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Spanish-Language TV's Wall St. Woes

The economic downturn that has slowed or reversed the fortunes of even the soundest sectors is expected to bring declines to one of the industry's strongest categories: Spanish-language television.

That sector, which has shown almost uninterrupted growth for several years, was starting to show signs of leveling off before Wall Street's recent historic woes. That fact, combined with such particulars of the demographic as a high concentration in hard-hit major markets and a higher-than-average unemployment rate, makes Hispanic media especially vulnerable in these times.

Second-quarter 2008 figures illustrate a decline in spending at both local Spanish-language TV stations and national Spanish-language networks. Spanish TV was down slightly from $1.287 billion to $1.247 billion, year-on-year for the period. That decline is expected to continue as some are wondering how much Wall Street's financial meltdown will affect ad budgets targeting the country's biggest minority.

One media buyer, with knowledge of the Hispanic TV ad market, says, “Scatter dollars [in the Hispanic sector] have pretty much dried up; there's not much going on.” Scatter refers to ad dollars spent during the year beyond upfront commitments. “Most advertisers have pushed back decisions on first quarter 2009 to the end of the month to give them more time to figure it out.”

Last week, Telemundo said it would trim 5% of its workforce despite its primetime ratings being up nearly 20%.

Lee Westerfield, managing director and media analyst at BMO Capital Markets, says Hispanic populations are generally concentrated in major markets such as Los Angeles, New York and Miami; those areas are being hit hard by the ad slump.

“Metropolitan markets are deflating faster than the national average,” Westerfield says. Los Angeles, for instance, is suffering deflationary pressures due to sagging real estate markets and the state's own budget woes.

Westerfield adds that unemployment rates might also hit Spanish-speaking communities disproportionately, which could give marketers pause. Among all workers, the national unemployment rate was 6.1% in September; among Hispanics and Latinos, the figure was 7.4%. But while some of the biggest mainstream marketers cut back on the sector last year—Procter & Gamble, Sears and General Motors among them—others such as Lexicon Marketing Group, which sells language learning videos, and fast food giant McDonald's have grown their spend.

On the positive side, Westerfield also points out that Spanish-language TV is better positioned to weather the storm because it has a much broader base of advertisers than during the last recession in 2001. “The ad budgets for Hispanic media are no longer experimental,” he says. “Hispanic TV is better positioned today and is institutionalized at the agency level.” He cites the fact that agencies now have dedicated units for buying Hispanic media.

Despite where trends are pointing, Aaron Cohen, chief media negotiating officer at Horizon Media, an independent media buying agency based in New York, sees reason for optimism. Hispanic media executives, according to Cohen, have been very aggressive in promoting the importance of speaking to their community.