January 15, 2009

    As I listened to last Fall's Big Three congressional hearings, which revived talk about a possible GM-Chrysler merger, call me crazy but I wondered whether we should also be talking about a merger between Univision and Telemundo.

There certainly would be some who would fret about a merger, on the grounds that it might imply that the Hispanic market is shrinking (when we know it's actually booming), but I think the entire marketplace--viewers and advertisers--would actually benefit.  There would certainly be cases of redundancy, requiring some elimination of positions, but in the end I think we'd see a much more robust, more potent Hispanic media empire that would be better poised to confront a rapidly evolving market.  For I honestly believe that when we eventually come out of this economic nightmare, we will see that certain CHANGED consumer behaviors have become PERMANENT.  We ALL need to be prepared for that.

I also believe that there are certain folks who I think would actually WELCOME such a merger, namely Univision's private equity owners AND Jeffrey Imelt of GE.  I'm certain Univision's private equity owners had visions of retiring in St. Barths in 2009 (although I'm sure some of them already vacation there) but have recently been shell-shocked.  And then there's NBC and GE.  I'm still wondering whether GE/NBC know what they bought, or whether they have ever really cared.  And therein lies the crux of my merger idea: given the current and incredible challenges facing Hispanic marketing, we need to dramatically expand the critical MASS of truly committed professionals working in Hispanic media.  For example, Telemundo's English-language Latino channel, mun2, would in all likelihood get more support from a mega-sized Hispanic media company.

I also think that GE and Univision's owners would welcome the reduction in expenses realized through consolidation and the potential for increased revenues realized from greater distribution and reach (see below).  I'm have no doubt that Univision's owners grind their teeth with every billable hour spent on their bout with Televisa.  I don't want to get into the specifics of FCC ownership rules that would need to be followed but I think a consolidation process would address these.

Programming - Keep the best of the best--let the best programming rise to the top.  Clearly, Univision's award-winning network news programming would be given the spotlight.  The best of sports programming from both networks could be kept.  And perhaps a merged company could leverage the seemingly better relations Telemundo has with Televisa.

Distribution - The one change I'd recommend on this issue is to turn over the Telefutura stations over to mun2.  This would have the immediate and profound effect of propelling mun2 into the market position it deserves.  More importantly, mun2 would be then ideally poised to fully exploit the burgeoning bicultural/bilingual Latino youth segment, and give marketers who have been seeking such Hispanic consumers robust distribution and reach.  Of course, this might put more distance between mun2 and Viacom's MTV3 but Viacom is experiencing its own turmoil (and super debt-load), and I don't yet see any plans to give MTV3 the commitment that channel deserves.

Management - Just like programming, it would be a case of the best and the brightest allowed to rise to the top--some would stay and some would go.  I think we could see someone like Univision's Dave Lawenda oversee a mega sales force or someone like mun2's Flavio Morales at the reigns of pre-eminent bicultural/bilingual programming in the U.S.

Look, we could still have the likes of such niche Hispanic sports channels as ESPN Deportes and Fox Sports en Espanol, and powerful local channels like MEGA TV and the Liberman stations, but marketers would benefit from a one-stop, national Hispanic media company.   There are still some marketers who don't get it in 2009--they will never get it--but a mega-sized Hispanic network would give breadth, reach, relevance and options to those more sophisticated marketers who DO get it.  They would have a vehicle for every Hispanic sub-segment they target.

Comments

I think merging Univision and Telemundo is a terrible idea. It would create a monopoly that will hurt production and on-air talent, advertisers, sales people and so on and ultimately provide less choices for the TV audience as well. Besides we have learned from the recent bailouts of big financial companies, that "big" is not necesarilly good.

