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A Changing Landscape

After years of adding Spanish-language channels to their packages, some of cable operators’ biggest announcements this summer were not about new programming but about long-distance phone service. Since the beginning of August, Time Warner Cable, Charter Communications and Cox Communications have all announced new international calling plans that they hope will help them market their triple-play packages to Hispanics.

As operators and programmers converge in New York City this week for the fifth annual Broadcasting & Cable/Multichannel News Hispanic Television Summit, the growing importance of these new products and Hispanic-targeted bundles is transforming the strategies of multichannel providers and the prospects for Hispanic programmers.

“Hispanics see the value in these packages and our [Hispanic-targeted triple-play packages] have done extremely well,” Comcast senior director of multicultural marketing Mauro Panzera said. He added that in large Hispanic markets, Latinos now make up a significant portion of triple-play customers and in some systems the Hispanic penetration of these bundles exceeds that of the general population.

Comcast has unlimited free calling in the U.S., Canada and Puerto Rico, an option that is proving popular with the large Puerto Rican populations in its East Coast systems, and is working on plans for Mexico and Latin America.


Telcos also see the beauty of the bundle as they expand their Hispanic marketing efforts. Verizon and AT&T, both still in launch mode, admit they are still in the early stages of their Hispanic market efforts.

But both companies have launched extensive Hispanic tiers that stack up very well against cable in terms of pricing and quantity of channels, and they plan to beef up their Hispanic marketing efforts and add to their service as they gain more penetration.

Verizon, for example, is already working on plans to add additional channels and video-on-demand content by April 2008.

“Bundles are going to be very important for us,” said AT&T senior vice president of programming Rob Thun. “We think that having a connection with the Hispanic community as a large provider of phone and mobile services is a very important competitive advantage.”

AT&T hasn’t rolled out customized Hispanic packages yet, but it offers a number of low-cost general market bundles. Thun expects them to develop specific bundles for the Hispanic market as they move past launch mode.

“You have to crawl before you walk and run,” Thun said. “Once we hit a critical mass in terms of penetration, then we can reach out and cater to a specific market with our products.”

Direct-broadcast satellite providers, meanwhile, have been paying more attention to marketing bundles with their telco partners.

“We work very closely with them to develop promotions and bundles for the Hispanic community and to market them,” EchoStar director of multicultural marketing Carolina Padilla said.

Such alliances continue to give satellite a key competitive advantage over cable, she said. “Because we have a national footprint, we can cater to [Hispanic] groups cable can’t target” with its limited bandwidth. At the same time, “we can work on a local level with partners like AT&T and our retailers to develop promotions and bundles that are stronger than cable.”

The battle of the bundles doesn’t mean operators have lost interest in adding new channels or programming. Since launching switched digital last year, Cablevision — which also features international calling plans — has dramatically expanded its Hispanic-targeted lineup, adding seven channels so far this year.

Later this year and into 2008, Time Warner Cable, Comcast and other operators will move to switched digital, freeing up bandwidth for new channels.

“Switched digital will really open things up,” said Comcast’s Panzera.

In the meantime, some systems are beginning to reclaim analog bandwidth. In Chicago, for example, Comcast has reclaimed enough analog spectrum to expand the number of Hispanic-targeted channels to 30.


In the short run, however, Hispanic programmers face a mixed prognosis.

On the positive side, TuTV president Chris Fager said all the major cable operators are now devoting significant resources to the Hispanic market.

“They’ve realized that they don’t have to surrender to satellite,” Fager said. “When they put together strong tiers and market them, they’re getting a very loyal, valuable customer that is taking their other bundled products at very significant rates.”

Newer distribution platforms, including telco TV, broadband video and mobile TV, are also boosting demand for Hispanic content, added Luis Torres-Bohl, president of Castalia Communications, which distributes a number of Hispanic channels.

But Torres-Bohl and others note a shift in the demand for Hispanic channels as operators place more emphasis on bundles and HD programming.

“I think cable and satellite have pulled back a little from the ethnic markets as they concentrate on other things,” Torres-Bohl said. “Satellite is focusing on getting a higher quality customer so they can reduce churn, and cable operators are putting more attention on other areas such as telephony and broadband, whereas before it was all video driven.”

As a result, Torres-Bohl said, “there is a little bit of a slowdown in terms of demanding more channels, compared to two or three years ago when everything was really hot.”

Those trends are reflected in this year’s list of the Hispanic channels available in the U.S.

While the kids and family channel V-me has rapidly expanded its distribution to about 30% of all Hispanic TV households since its March 2007 launch, only a few other Hispanic-targeted channels have launched this year, not enough to replace those that seem to have lost their distribution partners. Overall, the number of Hispanic channels on the list fell from 82 in 2006 to 79 this year.

Most operators note a keen interest in expanding their Spanish-language HDTV programming but little content is available.

“The Spanish broadcasters have been very slow to embrace HDTV,” complained one executive. “Univision is saying they want $1 for retransmission consent but when we ask them about HDTV, they can’t give us a date.”

While major operators are not making radical changes to their programming lineups, they continue to refine their marketing and branding efforts in response to an increasingly competitive landscape.

Time Warner Cable, for example, has hired a new executive to spearhead its marketing efforts. The new hire, who is already on board but whose name has not yet been released, will be looking to improve Time Warner’s branding, programming and bundles and to put increased emphasis on developing packages targeted to its large Hispanic communities in Southern California, New York and Texas.

Lauren Lofrisco, Time Warner Cable group vice president of marketing and communications, said the operator introduced an international calling plan in August and sees a major opportunity in bundled products: “Penetration among Hispanics for digital phone is lower than among other product lines, and we think we have a substantial opportunity to change that by virtue of the fact that we already have one product in the home.”

Charter also has high hopes that its new international calling plan will boost sales in the Hispanic community, said Kathleen Griffin, director of sales and marketing at Time Warner’s Fort Worth, Texas, operations, a market where 31% of the population is Hispanic.

With nearly 30 Spanish-language channels, she doesn’t see their system making significant changes to their programming lineup. “I think we now have a very compelling offering,” she said.

But Griffin does believe that alliances with programmers will play a key role in marketing their video and other products. A recent local marketing effort with TuTv, for example, boosted subscribers to their Hispanic tier by about 35%.

“Our real strength compared to satellite is that we can be out in the community with those kinds of efforts,” she said. “We have a very large Hispanic population and that gives us a lot of opportunities for continued growth.”