The following article appeared originally in the January, 2006 issue of Marketing y Medios. The rights have reverted to me and I have reprinted it here because it is a good (although somewhat dated) description of a television station group with an atypical business model built on low-power television stations and programming from TV Azteca. Please contact me if you are interested in reprint rights or an updated version of this article.
Más Stations Maximize Low Power (Title as it originally appeared in the magazine.)
By Luis Clemens
JUST SHY OF NEW YEAR'S EVE, Dallas-based TV station group Una Vez Más (UVM) secured a minority investment from Boston-based private equity firm Alta Communications. Proceeds from the deal, along with a credit facility from Wells Fargo Foothill and money from the sale of two signals, means the Azteca America affiliate group now has a little more than $45 million to enter additional DMAs. UVM expects to eventually operate in at least 23 markets representing close to 30 percent of the U.S. Hispanic market.
Not bad for a business that almost didn't get out of the starting gate. In December 2000, UVM CEO Terry Crosby sold his interest in a Los Angeles TV station and planned to take a break from work altogether. Instead, equipped with a tidy sum from the sale, he went in the opposite direction and got back into the TV business "one more time," starting up the aptly named station group Una Vez Más.
Most of UVM's stations are in the Southwest and all of them are low power stations. The majority of the stations are deliberately in markets where Mexicans and Mexican-Americans make up more than 80 percent of the local Hispanic population.
"The content from [TV Azteca in] Mexico is resonating in those markets," says Crosby, a longtime Hispanic radio and TV investor. "What plays in Phoenix does not play in Miami. I look at it as a regional Mexican network serving the largest [Hispanic] population."
The venture got under way in 2002 after Crosby met with Luis Echarte, then-president and now chairman of Azteca America. "[Crosby] really took a chance on us and has been a tremendous distributor," Echarte says. "It has been ideal for us." Azteca America is an all-affiliate network that has rapidly expanded its reach through UVM and other station groups.
The profusion of low power Spanish-language broadcast affiliates over the past couple of years has proven to be an inexpensive way to build distribution coverage. Recent deals include the Caballero sale of low power stations to Viacom for an undisclosed amount (final FCC approval is scheduled for late January), LAT-TV's December launch of a low power Spanish-language station in Austin, Texas, and McGraw- Hill's purchase of a low power station in San Diego to transmit Azteca America's signal. Additionally, Univision, Telefutura and Telemundo each have low power affiliates.
UVM's business strategy boils down to the creation of what Randy Nonberg, Crosby's lawyer and fellow investor, refers to as a "synthetic full power station" in many markets. "[We] take a low power that has a good signal, add [analog] cable and satellite coverage, [then] compete head to head with full power stations at substantially lower cost."
UVM first tested its strategy in Las Vegas, one of only four markets where the firm originally planned to operate. Minority investor Mark Paretchan, UVM's vice president of sales and Crosby's junior high school classmate, says, "You can have a full power in Vegas that covers a lot of scorpions and snakes in the desert, or you can have a low power like we have. You don't have the same must-carry rights [as a full power station], but we also didn't pay $25 million for the station in Vegas. Maybe we spent $3 million to $4 million."
Paretchan says UVM "pays to play" in certain markets, meaning they pay some cable systems to carry their stations. In return, they negotiate favorable channel placement. Paretchan says the negotiation with the cable companies is easier because of the strength of Azteca's programming. The Mexico City-based media company has racked up a few modest ratings successes mainly because of its Mexican soccer league rights and the strength of La Academia, a reality talent show franchise.
But the network is still a long way behind the Univision networks. "The big boys don't see them as competition, and many advertisers won't even look at [low power affiliates]," says Ken Deutsch, media director at Long Beach, Calif.-based Grupo Gallegos. He buys time on low power stations, with restrictions. "Let's not write off low power stations because of their signal strength, [but] don't try and sell me that they are full power."
Paretchan concedes he is having "limited success with the larger national [advertisers]." Instead, UVM focuses on the "low-hanging fruit that is the local and regional retailers."
Salvador de Luna, national Spanish sales director of Bill Heard Chevrolet, a Columbus, Ga.-based car dealership with 18 outlets nationwide, was interviewed by telephone while en route to catch a flight to Las Vegas, where he was going to renew a contract with the UVM station. De Luna is very pleased with the response to the 30-minute infomercials the dealership places on Azteca America affiliates.
"Well, you know, low power doesn't mean anything to me," he says. "What matters to us is results: At the end of the month, what do we get [in sales from] what we put out [in advertising]. UVM works well for us." He also advertises on Telemundo and Univision affiliates but says the "cost per spot is much greater and the results are about the same."
UVM intends to enhance its value to advertisers by launching local newscasts in a few markets in the first six months of the year.