This article was published under the title "Pushing Papers" in the March, 2005 issue of Marketing y Medios. It is also one of my favorite stories. Maybe, that is, because it took so much time and effort to research and write. 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.
Papers Spanish-language newspapers struggle to find their place in the
hearts of readers and advertisers' wallets.
March 01, 2005
By Luis Clemens
Greeley, Colo., is a newspaper town. It was founded by one newspaperman, Nathan Meeker, and named for another, Horace Greeley. Even before there was a school in town there was a newspaper. For 135 years the Greeley Tribune has been a fixture of local life. Ironic, then, that the recent launch of a free weekly by the Greeley Tribune should spark anger, controversy and cancelled subscriptions. The new publication is La Tribuna, and the natives are restless. "What a surprize (sic), aiding, abetting, rewarding and encouraging illegals, it is what the Greeley Tribune does best" was among the almost 400 unkind and mostly unsigned comments posted online reacting to news of La Tribuna's January start up.
"Estamos levantando pasiones" (We are inspiring passionate responses), says Edwin Ruis, editor of La Tribuna.
Local businessmen pursuing the Latino market dismiss the comments as the work of a "vocal minority." Mick Evanson is the executive vice president of Union Colony Bank, a local bank that makes a concerted effort to recruit bilingual staff and print promotional materials in Spanish. He considers advertising to Hispanics in La Tribuna "the right thing for us to do."
Spanish-language newspapers struggle to find their place in the hearts of readers and advertisers' wallets.
It is the right thing because he has plenty of
Latino customers and Hispanics represent roughly 30 percent of Greeley's
population of 77,000. A little more than 8 percent of the city's residents were
born in Latin America. The local school district recently announced 51 percent
of the primary school students are of Hispanic origin.
Jim Elsberry, publisher of the Greeley Tribune and La Tribuna, says, "We want to be the newspaper for everyone in [our] county" — in English and Spanish.
La Tribuna is unique only insofar as the scope of the controversy that surrounded its startup. Greeley's advertisers and newspaper executives are not alone in their desire to reach Latino readers in Spanish. The market is "booming [and] in the midst of cataclysmic changes," says Hernán Guaracao, the Colombian-born owner and publisher of Philadelphia weekly Al Día and president of the National Association of Hispanic Publications (NAHP). The most dramatic changes are largely wrought by an influx of corporate and private equity financing in the form of product launches and acquisitions. There is enormous interest despite the meager amount of national advertising allocated to Spanish-language print.
It is an underspend that Guaracao and others attribute, in part, to a faulty perception among advertisers. "There's a myth that Latinos don't read," Guaracao says. "That we simply have to provide them with telenovelas from Mexico and Venezuela. That is a lie."
What is true, however, is that for the uninitiated, buying Hispanic print media for a national campaign can be a hideously complicated and time-consuming process. It's particularly so, in comparison to a Latino broadcast buy. Not surprising, then, that a number of specialist firms have entered the fray as facilitators.
Of Irish descent, the Mexico City-born John Trainor is the CEO of Papel Media, which is one of a number of Spanish-language print media reps. "You have to call a lot of newspapers, negotiate rates, sign contracts, place insert orders and then collect the signed and notarized insert orders." Trainor says, "All of these are headaches for the advertisers." Papel Media is, of course, happy to deal with these headaches for a fee.
Many Spanish-language newspapers are working to standardize advertising formats and simplify the process. At the same time, though, the biggest and most aggressive among them are bypassing intermediaries and directly courting national advertisers.
"We want to build scale in order to provide advertisers with an efficient print ad buy that is as effective as doing so with Latin television. The best way to do that is by providing [media buyers] with one rep and representing them with one bill," says Digby Solomon Díez, the Cuban-born publisher of Hoy, the Tribune Corp.'s Spanish-language paper printed in Chicago, Los Angeles and New York.
