Sunday, December 21, 2008

Is Hispanic media ownership relevant?

Is Hispanic Media Ownership Relevant?, News Report, Richard Kaplan

There was a time in the 20th century when media ownership was a priority among minority entrepreneurs. In the Hispanic market the attraction mainly focused on Spanish-language electronic media, particularly radio, and some of the early pioneers of Spanish-language media in the U.S. are still active in today's media markets.

With market activity now expanding to the Web, online media has become the new frontier for pursuing Hispanic media ownership. Minority media ownership remains nonetheless almost as inaccessible as it was during the l970s and '80s.

On the contrary, in recent years, ownership consolidation in the industry has increased. In the 21st century the Federal Communications Commission, which once was at the forefront of advocacy for minority media ownership, has not been supportive. Another complication is the attraction shown by foreign investors and media operators for the U.S. Hispanic consumer market.

Media companies from Latin America and Spain have demonstrated a keen awareness of the growth and potential of the U.S. Hispanic consumer market, especially the Spanish-speaking part of it. All the same, few U.S. Hispanic media entrepreneurs have subscribed to positions and public views shared by proponents of media minority-ownership in the 1960s, '70s and '80s. Virtually no Hispanic leaders speak on behalf of Hispanic media ownership. Media ownership was perhaps the most elusive goal for all minority groups in the 20th century.

The Strengths Of Hispanic Ownership

Amador Bustos, a leading player in the arena of popular Hispanic radio, said Hispanic ownership helps open doors when trying to successfully reach an audience.

His company, Bustos Media, owns more than 30 radio stations strategically placed in many of the nation's leading Hispanic markets.

"It is important to have Latinos in the broadcasting game because the Hispanic owners will undoubtedly have a greater sensibility to the idiosyncrasies of the various Spanish-speaking groups," said Mr. Bustos, whose company has 60 employees and reported $12.9 million in 2007 revenue. "On the programming front, their understanding of the language, culture, and regional politics will contribute to shape the breadth and depth of the news and information coverage. On the employment front, historically Latino owners have been more prone to hire and promote other Latinos."

Hispanic entrepreneurs, Mr. Bustos recalls, were once at the forefront of Spanish-language media. It was their commitment to the community, as well as their capital and cultural knowledge, that drove development.

"Local promoters or entrepreneurs started buying blocks of time in other people's radio or TV stations," he said. "By the early 1970s, Spanish-language programming began to occupy 100 percent of the programming time and Latinos started to own many of those stations around the country."

Entry into the media market was facilitated by the relatively low cost of ownership and regulations limiting the number of stations any one firm could own. Starting in the 1990s, however, consolidation began.

Mr. Bustos explained, "Companies were allowed to own up to eight stations in any one market. We saw a rapid decrease in Hispanic ownership because many of the individual operators sold their stations at a premium (for the time) to the consolidators."

The dwindling number of Hispanic-owned companies forced a seismic shift in the landscape and has allowed entrepreneurs who remained in the market to use Hispanic ownership to their advantage.

Johnny Yataco traces out a similar pattern of consolidation in the print media. In 1994, Mr. Yataco founded and owns the Washington Hispanic, which now has a circulation in excess of 100,000 in the Washington, D.C. area. In the current downturn, his daily paper is doing fine, buoyed perhaps by the continued growth and underlying strength of the country's largest minority.

Currently, says Mr. Yataco, major media corporations are accumulating Hispanic newspapers, but those "conglomerates" consider their audience quite differently than a family-owned, Hispanic firm. When a chain acquires a Hispanic-owned publication, Mr. Yataco said, "the first thing they do is ... start cutting personnel, and when things don't go well, they just cut and cut and cut." Revenue, he said, is the "major driving force."

Of course, revenue is important for the Washington Hispanic and other Hispanic-owned media, Mr. Yataco agrees, but it's not the only concern. Small, local Hispanic papers "know their community," he explained. "We live here. When a newspaper is owned by a big chain, I think they lose touch with the community."

Carmen DiRienzo, president and CEO of the new television network V-me, also insists that Hispanic ownership is crucial for reaching the community.

Founded just 18 months ago, V-me partners with the Public Broadcasting Corporation to reach Hispanic viewers across the United States. The company is partially Hispanic-owned. V-Me is owned by WNET, the New York City PBS member station, and private investors led by the Hispanic-owned Baeza Group. The company has 30 full-time employees but declines to release its annual revenues.

Ms. DiRienzo said her company is "rooted, very rooted in the local Hispanic communities."

Feeding those roots, says Ms. DiRienzo, is partial Hispanic ownership with Mario Baeza serving as V-me's executive chairman, but she also points to the staff and its ties to the community.

"When the people designing the programming are very heavily Latino, as in our case," she asserted, "what they bring to the content is their sensibility as Latino Americans and their understandings of the viewers and the viewers' aspirations."

Capital Difficulties
But it's not always that simple. The idealism of many Hispanic entrepreneurs takes a backseat to the cold realities of the business climate. Competition over advertising dollars makes it tougher for companies to expand, regardless of who owns the company.

A major roadblock for Hispanic-owned media companies continues to be finding financing and advertising dollars, said Maggie Rivas-Rodriguez, a professor in the journalism department at the University of Texas at Austin. "Often in the Latino community, we just don't have the money to put together a newspaper or magazine without outside funding," explained Ms. Rivas-Rodriguez, who formerly reported for the Boston Globe and the Dallas Morning News. "It is a very competitive business right now."

Mr. Bustos agrees. The two biggest barriers to creating new Hispanic ownership of media outlets in the radio industry, he explained, are "access to substantial amounts of capital at a decent interest" and, second, "the scarcity of good signals in populated urban centers."

Future Growth
One Hispanic-owned firm that continues to maintain a strong presence in the Hispanic marketplace is Spanish Broadcasting System (SBS), which owns 20 radio stations in the United States and Puerto Rico and pulled in $179.5 million in gross revenues for 2007.

For Frank Flores, vice-president and market manager for SBS – New York, Hispanic ownership is a key ingredient in the company's success. At the beginning of his career, 28 years ago, he worked for a non-Hispanic station that served the Hispanic market in New York City. Mr. Flores says much of his time was spent in explaining the subtleties of Hispanic culture to the owners, helping to guide them in their programming choices.

At SBS, Mr. Flores says he has no such problems. Comparing Hispanic-owned media to non-Hispanic, he declared, "I've seen the difference between the two, and the difference is stark." Now at SBS, he explained, "We are very much in tune with what our community is all about. ... and I think the community understands it, the community feels it. They know that the radio station is owned and operated by a Hispanic. So there is a certain amount of pride there. And they also know that it's good that these people are in charge because they are going to do the right things for us."

Under the leadership of CEO and President Raul Alarcon Jr., Mr. Flores says SBS has built a "mini Hispanic-owned media company and empire." Despite the current gloomy economic conditions, SBS is well-situated in key Hispanic urban markets and primed for growth. Indeed, once the markets recover and the Hispanic marketplace "fully emerges as the monster that we all know it will become," Mr. Flores is sure SBS will be there to take full advantage of its Hispanic edge.

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