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Univision Aims 3rd Network at Bilinguals

Television: TeleFutura hopes to win over the elusive English-speaking Latino audience.


Spanish-language television giant Univision Communications launches a third network today in an ambitious attempt to capture the company's most elusive audience: bilingual Latinos who primarily watch English-language television.

The Los Angeles-based company has spent more than $1.4 billion during the last year to expand its dominance in the Spanish- language media sector by piecing together the new broadcast network it is calling TeleFutura.

When TeleFutura goes on the air at 4 p.m., it will reach an estimated 80% of Latino households nationwide. The network initially will consist of 42 stations, including 13 that Univision acquired during the last year from Barry Diller's USA Networks for $1.1 billion.

Univision executives predict that TeleFutura will break even during its first year and will immediately come in No. 2 in the ratings race behind Univision's flagship network.

"TeleFutura could become a bigger network than Univision," said Ray Rodriguez, president and chief operating officer of Univision Networks. "There is this huge audience that is not watching Univision and a large percentage are Spanish speakers."

Univision commands 80% of the U.S. Spanish-language television market. However, less than half of all U.S. Latino households regularly tune in to Univision or its rival network Telemundo, and those are the viewers TeleFutura hopes to attract, Rodriguez said.

"Univision and Telemundo don't meet the needs of all Hispanics," said Carlos Santiago, co-chairman of Santiago & Valdes Solutions, a San Francisco marketing firm. "We don't have that many choices. You either can watch a telenovela on Telemundo or a telenovela on Univision."

Telenovelas, the low-cost Latin American soap operas, have become the bread and butter of Spanish-language television. But no prime-time telenovelas will appear on TeleFutura.

The new network's evening schedule will be filled with sports and news capsules and dubbed Hollywood movies such as "The Mambo Kings," "Tango and Cash," and "Dog Day Afternoon." The network will feature Friday night boxing, weekend soccer matches and a daily 11 p.m. ESPN-style sports highlights program called "Contacto Deportivo" (Contact Sports) to attract male viewers. Telenovelas have been relegated to the afternoon slot.


'Counter-Programming' for a Broad Audience

Univision calls its strategy "counter-programming." The idea is to offer viewers different selections without directly competing with programs found on the original network. The company says it is not zeroing in on any one demographic group.

"TeleFutura is a broad-based broadcast network with programming that will appeal to a full range of viewers--women, men and youth," Rodriguez said.

Univision is building TeleFutura at an ideal time, analysts say. More than 35 million Latinos were counted in the U.S. during the 2000 census, several million more than anticipated. The increase in population raised awareness of the potential of Spanish-language media, and advertisers climbed aboard.

Univision has signed up major advertisers for TeleFutura, including Johnson & Johnson, AT&T, MCI, Sears, J.C. Penney, Ford, Toyota, Gillette, Wendy's, Miller Brewing and Budweiser. Pepsi-Cola is sponsoring a weekend "American Bandstand"-style music program that will feature Latin music stars, primarily ones from Univision's record labels.

Univision executives expect advertising revenue to cover the $100million the company plans to spend this year on TeleFutura programming and operations.

Some analysts say revenue will probably trickle in until TeleFutura's success can be gauged through ratings. Merrill Lynch analysts estimate that start-up losses for TeleFutura could be $20million to $30million for the year.

Other analysts predict that TeleFutura will break even or be profitable, particularly if advertising spending rebounds by the middle of the year, as some are predicting.

David Joyce, senior equity analyst for Guzman & Co., a Miami-based investment banking firm, said TeleFutura could add as much as $20 million to Univision's 2002 earnings before interest, taxes, depreciation and amortization, a common yardstick to measure the financial performance of a media company.

"Spanish-language media companies are going to be particularly strong beneficiaries of a turn-around," Joyce said.

Univision Communications' stock has more than doubled in value during the last quarter, soaring from $18 a share in late September to Friday's close of $38.76 on the New York Stock Exchange. Analysts attribute the increase to a swirl of Univision takeover rumors fueled by NBC's announcement that it plans to buy Telemundo for $2.7billion, including debt.

Wall Street has been concerned that TeleFutura might simply peel off viewers from Univision's popular flagship network, thus diluting the network's dominance in the market.

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