Solomon relentlessly touts the advantages of Hoy as a one-stop shop for national and regional advertisers. He stresses Chicago, Los Angeles and New York together represent 73 percent of the Hispanic market. Future financial growth, Solomon insists, lies in national and regional advertising, even though, for now, local advertising still represents a majority of his revenue. Hoy's overall strategy is, to a large extent, predicated on the belief that national advertising in Spanish-language will grow.
It is a safe assumption because the amount can only go up. The money spent by national advertisers in print is, well, pathetic. Solomon practically demands, "I want a bigger piece of the pie." Industrywide, advertising figures vary wildly between sources. The latest data available from Latino Print Network (LPN) estimates total ad revenue in 2004 for Spanish-language newspapers to be $923 million. National advertising accounted for $170 million of that figure. Dailies captured the lion's share of national and local advertising, even though they are significantly outnumbered by weeklies.
It is worth noting these advertising numbers are reported by the newspapers themselves with all the attendant possibilities of overstatement. They also include barter. Even if taken at face value, the figures don't add up to huge amounts, particularly in comparison with Spanish-language TV. (See chart, Page 35.)
Strangely, money is being spent on Spanish-language newspapers because of the serious underallocation of Spanish-language print media buys. In other words, investors and newspaper companies are confident the current, lopsided underspend on Spanish-language print will not stand.
Hence the efforts in the past few years by Hoy and others to build Hispanic readership quickly. Solomon says, "Our goal is to have the biggest and most successful papers in the most important markets in the country."
THE HOLY GRAIL
Standing squarely in Solomon's way is a Canadian who describes himself as "a longtime newspaper guy" who "approach(es) this market with great humility." Douglas Knight is chairman and CEO of ImpreMedia, which owns three prominent and strategically located Spanish-language newspapers — La Opinión in Los Angeles, El Diario-La Prensa in New York and La Raza in Chicago.
The result of linking the three titles has been, according to Knight, "extraordinary" and produced "double-digit" growth in revenues, although he declines to provide specific figures. (The same is true of every other newspaper executive interviewed for this story, including those who work for publicly traded companies.) "The biggest opportunity is in general-market advertisers understanding how much more effective they can be in reaching Spanish-language customers, particularly by using Spanish-language newspapers," Knight says.
New Jersey-based media consultant Robert Montemayor says "ImpreMedia and Hoy are chasing the concept of a national chain, a national publication. "There is the thought that whoever perfects that formula is going to garner the most in terms of big-time advertising buys, at least that's the Holy Grail."
PAID OR FREE?
In the general market the quest for the Holy Grail has been the decades-long search for the way to reverse the decades-old and steady decline of newspaper circulation. Spanish-language newspapers are all over the map when it comes to the various circulation and subscription models.
ImpreMedia does only single copy sales for its dailies El Diario-La Prensa in New York and La Opinión in Los Angeles. In Chicago, for its weekly La Raza, it does strictly household distribution. It is a relatively straightforward approach.
Then again, so was the reporting of circulation figures for Hoy's New York edition. Hoy's credibility took a serious knock when auditing problems were made public. These consisted of aggressive and deliberate inflation of circulation figures. Appropriately, Tribune Corp. fired those responsible and commissioned a new audit. Despite its corrective measures, the scandal at Hoy and sister publication Newsday cast doubt industrywide on auditing and circulation practices.
Since the scandal, Hoy has done its best to be squeaky clean about accounting for single-copy sales in New York. This is important because it is the one market where Hoy still is for sale, which is because, quite simply, they can make money from it. There are distributors and newsstands already in place, for whom it represents a marginal cost to distribute Hoy in New York. Sell the paper for a quarter and the company sees a net return. That's not so in Chicago where Hoy is the only Spanish-language daily. "It was costing me a dollar to get 25 cents [per copy] including waste, distribution costs and subsidies," Solomon says. "Now, I can deliver a free copy for 6 to 9 cents and it allows me to tailor my distribution to those zip codes where major advertisers have their retail locations."
