SPANISH LANGUAGE MEDIA COMPANIES

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SPANISH LANGUAGE MEDIA COMPANIES

• Linguistic Market Oligopoly

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MERGER 1

• Established
• 2002 Telemundo network, No.2 in U.S. Hispanic TV
  market acquired from Sony Liberty by NBC.
• Cost of purchase is 2.7 bn
• Potential market 35.3 mn Hispanics (14 of U.S.
  market, but 3 of advertising pie)
• Advantages gives Telemundo access to NBC to
  sales, marketing, formats, news

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Merger 2

• Univision (No. 1 U.S. Hispanic TV) proposes
  merger (pending FCC approval) with Hispanic
  Broadcasting Corporation (HBC), leader in U.S.
  Spanish-language radio stations (63 stations in
  15 of top 20 Hispanic markets)
• This merged company would control nearly 70 of
  Spanish-language ad revenue in the U.S.
• Largest HBC shareholder is Clear Channel (8.4bn
  rev).

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Merger 2 (ctd)

• Univision owns
• Univision Television Network
• Telefutura (24 hr broadcast-TV network)
• Galavision (No.1 cable network for
  Spanish-speakers in U.S.)
• Univision Music Group (leading LatAm co., with
  more than 35 market share
• Univision Online

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Advantages of Univision-HBC deal

• Scope for marrying Univision recording artists
  with Univision/HBC TV/radio shows potential
  trouble for independent artists
• Cross promotional prospects for commercials
  promoting Univision artists on Univision/HBC
  TV/radio
• Links with Clear Channel to marry Univision/HBC
  TV/radio with Clear Channel artists, concerts,
  promotions

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Problems with Univision-HBC merger

• Both Clear Channel / Univision run by politically
  active billionaire Republicans at a time when
• GOP reaching out to Hispanic voters (most vote
  Dem)
• Clear Channel syndicates many right-wing talk
  shows and shock jocks
• Both Clear Channel and Univision exert
  near-monopoly power in their markets. In
  2000-2001 Univision accounted for ALL top
  20-rated U.S. Spanish programs
• Clear Channel 1,200 radio stations (970 more than
  nearest competitor) 37 TV stations, 770,000
  billboards and hold of venues, promoters and
  tours to exert control over concert industry
  (sold 30m concert tickets in 2002, 70 of
  national total). Said to have the power to
  determine which artists get to be heard by
  public. Exercises political censorship.

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Problems ctd.

• Neither Univision nor HBC is controlled by
  Hispanics
• 87 of Hispanics in US are opposed to having
  Sp-lang media owned by non-Hispanics

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BUT

• Univision only attracts 5 of U.S. TV viewers,
  and 2 of ad. dollars

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CLEAR CHANNEL The Complaint

• Consolidation has made radio even more
  cookie-cutter bland, with narrow, unimaginative
  playlists. Demographic targeting and audience
  testing eliminate variety, stifle regionalism and
  foist the least objectionable music on the
  public.

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Clear Channel (2) Complaint ctd.

• advertising pricing policies that undermine
  competing stations,
• payment deals that skirt laws prohibiting
  payola,
• purchases of stations across the Mexican border
  to bypass domestic ownership caps,
• strong-arming of artists to perform with Clear
  Channel's concert production arm,
• four or fewer companies control 70 percent or
  more of market share in nearly all local markets

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Clear Channel (3) The Defense

• Owns only 10 of nations 11,000 stations
• (BUT takes 20 percent of advertising rev and
  attracts 25 of listeners nationwide about a
  third of the population)
• Surveys show people prefer tight, predictable,
  repetitive play-lists
• Specialization has led to stations that play only
  hip-hop or dance music
• Focus attention on under 35s decline in classic
  stations
• Subscriber sat services suchas XM and Sirius, and
  Internet radio promise more choice

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Clear Channel (4) The Power

• Owns more than 1,200 local radio stations in all
  50 states It
• Dominates rock and Top 40 formats in many of the
  countrys largest markets,
• CC stations control 60 percent of the rock radio
  market nationally.
• CC stations share logos, promotional bits but
  draw from same pool of on-air talent
• CC runs programming and advertising operations of
  many stations it does not own

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Clear Channel (5) The Power

• In S.F., CC has 7 radio stations, massive concert
  business, and many of the city's billboards. And
  through its subsidiary, Adshel, it may soon
  control street distribution of newspapers

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Clear Channel (6)

• Radio station owners use their power to push
  around record companies that want their songs
  played on the air.
• Clear Channel often demands rising artists play
  at live concerts promoting individual Clear
  Channel stations. Stations continue playing
  group's music only if it appeared at the concert.
  Record companies must bear group's expenses. Such
  appearances dilute audience for groups own
  concerts.

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Clear Channel (7)

• In its defense, Clear Channel says top 10 radio
  companies only control 44 percent of the radio
  industry. In contrast, top 10 film studio owners
  account for 99 percent of movie profits, and five
  record distributors dominate 84 percent of that
  market.