Manny Gonzalez asks in his latest blog if he is "crazy." With all due respect to the managing director of Abecé, he may not be crazy. But he is certainly misguided in his ideas and views on this subject. A merger between Univision and Telemundo would be the worst possible scenario for one of the few segments of the ailing U.S. economy that actually shows signs of growth. Think of the longterm message this would send advertisers, media buyers, agencies and media - "Hispanics are using less Spanish-language media." As we continue to grow the share of the advertising dollar "pizza pie," we should thinking about changing the "pizza pie" to a "torta." The UniMundo network would do the opposite, and covert our slice of the pizza pie into a few pieces of pepperoni thrown onto a bland, tasteless undercooked pizza with extra cheese and excess grease. WE know that the Hispanic market is actually booming. But I highly question how the Hispanic market could benefit from less choice, and a virtual monopoly in the world of Hispanic television? Thousands of stations would suffer employee reductions. Local promotion and marketing budgets would be slashed, removing an important cog in the wheel of growth - community connections. We'd also wind up with one management team overseeing the programming for Univision, TeleFutura, Telemundo, Galavisión and Mun2. All would fall under the budget ax. This is a good thing? A "much more robust, more potent Hispanic media empire" isn't growth. It's not even a good thing. We don't want an EMPIRE. It didn't work for Clear Channel Radio; why would it work for UniMundo? What you are suggesting is akin to the situation in Mexico, where Televisa is the dominant media player and TV Azteca, as competitive as it is, remains the No. 2 entity solely on the basis of reach and outlets. Television in the U.S. Hispanic market should mirror the Mexican environment? God forbid. "Certain folks" would welcome a merger between Univision and Telemundo. Among the names mentioned are Univision's private equity owners and the head of General Electric. But what about the viewer? What about the advertiser? Shouldn't television executives be interested in who their product is serving and how this focus will achieve the best long-term growth strategies? And, for the record, General Electric executives are not ignorant. They know what they have in Telemundo and they likely understand its long-term potential - albeit in very basic terms. Why else would GE put WTVJ-Channel 6, the heritage NBC station in Miami, on the market yet decide to keep Telemundo WSCV-Channel 51? The ignorant exec would have ignored the ratings data and simply said, "Oh, we'll let some Hispanic broadcasters that know what they're doing run it." UniMundo would result in less diverse programming options, an unfair monopolistic entity that would have the power to strongarm any competitor - broadcast or cable - and would ultimately drive dollars away from the Hispanic media segment that currently attracts the most dollars - network television. Clear Channel's sales team not too long ago invented the mantra "Less Is More," in reference to their decision to cut spot loads since they had gotten obscenely high. In the case of a proposed UniMundo, less is NOT more. You state, "a mega-sized Hispanic network would give breadth, reach, relevance and options to those more sophisticated marketers who DO get it. They would have a vehicle for every Hispanic sub-segment they target." Maybe so. But it is no longer about the sophisticated marketers who "get it." It is about the marketers that are still not targeting Hispanics with their marketing messages. It is about growing the pizza pie and changing it to a tortilla. A one-stop shop is not growth. A one-stop shop is the first stop on the express train to irrelevancy.

Merging the 2 is definitely a terrible idea. Reducing competition for talent, the options for viewers, and the variety of perspectives representing the Hispanic consumer would all be very bad for the marketplace. If the companies that own both networks are having a hard time with their balance sheets, I'm sure there are hundreds of investors waiting in the wings who would gladly jump at the opportunity to buy access to the fastest growing audience segment in the US.

Adam, thanks for your comments but clearly you and I are seeing a different universe. You see a Univision-Telemundo entity within the smaller Hispanic media space; if so, I would agree with you that it would be comparable to the Mexican situation. However, I see such an entity within the vast American media landscape...no monopolistic situation ala Mexico. I know the "universe" issue was a prominent one when the FCC was reviewing the Univision-HBC merger. Demographically speaking from a viewership standpoint, the Hispanic media space is continually showing that it is very much a part of the larger universe.

Good for you Manny! We would all be better served if we lived in the realm of "What if?" and "How?", versus the world of "NO!" and "Why not?"...............BIG level thinking is good for the soul....and maybe even business!...."Powerful", "A Force" and "Change Agent" are not necessarily synonymous with "Big"!

I can imagine the executives in the session on what to name the merged entity: Univision + Telemundo = Unimundo, or better yet TELEVISION, CLARO! It is excellent to be coming up with ideas for the Hispanic media and market. This is the idea you throw away because it stinks.

Michael, get beyond the literal..............its the underlying idea that counts..........IMAGINATION is key........afterall, AIN'T WE IN ADVERTISING?!...........BIG thinking.........let's embrace it people!