The targeted distribution is such that it seems more like a daily, direct mail campaign than a traditional home delivery of newspapers. In Los Angeles, where Hoy is facing an uphill battle, Solomon has developed a sophisticated circulation strategy in an attempt to undermine La Opinión, which he acknowledges is "the big dog in the market. In Los Angeles, we identified 69 core zip codes with the most dense Hispanic population [and] also correlated in terms of a lot of retailer locations. Thirty percent to 50 percent of the distribution is off to the zip codes in those homes. On Friday, we increase the home delivery to the same [zip codes] to 150,000 and we charge more. We move around within the zip codes. It is a sampling program not a guaranteed delivery."
Solomon says he opted not to charge for Hoy in Los Angeles because "at a normal rate of growth to gain readers we leave advertising dollars on the table."
But Fernando Páramo, publisher of the Los Angeles weekly Impacto USA, is skeptical. "Hoy was forced to give it away," he says.
This may well be a case of bravado from a competitor who also distributes a newspaper free of charge, but Páramo and his publication should not be dismissed out of hand. The Mexican-born, former editor of Playboy en Español oversaw the transformation and re-branding of the Los Angeles Newspaper Group property, El Económico (circ. 50,000), to Impacto USA (reports circulation at 250,000). It's to be audited next month by ABC. They deliver to most zip codes in Los Angeles County that are over 85 percent Hispanic, with an average household income of more than $35,000 and located within five miles of a shopping mall. Páramo claims the paper broke even in 2004, its first full year of operation.
"I think advertisers will tell you that they like to know that the publication is on the doorstep getting into that household on a week in, week out basis," says Montemayor. "The advertiser doesn't care whether [a newspaper] is paid or controlled".
But the reader might. Greeley's La Tribuna has been in circulation for only a short period of time, and it is too early to draw conclusions. Still, Ruis notes that "we are fighting the stigma that what is free must be bad."
Alex López Negrete, the founder and head of López Negrete Communications, an advertising agency based in Houston, says, "If you have someone who pays for it, you have a far more committed reader."
Newspapers have long considered paid, home delivery to be the sine qua non of reader commitment. Yet, it is a rarity in the Spanish-language market compared to mainstream papers. El Nuevo Herald, a Knight Ridder publication in Miami, is a noteworthy exception among Spanish-language dailies when it comes to home delivery.
César Pizarro, the Cuban-born business manager, cites a number of reasons for the success of the home delivery program, including the existing distribution infrastructure of The Miami Herald, heavy promotion of home delivery, extended residence in the area (average length of residency of Hispanics in this market is 15 years) and since locals do not rely on public transportation they "want to [receive] their newspaper before they get into their cars in the morning." Home deliveries account for 62 percent of the daily circulation of 88,780 and the Sunday circulation of 99,648, according to the latest publisher's statement.
As with home delivery, the success of El Nuevo Herald in a number of areas is the combined product of synergies with sister publication The Miami Herald, persistent marketing efforts, solid implementation by management and the characteristics peculiar to the Miami market. "Spanish is the main language. You can live in Spanish all your life here in Miami," Pizarro says.
El Nuevo Herald is profitable (Knight Ridder doesn't break out results for El Nuevo Herald) and, according to Knight Ridder's own readership surveys, El Nuevo Herald ranks first among all corporate titles in terms of reader satisfaction, with The Miami Herald in second place.
Meximerica's Rumbo is trying to cover much of the same operational and editorial ground as El Nuevo Herald in record time. Edward Schumacher Matos, publisher of Rumbo, has ambitious plans for his startup newspaper chain, which operates a regional cluster in four Texas markets. He says, unabashedly, "We think we are the chain of the future."
No individual, other than Schumacher, and no topic, other than Rumbo, sparked as many contradictory and passionate responses among those interviewed for this article. Schumacher has a Pulitzer Prize under his belt, a Bronze Star on his chest and a photogenic mug. And he knows it, which makes him something of a walking bull's eye for critics in the Spanish-language newspaper business. Notwithstanding, he gets plenty of good press.
