This article was the cover story of the inaugural issue
of Marketing y Medios in September, 2004 and was published with the title "Cha-Cha Charlotte". The
rights have reverted to me so I am posting the piece in its entirety.
Please contact me (luis dot clemens at gmail dot com) directly if you
are interested in reprint rights.
By Luis Clemens
Charlotte, North Carolina, is dancing to the rhythm of a Latin beat. Sí, Charlotte. Here, you can listen to music on Radio Líder, compete in the Mundialito soccer tournament or read the news in La Noticia. With an explosive 932 percent increase in the metropolitan area's Hispanic population between the 1980 and 2000 census, demographers have aptly labeled the rapid rate "hypergrowth."
"You don't have to be in L.A. You don't have to be in Dallas. You don't have to be in Miami. If you have 80,000 Hispanics in your community, you can turn a profit," says Luis Villareal of Cleveland-based radio consulting firm McVay Media. "Even if the absolute numbers in the community are small it can be very lucrative."
Charlotte's 77,000 Hispanics are dwarfed by the millions of Latinos in the traditional strongholds such as New York, Chicago or Houston. Yet, Charlotte represents a national trend in which new Hispanic markets appear overnight and out of nowhere.
Aspiring media barons, such as José Isasi, the Cuban-born founder and CEO of Que Pasa Latino Communications, are busy opening Spanish-language
newspapers and radio stations in Hispanic hypergrowth areas. For now, these small markets are bypassed and overlooked by the large media companies, which prefer to concentrate their firepower in the major, well-established Latino markets where the competition already is entrenched and fierce. Claiming "the big markets are gone," Sam Zamarripa, co-managing partner of Atlanta-based private equity fund Heritage Capital Advisors and an investor in Spanish-language media, says that putting money into hypergrowth areas will yield a leadership position and spectacular returns at a lower cost.
CHICKENS, CARPETS, CONSTRUCTION
Charlotte's swiftly growing populace is not alone. Eighteen metropolitan areas grew at the scorching rate of more than 300 percent, the statistical threshold for hypergrowth, during the past two decades. Eleven of those are located in the Southeast, with three in North Carolina: Raleigh (1,180 percent), Greensboro (962 percent) and Charlotte. The figures and statistical analysis come from a report, Latino Growth in Metropolitan Areas: Changing Patterns, New Locations, co-authored by Audrey Singer of the Brookings Institute and Roberto Suro of the Pew Hispanic Trust. In each of the hypergrowth areas, most of the increase can be accounted for by immigrants, mostly from Mexico, settling in cities where very few Mexican immigrants have settled before. The legal status of many is unknown.
Chickens, carpets and construction explain much of Hispanic hypergrowth in the Southeast. Processing poultry and making rugs are labor-intensive and unpleasant tasks, so much so that those jobs attract too few native-born American workers. These industrial sectors instead lure large numbers of immigrant workers who are less likely to turn up their noses at the stench of so many freshly slaughtered chickens or shy away from the backbreaking work of making carpets.
In the case of Charlotte, immigrants flocked there for the construction work. During the second half of the 1990s, the city experienced significant growth in the financial and service sectors, which, in turn, fueled high demand for new commercial and residential buildings.
A lopsided gender ratio is another defining trait of Hispanic hypergrowth. On average, there are 24 percent more men than women in these areas. Raleigh-Durham is an extreme case with 188 Latino men for every 100 Latina women. Traditionally, male Mexican immigrants send for their wives after having established themselves in a community and secured a steady job. But right now in these areas, it is a man's world.
PRINT MEDIA PANORAMA
Local retailers are interested in reaching this male-dominated market through print advertising in the Spanish-language weeklies, but there has been far less interest from national brands. Supermarkets and car dealerships routinely purchase full-page ads combined with the smaller ads purchased by immigration lawyers and travel agencies. National ads are scarce, though Bank of America is an active buyer not only of print but of radio ads and outdoor advertising as well.
Still, the market is small. Industry sources indicate print advertising for the Spanish-language market in North Carolina totaled only $5 million last year, half of which went to Charlotte weekly La Noticia, with an audited circulation of 21,000.