What an interesting premise. To be honest, I have never thought of combining Uni-Mundo. I don't think it is an answer b/c I believe people don't want less choices, they want more. Univision and Telemundo are being challenged now by the fact that Latinos, fortunately, have more choice than ever before. Personally, I have always looked at media as fully inclusive of all forms such as what we have considered conventional media (tv/radio/print) to newer and non-conventional media (internet/mobile/digital video/digital&satellite radio/movies-documentaries/concerts-sports-live events/gaming). So in essence, I think Univision and Telemundo have to deal with Latinos deciding whether they want to watch their respective channels OR the gamut of newer/non-conventional media available (not to mention conventional terrestrial radio and print offerings). The wide acceptance and ever-growing ease of UGC (user-generated content) is allowing Latinos the opportunity to create and consume their OWN media. From a personal perspective, my mother and her friends no longer watch Univision or Telemundo all day. They watch Caracol, Ecuavisa, Discovery en Español, CNN en Español and Latin music they stream over the internet with the help of their relatives along with Univision and Telemundo. My mother and her friends are 50 - 80 years of age. If their media consumption has dramatically changed in the last 2-3 years, what does that say of the desired 18-49 age demo? So, if we follow this trend, Manny, I do not agree with your assertion. I believe now is the moment to be unconventional and work w/ Latino consumers b/c now they wield more power than ever before, and they are becoming more and more aware of it. Now is the moment to offer than more options and allow them to become part of the media as well by starting to incorporate (and promoting) P2P (Peer-to-Peer) technology online-soon it will be available on their television screens/monitors, as it will be readily available within the next 3 - 5 years on new television screens/monitors. Thanks for a great and stimulating post as always, Manny! We need more conversations like this.

Manny: It is a compelling thought to consider whether Univision and Telemundo should merge. Based upon my 25+ years in the cable TV industry, I would say my vote is NO. Here's why. Networks have merged in the past when the audience and ad market was seen to be too small to sustain more channels with the same targeted audience. Yet, once they merged, there were new channels created to replace the one that was eliminated. And the new channels succeeded. For example, Lifetime is a product of a merger (and now we have WE and others for women). CNN is an example too (and now we have so many more news channels.) There are so many more examples of this point. Bottom line: What I've learned is that TV viewers always want MORE choices.

What goes around comes around. This idea was actvily considered by Hallmark and Reliance in 1989. It was believed that the combined entity would have the resources to grow the market that were not avialable to the individual companies of that era. The undertaking was code-named "Project Corona". The sticking point was that it was impossible to determine what part each of the principles should own of the merged entity. I suspect a similar plan today would founder on the same issue.

Epa Leon saludos: like I said I APPLAUD COMING UP WITH BIG IDEAS, but this idea makes no more sense that a merger between CBS/NBC/ABC would make sense for the general market. Plus, as a viewer of these stations it does me no good...i've enjoyed viewing more of the risque soaps Telemundo airs than the tired old conservative Univision fare... there are many other good reasons why this merger would suck, they are posted above. q siga el debate...!!!!

Harold, thank you for your comments. Your reference to the other channels actually confirms my belief that this "mega" entity (I probably should have avoided using "mega") is not as onerous as that word implies. I've lived in Miami for the past three years and have been amazed at how robust this TV market is...Mega TV, AmericaTV, etc. I've also seen the impact that the Liberman stations in LA and Houston are having. There is a role for national Hispanic TV programming (if nothing to compete against the English-language TV networks which are still garnering their dispropotionate share of TV dollars) but from a longer-term perspective, I do expect Hispanic media consumption habits to increasingly take on the prevailing local culture(s).

Manny, wouldn't call you crazy. Dumb, yes. Or maybe you are just trying (desperately) to attract attention by trying to be controversial, but it is a dumb idea nevertheless. Why should anyone in the U.S. Hispanic arena spouse this idea? - From a consumer perspective, it shrinks your media choices. - From an agency perspective, it limits your choices - From a media professional perspective, it limits your negotiating power - From a client (or at least, the head of multicultural in a client), it shrinks your base - It would put hundreds of people, including sales people, producers, etc., out of work There is absolutely no advantage to it. On the contrary, it would make sense for Univision to get rid of Telefutura, sell it to Televisa, and have Televisa enter the U.S. market. That way we would have more negotiating leverage, more choices, more employment and a bigger Hispanic market.

On the other hand, and picking up on Mr. Cancela's Jan 12th post, if you framed it like "Univision is going to file bankrupcy in order to sell assets and pay off the buyout debt and the Univision network will no longer exist". In this scenario Univision would disappear off the map, well then it may not be a bad idea to merge the two. However, IMHO, this it would still suck.

Here's a novel idea!.....ask the viewer!...(oh, BTW Micheal, ur in the biz....nothing personal, but...YOU'RE NOT THE TARGET!)