One advertising executive who did not want to be named, shrugged and then smiled before saying "Schumacher has balls of steel."
Rumbo operates without the safety net of being an extension of an existing newspaper, as is the case of La Tribuna, El Nuevo Herald and a host of other titles. Rumbo cannot share an office, parking lot or a printing press. It has had to build a sales staff and client contacts from scratch. Some of Schumacher's competitors seem baffled, almost affronted, that he should even try to pull off such a venture. His is not a modest, mom and pop weekly in the hinterlands. A number of people, both well-wishers and ill-wishers, question Rumbo's long-term viability as a freestanding operation. No one interviewed for this article, though, questions the sheer chutzpah and gutsiness of the venture.
For his part, Schumacher doesn't pull any punches either. "Too many English-language publications are short-sighted," he says. "Most newspapers go into the Spanish market as a defensive measure, covering their backside and defending their turf as opposed to creating a new market."
Funding for Rumbo's entry into the new market comes from Recoletos, the Spanish newspaper group, which purchased 80 percent of Meximerica Media, owner of Rumbo. The remaining 20 percent is in the hands of Rumbo's management. Recoletos, in turn, is owned, for a little while longer, by Pearson, the British media group, which includes the Financial Times among its properties. Management at Recoletos recently put together financing from a syndicate of banks led by Spain's Banesto in an effort to buy out Pearson. The management buy-out of Recoletos is expected to be completed by the end of the first quarter.
The financial background is relevant because Recoletos is "exploring the possibility," according to Schumacher, of selling part of its stake in Meximerica Media. Schumacher has accompanied Recoletos executives to meetings in New York with potential financial and strategic investors.
The reason for the interest in the possibility of a sale is to "finance future growth," says Schumacher. Recoletos has committed itself, according to Schumacher, to funding Rumbo's operations through projected break-even in 2007. "We really want to take this beyond Texas [and] prove the model works and go beyond these four markets. Each additional market that we open adds marginal cost." Further growth, though, even with marginal cost, is on hold pending a decision on whether or not the sale advances.
Meanwhile, Rumbo both sells and gives away copies of its newspapers in the same markets at the same time. It may sound schizophrenic, but Schumacher spells out the method to the madness. "Let's cut to the chase. We didn't want to go to the totally free paper because we wanted to maintain single copy sales." That said, in the face of competition from "all those free weeklies out there, it is going to take time to build sales for the daily." The purpose is to "give advertisers a regional buy. To give them numbers that were attractive from the get-go. We then began saying what we ought to do is keep our numbers high for advertisers."
Gilbert Bailon, publisher of the AH Belo corporation daily Al Día in Texas (no relation to Hernán Guaracao's weekly Al Día in Philadelphia), has more modest aspirations. "We are trying to appeal to a discrete group of readers based on language, culture and common interests. ... We don't have delusions of becoming this monster paper," he says.
Bailon, like Schumacher, is an accomplished journalist. Until two years ago, he was executive editor of The Dallas Morning News and one of the most senior Hispanic editorial staff members of any general-market newspaper in the United States. This helps explain why Bailon unabashedly promotes Al Día's ties to his former paper. "We have a tremendous asset here overall and that is The Dallas Morning News. The synergies are quite real. The efficiencies [too]."
This Belo effort is typical of how general-market publishers are presenting Spanish-language papers. It is emblematic because Al Día is fully embedded within the The Dallas Morning News superstructure.
Bailon does not pay rent. He does not pay the electric bill. He pays for newsprint, but not for the use of the printing press. This frees up significant resources for newsgathering, which Bailon considers a vital component for Al Día's success. "We needed to have a quality newspaper that speaks to the Hispanic community with competence and credibility," he says. Bailon's sales people do, however, sometimes call on accounts together with The Dallas Morning News sales staff and pitch clients. "Without the [The Dallas Morning News] infrastructure, it would not be viable." Certainly, it would be much riskier. (See related Market Profile, Page 46.)
