollars are going to Hispanic media.

The Hispanic media team of Bcom3 Group's Starcom Worldwide named Mr. McNamara the No. 2 Latin hunk against a bevy of Latino soap opera stars for his lead role in "The ratings desert," a hilarious short film shown in May at the Hispanic upfront market detailing his uphill struggle against Univision for bigger audiences.

Telemundo closed ad sales worth more than $200 million in the Hispanic upfront TV market, up from $170 million last year, said Chief Operating Officer Alan Sokol. Some marketers, including Wendy's International, Doctors Associates' Subway and Unilever's Slim-Fast, will advertise on Spanish-language television this season for the first time.

"NBC's acquisition of Telemundo is recognition of the importance of the Hispanic market in the U.S. advertising scene and the importance the Hispanic consumer has in the overall economy," said Les Margulis, VP-director of communications at the Vidal Partnership, an independent Hispanic agency in New York. "The U.S. media has finally realized this is the only area of advertising where there's a real upside."

Telemundo's prime-time programming is mostly novelas, or soap operas, bought from Latin American broadcasters. The deal offers NBC the chance to grow other programming such as reality shows and news and to benefit from joint sales efforts and network cross-promotion. Bob Wright, GE vice chairman and NBC chairman-CEO, said Telemundo's revenue will total about $400 million this year. NBC, by contrast, had $6.8 billion in revenue last year and $4.2 billion in the first nine months of this year.

Rival Univision is trying to increase its market domination with the January 2002 launch of a second national network, Telefutura, that will target Hispanics, especially men and children, who mainly watch English-language television.

Telemundo's sale leaves Univision a prime target for other U.S. media giants. Merrill Lynch media analyst Jessica Reif Cohen said she doubts a deal for Univision is imminent because the company's share price-about $28, around half its 2000 peak-has held up much better than the hard-hit English-language media that are potential buyers, making a deal expensive. Univision's market capitalization is about $5.9 billion.

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