Despite the small stakes, Charlotte is amid a full-scale battle for Spanish-language newspaper readers. It has 10 to 12 Spanish-language titles, but the exact number varies every few months. Most of the newspapers are distributed weekly, side by side in open-air racks outside Hispanic businesses. Claims of regional circulation range from 20,000 to 60,000. Some publications are audited, some are not.
The Spanish-language newspapers compete fiercely for circulation and advertising sales using every weapon at their disposal. They hire away each other's employees, offer free advertising to win market share, pare costs to the marrow, badmouth the competition and, in one case, display a titillating Page 3 girl. Titles appear and disappear with great frequency. "It is simply a sign of the vitality of the market. We are reenacting the history of the mainstream papers in the country," says Hernán Guaracao, president of the National Association of Hispanic Publications. "The fact that there was more than one alternative benefited the reader. I see it from a positive view."
For now, La Noticia is the acknowledged editorial and commercial leader. It was founded in 1997, and is owned by wife-and-husband team Hilda and Alvaro Gurdián (Hilda is the CEO, Alvaro is the president). Peter Ridder, chairman and publisher of The Charlotte Observer, a Knight Ridder newspaper, says, "Clearly, the top one is La Noticia. It has credibility in the community."
The Gurdiáns are very proud of their extensive ties to the community and believe it will help shield them from external competition. Out of seven owners of Spanish-language media outlets interviewed for this article, the Gurdiáns were the only ones without an eye on expansion. "Our newspaper is here. We live in this community," says Hilda Gurdián. "The person who wants to publish a paper and really wants to serve the community should go to a [market] that is not already served."
Nonetheless, José Isasi seems quite happy to crash the gates of Charlotte's newspaper fraternity. Isasi and his wife, Flora María Appel, own Que Pasa Latino Communications, which publishes three editions of the Que Pasa newspaper in North Carolina, each with an audited circulation of slightly more than 20,000. The company, headquartered in Winston-Salem, also operates three Spanish-language radio stations. Together, Isasi projects the newspapers and radio stations will generate between $6.5 million and $7 million in revenue this year.
José Isasi, 59, is a charmer. But beneath his almost cuddly exterior there lies a steely competitor with a big appetite. He wants to have a newspaper and a radio station in every Hispanic market between Atlanta and Washington, D.C., by 2010. Isasi stresses the importance of leadership, teamwork and being number one so often that he sounds like a high school football coach. "I am really a strong believer in participative management," he says. "You get the right people in the right position and you let them run the company." With more than two decades at Westinghouse Electric as a manager and engineer, he left in 1990 and opened a manufacturing consulting firm and a medical software development company. Eventually, he closed those businesses to focus on serving the Hispanic market.
But it wasn't until 1998 that he entered the communications business when he purchased an interest in the local Spanish-language newspaper. A year later, he bought out the founders. In relatively quick succession, he built up the paper and launched a second edition in Raleigh. Isasi says that for the next year and a half he will consolidate the operation of his newspapers and radio stations. At the same time, though, he already is exploring a broadcast television deal in North Carolina with a local station owner and one of the Spanish-language networks.
AIRWAVES EN ESPAñOL
"This market is growing by leaps and bounds. We just continue to grow, and it is not going to stop," says Lisa Brown, sales manager of WKRE-AM, La Máquina. In light of this growth, locally owned WKRE flipped its format a year and a half ago from general-market News/Talk radio to Spanish-language music.
The move from English to Spanish has paid off, Brown says. In part, because she can make a very effective pitch to local advertisers. "We talk to [automobile] dealerships, for example. We tell them [Hispanic consumers] are going to pay in cash, in full most of the time. If you put your price under $10,000, the cars will be off your lot this week."
Recent Mexican immigrants prefer cash purchases to credit, which endears them to local shop owners and motivates much of the local ad sales in Charlotte's Spanish-language media.
Convincing national advertisers, as opposed to local car dealers, to place their Hispanic ads on Spanish-language radio in Charlotte is a tougher sell. "Media buyers are like, 'What? Charlotte?,'" says Brown. She adds, "They should be considering Charlotte. Include us in the mix. [I am] not going to tell a media buyer to ignore Miami, but we're here, we're huge."
