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Media tune in to ethnic audiences

Forget the Internet for a moment. One of the most intriguing new developments in media is taking place in a part of the industry that many executives used to dismiss as a backwater.

Call it the year of ethnic media, the vast collection of mostly tiny broadcasters, cable channels, newspapers and magazines that target Hispanics, Asians and other audience niches. Advertisers who once deemed ethnic audiences too small, too poor or too old to take seriously are looking at them anew as immigration rates soar.

With minority markets now accounting for nearly a third of U.S. buying power, pitching to these audiences "is no longer the nice thing to do, or the social thing to do. It's about business," says Gwen Kelly, senior ad specialist for American Family Insurance.

Spanish-language media are getting the most attention. The 2000 Census found that 12.5% of the U.S. population of more than 280 million was Hispanic — a bigger market than all of Canada — and projects the share to be nearly 18% by 2020.

Last year, Spanish-language TV's ad sales rose 16.9%, according to Nielsen Monitor-Plus, making it No. 2 in ad market growth after the Internet.

And there's still plenty of running room. Spanish-language media accounted for just 4% of the $106.5 billion advertisers spent on TV, local newspapers and national magazines last year. That's one reason Kagan Research forecasts spending on Hispanic broadcast and cable networks will grow 16.4% a year through 2009, surpassing English-language counterparts' forecast of 9.4% a year.

Such numbers have pushed companies that have successfully appealed to Hispanic audiences to look for opportunities to reach other ethnic groups. Cable and satellite companies in particular are scrambling for deals to retransmit shows from China, South Korea, the United Arab Emirates, Russia, Poland, Greece, Israel, Italy, Vietnam and elsewhere.

Among other factors that could make this ethnic media's breakout year, ad and audience surges in ethnic media are expected in June and July during soccer's quadrennial World Cup championship.

And Wall Street's estimation of ethnic media could rocket depending on the outcome of Univision's current search for a buyer. Investors already value the USA's largest Spanish-language broadcaster — with 62 TV stations on the mainland and in Puerto Rico along with other networks and media properties — at more than $10 billion.

"Despite all of the activity in this market, we're just in the top of the second inning, maybe the bottom of the first," says John Paton, CEO of ImpreMedia, the largest Spanish-language newspaper publisher.

Ad growth has hurdles

Ethnic media still typically can't command the ad rates and revenue that mainstream rivals enjoy.

Many marketers fear their pitches might unwittingly offend people from other cultures. Some demand proof in advance that their efforts to reach diverse audiences will pay off in sales.

"You don't get proof beforehand in the general market, so there's a different paradigm being applied," says Deborah Gray-Young of ad agency E. Morris Communications. "Basically, it's a risk. A lot of times, the marketer doesn't want to invest in the research."

Nielsen Media, which supplies TV ratings, has been criticized for surveying too few people for the company to be able to break out a statistically valid picture of ethnic consumers' habits.

"The media cartel has run a business based on the Ozzie and Harriet general market," says Jo Muse, chairman of ad agency Muse Cordero Chen & Partners.

The situation may be changing, though. Univision and its top competitor, NBC Universal's Telemundo, just signed up to the same Nielsen ratings service that measures all viewers — not just Hispanic ones. That should make it easier for them to compete for ads with mass networks ABC, CBS, Fox and NBC.

In addition, TV stations that appeal to Hispanic and Asian viewers expect good news from Nielsen's new local people meters in use in the nine largest markets. The meters automatically register all year what shows are watched by the people being surveyed — unlike Nielsen's traditional method involving paper diaries filled out by surveyed families during a handful of so-called sweeps months.

Major media more diverse

The major media, meanwhile, continue to expand ethnic appeals:

Cable and satellite. Ethnic programming is emerging as a key battleground. EchoStar and DirecTV each have about a million subscribers who take one or more foreign-language channels — compared with just another million for the entire cable industry.

EchoStar's Dish Network was the first into this market in the mid-1990s. Lacking DirecTV's popular array of NFL games and other sports programming, Dish offered channels for viewers from the Middle East, Greece and Italy.

"It was low-hanging fruit," says Michael Schwimmer, who oversaw EchoStar's international programming until he became CEO of SiTV last year. "Immigrant consumers are starving for entertainment from their home country."