GIVE US OUR DAILY RISK
Risk, however, is the daily bread of most of the small- and medium-size Spanish-language weeklies across the U.S. These weeklies continue to represent the bulk of Spanish-language print circulation in the country. And the entrepreneurs who own and operate these weeklies routinely wager their life savings and not just a tiny portion of shareholder capital.
Johnny Yataco is a Peruvian photographer turned ad sales rep turned founder and publisher of the weekly Washington Hispanic (40,000 circulation, ABC audited). He does not mince words, no hemming and hawing, no searching for the politic phrase. He is also a good example of the success that some small- and medium-size weeklies are having in the face of well-financed competition from Spanish-language dailies. Not that he thinks much of many of them.
"That model is a catastrophe," says Yataco in reference to Hoy's papers in Chicago, New York and Los Angeles. "I don't know who they paid to come up with it." His blood boils when he hears mainstream publishers justify their entrance into the Spanish-language market by saying Latino readers are underserved. "I don't believe they are being sufficiently honest. This market is already well-served." (Bailon, Knight, Schumacher and Solomon each, in fact, said the Latino market was underserved even though they are all operating in markets that have several, and in some cases more than a dozen, weeklies.)
The potential sale of independently-owned Spanish-language newspapers worries Robert Montemayor, the consultant, who is both a former journalist and marketing executive. "A lot of these publications have a voice to them that runs counter to or different from English-language media. ... If there is a voice that wants to rail against the establishment they do so. My concern is that if mainstream publishers begin to scarf up a lot of these publications [the market] may get homogenized."
That is a shame, he believes, because Spanish-language newspapers are "not traditional white bread journalism. It is not white bread publishing. It changes the landscape in a country where half of the states have English-only legislation. What's the dog and what's the tail?"
SIDEBAR: Editorial Talent Is Hard to Find
"The biggest hurdle is to prove to advertisers that Hispanics do read," says Gilbert Bailon, publisher of the AH Belo Corp. daily Al Día in Texas.
When asked about the topic, Alex López Negrete, founder of López Negrete Communications and future president of the Association of Hispanic Advertising Agencies, raises his voice and says, "We don't read junk. If that was not the case, you would not have great papers like La Opinión that are testimony that there is a reader out there if you put something good in front of them."
The answer to the question of whether or not Hispanics read would seem to be self-evident. There are millions of Spanish-language newspaper copies circulating each week and they can't all be used to wrap fish. John Trainor, CEO of Papel Media, argues that classified ads, coupons, dealership ads and retail inserts are particularly important to price-conscious Hispanic immigrants. That's an argument borne out, he says, by the higher coupon redemption rates of various immigrant groups.
But the more difficult question may be who is going to report for all these Spanish-language newspapers. Finding and hiring journalists who can write or edit in Spanish and effectively navigate American culture "is a tough challenge," says Hoy publisher Digby Solomon Díez. "They are so hard to find in the United States and we recruited from coast to coast," adds Rumbo publisher Edward Schumacher Matos. The solution would seem to lie in the sizable Hispanic community, but, as Schumacher explains, "If they live here for a long time they lose the syntax."
One option that remains largely unexplored is to call the local fire department. Edwin Ruis went on vacation to Greeley, Colo., to visit his cousin David Escobar, a local fireman. Like most journalists on vacation, he read the newspapers. He was not impressed by the Denver-based Spanish-language ones he came across. After reviewing the Greeley Tribune, he went to the local library, looked up the paper's staff directory and sent an e-mail to the editor. Ruis wrote that there's a market and an opportunity for the Tribune to open a Spanish-language paper. Much to his surprise, Ruis was contacted almost immediately and pursued by the editor of the Greeley Tribune. A year later he moved from El Salvador to Colorado.