Charlotte has gone from one to four Spanish-language radio stations in the past year, and there is a real possibility of a fifth or even a sixth station. The longstanding and leading Spanish-language radio station in Charlotte is Radio Líder, which is operated by two local Hispanic companies that have leased airtime from WNOW-AM for almost 10 years. The station was purchased in January by the private New York-based Davidson Media Group, along with five other Spanish-language stations in North Carolina. In the face of increased competition, Radio Líder's news director, Aura María Gavilán Posse, remains calm. "You have to understand we have presented a good product," she says. "The new stations will have a hard time because they will be competing against one another. We have had time to grow this community's affection for [Radio Líder]."
Norsan Communications, like the Davidson Media Group, is a recent entrant into the Charlotte market. Atlanta-based Norsan is owned by Norberto Sánchez, a Mexican-born entrepreneur who started in the restaurant business and has since branched out to wholesale meats and now radio. It recently purchased an AM radio station, La Tremenda.
Like Isasi, Sánchez is an aspiring media baron; but unlike Isasi, Sánchez is publicity shy and refused a number of written and verbal requests for interviews.
Zamarripa, the venture capitalist, knows Sánchez well. Together, they invest in real estate and sit on the same corporate board of directors. Zamarripa hopes to expand that business relationship. "We're probably going to support him as he expands his footprint," he says. "And we've encouraged him to think about acquisition, acquisition stability, aggregate some capital and then take the company public. We think Norberto has the ability to be a CEO of a public media company."
So far, existing publicly traded, Spanish-language (SBS, Univision) and general-market radio companies (Clear Channel, Jefferson Pilot) have not yet entered the Charlotte Hispanic market, despite the entrance of Davidson from New York and Norsan from Atlanta. The large mainstream media companies are simply not active in Charlotte's Spanish-language market.
This is true for print as well as radio. "We haven't done anything I would call real substantial. We are not trying to be a Hispanic publication. We leave that up to La Noticia," says the Charlotte Observer's Peter Ridder. His paper covers the Hispanic community regularly and distributes a Spanish-language version of its hurricane guide, but that's about the extent of its efforts.
Stuart Powell, vice president and general manager of WCNC-TV, the Charlotte NBC affiliate owned by the A. H. Belo Corporation, says he is "keenly aware of the Hispanic community. We've had a number of incidents [such as hurricanes] where we've been wall to wall in our [news] coverage, and we will give regular reports in Spanish. You do that because everyone has the potential to be harmed by a major story of that nature," he says. Beyond newsgathering, though, Powell is not yet willing to spend money on developing local Spanish-language programming. Potential Hispanic viewership, he says, "is not in the level where it would be considered significant."
According to Nielsen Media Research, which is owned by Marketing y Medios parent company VNU, the 22-county designated market area has a Hispanic household penetration of 3.3 percent. The same figure for the metropolitan area is 3.9 percent and 4.7 percent within Charlotte city limits. But the Nielsen figures seem low, if compared to anecdotal evidence and census data. "Nowadays, everywhere you turn [in Charlotte], it is filled with Latinos," says Que Pasa Charlotte publisher Alan Becker. The 2002 census estimate pegs the Hispanic population of the city of Charlotte at 12.5 percent.
Both Belo and Knight Ridder aggressively pursue Hispanic media ventures in larger markets, but in Charlotte they both seem happy to wait on the sidelines. "It might be cheaper to buy once it is established rather than be the pioneer with all the start-up costs," says Owen Van Essen, president of newspaper merger and acquisitions firm Dirks, Van Essen and Murray.
Radio consultant Villareal sees value in getting in these markets early. "You want to be in there while it is growing," he says. "Lets face it, the Hispanic population is going to keep multiplying. It is going to keep growing and you want to be there."
Small entrepreneurs now are rushing to open Spanish-language newspapers, radio stations and related media in Charlotte and other hypergrowth cities, perhaps motivated by the hope of becoming, in their own right, an A.H. Belo, John S. Knight or a Herman Ridder. These aspiring media barons are acting now, before the paint dries on the Se Habla Español signs.