DirecTV began to challenge EchoStar for ethnic viewers after Rupert Murdoch's global News Corp. bought a controlling stake in 2003. He added shows from Puerto Rico, Colombia, Venezuela, Argentina and Peru to the Mexican-oriented service in Spanish. Now DirecTV is beefing up its WorldDirect offerings of shows from Europe, the Middle East and Asia.

"There's been phenomenal growth in the last year and a half," says DirecTV's international programming chief Aaron McNally.

Satellite companies want to exploit an edge they have on cable: A satellite channel for viewers from, say, Bangladesh, can pay off because the channel reaches nearly all U.S. households. A local cable franchise with its limited area, however, might consider it inefficient to commit a channel to such a narrow interest.

"For a long time, Comcast had no Polish programming in Chicago, the largest Polish population outside of Poland," Schwimmer says.

Operator perceptions changed, though, as they realized they'd begun to lose subscribers to satellite. "Those (ethnic) customers were going to satellite before, and we didn't even know it," says Cox Communications President Patrick Esser. "Now they come to us."

Many have added offerings and rethought rates.

"A lot of (cable operators) overpriced their ethnic packages," says Kagan Research's Deana Myers. "But they're getting on board now."

Video on demand, which satellite can't easily provide, also gives cable a place for ethnic programming.

In a few years, "We'll be able to offer everything the satellite guys do, and then some," says David Jensen, who handles international programming at Comcast.

The No. 1 cable operator also is also making sure it has channels: A subsidiary, International Networks, is developing ethnic services such as AZN Television, a channel for Asian-Americans that has been beefed up.

Yet cable may soon face competition from video over broadband — a popular service among immigrants already using low-cost broadband phone services such as Vonage and Skype to call home.

"Existing ethnic media delivery vehicles try to be all things to a lot of people," says Kaleil Isaza Tuzman of JumpTV, which offers overseas channels through the Internet. "The next level in TV is specificity. Why would I watch anything but exactly what I want?"

Print. New money is moving into the oldest medium to serve immigrants, making it more competitive and professional.

Over the last two years, ImpreMedia, backed by private investment firms, has snapped up seven of the USA's top Spanish-language newspapers — including New York's El Diario, Los Angeles' La Opinion and Chicago's La Raza — giving national advertisers an easy way to buy space in all the dailies.

With one order, "Best Buy can hit our five key markets, which represent 37% of the Hispanic population," says Paton. "That's something they couldn't do before."

Mainstream newspaper chains also have moved in. In the USA's three biggest cities, ImpreMedia competes with Tribune, which since 2003 expanded its New York-based daily Hoy to Chicago and Los Angeles.

Meanwhile, the Texas market is turning into a slugfest. For example, in Dallas/Fort Worth, Belo's Al Dia faces Knight Ridder's Diario La Estrella. Now they and other Spanish-language publications in Texas face a new chain of dailies called Rumbo from Meximerica Media, a company formed in 2003 with backing from private investors and a subsidiary of Pearson Group.

Big magazine publishers also are jumping. For example, last year Meredith launched Siempre Mujer (always woman). ESPN introduced a Spanish edition of ESPN The Magazine while Time Inc. scored SI Latino.

Broadcast TV. Ethnic programming is one of the few bright spots in this struggling business.

Univision says it attracted its highest ratings ever in 2005 and that ad revenue has leapt 44% since 2000, while the rest of the industry was up just 7%.

"It's an accelerating process, and it feels like we're at a tipping point where it's almost impossible for clients to ignore this audience," says Univision's Network Sales President Tom McGarrity.

Telemundo also boasts that in January and February it had its highest ratings in its target audience of adults younger than 50.

Univision says that 55% of Hispanics 18 to 49 now watch Spanish-language TV in prime time, up from 47% in 2001.

Meanwhile, the two most prominent TV stations with Asian programming, San Francisco's KTSF and Los Angeles' KCSI, frequently beat local rivals that air mainstream network shows.

That's why some executives expect a lot more ethnic channels as stations switch from analog to digital transmissions, which will allow each station to broadcast as many as six signals in its channel's airspace.

"Soon there'll be multiple streaming, and they can target specific audiences," says Ernest Bromley, CEO of ad agency Bromley Communications. "I can see a day when a station in Los Angeles would have four channels. One would be in Spanish. One would be in Korean. And so on."


David Lieberman, USA TODAY. April 7, 2006

Copyright © 2006 USA TODAY, a division of Gannett Co. Inc.. All rights reserved.