Leon, like your attitude!

I think Manny is trying to soften the blow of the inevitable. He mentions the sour economy and how it is changing consumer behavior...like immigrants returning to Mexico. Like the rise of displaced and laid-off workers competing for jobs across all strata of U.S. society. Advertisers have lowered budgets, and now even wealthy Univision has taken a lost. Univision has the most debt, and the most to lose after this recession and the suit with Televisa is over. Imagine what is happening at Telemundo and Azteca America. For the first time, advertisers are seeing the long-term effect of limiting or canceling Hispanic advertising. Some will see damage, still others will see no effect whatsoever. Behaviors will change, so I agree, adjustments are going to come out of this economic downturn, and it will most likely make some businesses more conservative. Let's be honest, for the size of the Hispanic population, four Spanish TV networks might be overkill. Among the many reasons Univision is exceedingly dominant, one could certainly be that there really are not enough Spanish dominant U.S. Hispanics to go around. This is especially true when the four networks air essentially the same type and flavor of programming. Then again, there currently are so many wonderful Hispanic media options and they keep growing to incorporate more magazines, online sites, local stations, radio outlets, and newspapers. But I feat that like the Dot.Com bubble of a few years ago, and the real estate bubble that caused this recent collapse, the Hispanic media bubble will reach its apex and then collapse because there won't be enough money to go around. But on the positive it could reduce into something more robust, representative, and finely tuned then what we have now. The current economic troubles just might be the catalyst for such a reduction. No, a merger is not a great idea on its own, but like the Xirius and XM satellite radio companies, it may come to be the best course of action for the two, down the line when everything shakes out.

If Univision were to file bankrupcy, Televisa would probably buy the assets and we would still have 2 major networks. If Telemundo and Univision were to merge, this would still have a very negative effect on the industry as a whole. The Syrius and XM comparison doesn't hold really true. First, there was no clear need for them in the market so they are basically "disposable" companies; second, there are literally hundreds of alternatives in the radio universe, third, these are very premium services and fourth, their share of audience was minimal. If, I don't know, LATV were to merge with VeMe (creating VeMeLa...) the market would not suffer at all.

Leon, can you post a real argument? so far you sound like a high school cheerleader...the merger idea is a lousy idea, for many of the reasons posted above and which I don't feel a need to repeat.

I think merging Univision and Telemundo is not a good idea at all. Having these two apart give us the benefit to choose. As a viewer we get to have more options to see whatever we like, and what's the point of doing this? Competition in a safe way can be very effective to propel high quality programming and this is what are they doing. And anyways, if they do that another company will arise to do the competition itself

Merger is a big step for any corporation when it comes incline monopoly picture. But lets look at the big picture, individually the have factors in their respective programming that are decadent. But working on this as to better alleviate the debt Univision and better develop such programming to best attract the hispanic consumer as such chains as Azteca America or Telemundo. Never the less, Univision's biggest obstacle is to hire a Latino expert to the hispanic consumer and not just let this network fall apart.

For these two huge corporations they have two options or they create a huge company by merging and it could be classified as monopoly or Univision should invest by getting a new sales and creative person that could change the image and perspective of Latinos in their programming selection. Telemundo could be buying their biggest competition but this is not a good idea since it limits the options of consumers and the industry as well.

This idea of merging these two great networks, Telemundo and Univision, sounds very interesting, by seeing a stronger and bigger network in the media field. But it can couse great problems from rhe piont of view of the employees, fans of the two networks, less competence inthis field, and less variety for viewers. I think that Univision has a higher rating than Telemundo, in programing and in viewers quantity. If they merge, a lot of Telemundo will be gone, because Univision and Telemundo merging, their will be a re-construction of programming, taking and living the best programming each one has to offer and has. i think they should not merge these two networks because even if one of them is best than the other, each one has different things to offer to different people, and is the desision of the public to decide wich network to see. And at the same time each network offers different things at the same time, in case of a merging of these two, they can risk not gathering that much information or variety of programming to the people to watch. And can cause serious problems in rating.

I think the merge of univision and telemundo is no a good idea because limit the opcion of programs of the viewer can see. The merge of Univision and Telemundo it mean the principle of a tv media monopoly.

I Think that if Univisión and Telemundo , merge it will be a bad thing , because then we will not have the variety in programs that we have in both stations, the two are for hispanic people but they have a variety of programs that they other one don't have. and people like both Stations but in terms of programs they are very selective.

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