1. SPANISH LANGUAGE MEDIA 2. CLEAR CHANNEL

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1. SPANISH LANGUAGE MEDIA2. CLEAR CHANNEL

• Linguistic and radio oligopolies

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Hispanic Media Market Attractions (1)

• Hispanic population projected to triple in size
  by 2050, accounting for 24 of the population.
• Growth in this market greatly exceeds growth in
  comparative markets.
• Media age of Hispanics is 26.6 versus 35.8 for
  non-Hispanics.
• One in five teens are Hispanic.
• Hispanic teen pop. Grew 30 1993-2001, while
  non-Hispanic teen pop grew 8 is expected to
  grow further 62 by 2020 compared with
  non-Hispanic teen growth of 10.
• 18 of Hispanic viewers in the 18-34 age range.

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Hispanic Media Market Attractions (2)

• Hispanics watch more TV (4.6hrs) than whites
  (3.9hrs) and Asians (3.5hrs)
• Average Hispanic teen spends 320 monthly (total
  19bn spending power), 4 more than average
  non-Hispanic teen
• 96 of Hispanics use at least some Spanish at
  home 86 do so at work or school.
• 70 Hispanics learn more about products when
  advertised in Spanish
• 50 Hispanic households prefer watching programs
  in Spanish

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Hispanic Media Market Attractions (3)

• Hispanics are more brand-oriented.
• Hispanic advertising industry grew at average
  rate of 17 a year 1997-2002, from 1.7bn to
  3bn.
• U.S. leading advertisers under-investing in
  Hispanics allocated only 2.4 of advertising
  expenditures 1999-2002, although Hispanics
  accounted for 13 of U.S. population.
• Hispanic purchasing power is 630bn in 2003.
• Hispanic middle class grew 80 1979-1998.

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MERGER 1 Telemundo NBC

• Established
• 2002 Telemundo network, No.2 in U.S. Hispanic TV
  market acquired from Sony Liberty by NBC.
• Cost of purchase 2.7 bn
• Potential market 35.3 m Hispanics (14 of U.S.
  market, but 3 of advertising pie)
• Advantages of synergy
• Telemundo (in 1993, 300m in debt) gets access
  to NBC sales, marketing, formats, news gets
  increase in market share NBC gets broadcasting
  in both languages for major news stories (e.g.
  2004 Olympics), since 40 of Telemundo staff is
  bilingual

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Merger 1 Telemundos Strategy

• Will concentrate more on telenovelas in
  primetime, particularly Mexican telenovelas since
  Mexican Americans prefer imports from Mexico
• New imports come mainly from TV Azteca (No.2
  network in Mexico)

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Merger 2 Univision HBC

• Univision (No. 1 U.S. Hispanic TV and radio,
  reaching 97 of all U.S. Hispanic TV households
  owns and programs 66 radio stations in 17 of top
  25 U.S. Hispanic markets) Univision is fifth
  most watched network in U.S.
• In 2003, Univision announced merger with Hispanic
  Broadcasting Corporation (HBC) a Spanish-language
  broadcaster with 63 stations in 15 of top 20
  Hispanic marketsFCC approved merger Sept 2003
• This merged company would control nearly 70 of
  Spanish-language TV ad revenue in the U.S. and
  40 of Hispani audience radio ad revenue
• 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
• Univision gets most of its telenovelas from
  Mexicos Televisa

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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 respective markets.
  In 2000-2001 Univision accounted for ALL top
  20-rated Spanish programs
• Clear Channel owns 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
  Hispanic Americans Univision, once owned by
  Hallmark, is owned by Jerrold Perenchio, Televisa
  of Mexico and Venevision of Venezuela. But half
  the board is Hispanic as are its three highest
  paid officers
• 87 of Hispanics in US are opposed to having
  Spanish language media owned by non-Hispanics
• Perenchio is strong GOP supporter as is Clear
  Channels CEO Lowry Mays, and its investor/board
  member Tom Hicks

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BUT

• Univision only attracts 5 of U.S. TV viewers,
  and 2 of ad. dollars but it had more than 50
  of Hispanic audience in L.A..

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A Third Player Azteca America

• Azteca America is an off-shoot of TV Azteca which
  broke Televisas monopoly in Mexico and now
  commands 40 of the audience in Mexico.
• TV Azteca is owned by Group Salinas, which also
  owns Group Elektra (home electronics), Unefon
  (cellular phones), Todito.com (Internet services)
  and half of the Mexican soccer league.
• Launched 2001, in L.A.
• In 2002, AAs LA station, KAZA-TV 54 had been
  3-4 of total U.S. Spanish language TV sales.
  Controls WPMF 38 in Miami (but Miami Cuban
  audience not so receptive to programming from
  Mexico)

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CLEAR CHANNEL (1) 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 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 Complaint

• Owns more than 1,200 local radio stations in all
  50 states
• 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 (4) The Complaint

• 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 (5) The Complaint

• 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 (6) The Defense

• 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.

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Clear Channel (7) 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 such as XM and Sirius,
  and Internet radio promise more choice