BREAKINGVIEWS-Murdoch banks on U.S. Latinos going all-American

Tue Aug 14, 2012 8:26pm IST

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(The author is a Reuters Breakingviews columnist. The opinions expressed are his own.)

By Raul Gallegos

NEW YORK, Aug 14 (Reuters Breakingviews) - Rupert Murdoch is banking on U.S. Latinos going all-American. News Corp’s (NWSA.O) new MundoFox, a Spanish-language joint venture with Colombia’s RCN Television TRR.CN, should have little trouble piquing the interest of America’s fastest-growing minority with the Latin American country’s television soap operas. Throwing in U.S.-style programs is the novelty – and could define how much market share News Corp can grab.

Murdoch knows he needs something different. Giant broadcaster Univision dominates America’s Spanish-language TV market on the strength of Mexican soap operas popular with the older generation. MundoFox’s plan to combine soaps with edgier Colombian series will probably please younger Latinos. Dubbed News Corp content, like the animated “American Dad,” adds another layer to the offering.

Changing demographics should justify more sophisticated programming. Hispanics made up 16.3 percent of the U.S. population in 2010, according to the census that year, but could reach 22 percent by 2030. Yet in a sluggish economy new immigration is likely to slow. That means the bulk of near-term population growth will come from bilingual second and third-generation Latinos who grew up watching HBO.

What’s more, ad revenue has room to grow. Nielsen reckons advertising dollars topped $5.7 billion for all U.S. Spanish-language media in 2011, with $2.2 billion of that spent on TV ads. Yet a mere 4 percent of U.S. advertising targeted Hispanics last year, Moody’s reckons. That’s modest considering the community’s $1 trillion of annual spending power is about a tenth of the U.S. total, according to the research firm. Broadcasters also sell ads for as much as a 30 percent discount to English-language ones, based on Moody’s estimates, a gap that has the potential to narrow.

More than half the 120 advertisers that buy time on News Corp’s Hispanic-targeted Fox Deportes, Utilisima and Nat Geo Mundo are already on board with MundoFox, which launched across the United States on Monday. That will help the company toward its goal of capturing 2 percent of Hispanic TV ad dollars in the new channel’s first year. And Univision, under a heavy debt burden since a 2007 leveraged buyout, isn’t the most flexible of competitors. The timing of Murdoch’s latest effort to outfox a larger rival looks characteristically canny.

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CONTEXT NEWS

- MundoFox, News Corp’s Spanish-language TV joint venture with Colombia’s RCN Television, launched in 50 cities across the United States on Aug. 13.

- The network plans to offer viewers RCN’s soap opera programming during the day but will emphasize American-style television geared for a Spanish-speaking audience. This will include dubbing some Fox content into Spanish, including the animated show “American Dad.”

- MundoFox will compete with market leader Univision and the smaller Telemundo for an audience estimated by the U.S. 2010 census at 51 million people, or 16.3 percent of the population.

- The American Hispanic community has purchasing power estimated at $1 trillion, potentially rising to nearly $1.5 trillion by 2015, according to Moody’s. Spanish-language broadcasters compete for a portion of an overall $5.7 billion Spanish-language in advertising spending, according to Nielsen.

- For previous columns by the author, Reuters customers can click on [GALLEGOS/]

(Editing by Richard Beales and Martin Langfield)

((raul.gallegos@thomsonreuters.com)) Keywords: BREAKINGVIEWS NEWSCORP/MUNDOFOX

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