Univision Communications Inc.'s Andrew Hobson told investors and analysts
Tuesday that the company's new Spanish-language broadcast network, Telefutura,
would do something few new networks rarely do: break even in its first year of
operation.
The network is set to launch Jan. 14 using the 13 stations Univision acquired
earlier this year (for $1.2 billion) as the distribution backbone.
But to get there, Hobson said, Univision is taking 'full advantage of duopoly
economics.' That means skeletal staffs, compared with most TV stations, at its
owned Telefutura affiliates. Those stations will have staffs of 11 people --
nine sales reps, one engineer and one secretary -- Hobson said.
'There are no technical costs, no master control,' he said, adding that all
of the programming will be inserted through remote satellite switches at a
savings of about $20 million per station.
At breakeven, the network is expected to generate $100 million in revenue (or
roughly 6 percent of the U.S. Spanish-language TV ad market) in 2002, Hobson
said.
He added that Univision believes Telefutura will be the second-most-viewed
Spanish-language network (behind Univision) within three years, with about a 20
percent share of audience. It's expected to average a 10 share in its first
year, he said.
Hobson said the company would probably move some of its stations acquired
from USA Broadcasting out of the 700-megahertz band (channels 59 through 69)
that the Federal Communications Commission plans to auction off next year for
other uses.
Eight of the former USA stations are located in that spectrum, making
Univision the largest single space holder in the 700-MHz band, he said. But
Hobson also insisted that Univision would not compromise coverage for the sake
of the auction.
'We're broadcasters. This is not a spectrum arbitrage,' he said.
Nevertheless, he added, 'in markets where we can maintain distribution, we'll be
prepared to do something.'
In the contract to buy the USA stations, Univision agreed to split any
windfall (above the first $100 million) from the 700-MHz auction with USA
Networks Inc.
Hobson made his comments at the UBS Warburg LLC media conference in New
York.
