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Azteca America Scores Largest Audience Ever With Mexican Football Final

Not surprisingly, last Sunday's match between Club América and Pachuca brought Azteca America its highest ratings ever. 1.9 million viewers saw Pachuca win its fifth Mexican Football League championship in a decade.

The popularity of the match underscores the importance of Mexican football coverage to the number four Spanish-language broadcaster. However, the fact that the semifinal match between América and Chivas drew a larger audience than the final suggests that Azteca America still faces distribution problems. Quite likely, not everyone who wanted to see the match could actually do so.

Azteca America relies heavily on low-power stations combined with cable and satellite carriage (See here to read about one such Azteca America television station group.) Univision, on the other hand, enjoys near-universal distribution throughout the Hispanic market.

Azteca America is unlikely to equal the match's ratings with any other show for years to come.

   

Una Vez Más Television Station Group

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.

Una Vez 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.

Azteca America Affected By Cruz Azul's Decision To Field An Ineligible Player

Mexican media outlets have been buzzing with indignation over the decision of Liguilla semifinalist Cruz Azul to field Santiago Carmona in last Thursday's match against Pachuca. On Wednesday, Carmona had received notice of a lifetime suspension by the Court of Arbitration for Sport tribunal for repeated doping violations. The Mexican Football Federation (FMF) and the club had also been notified. Carmona sought and received an injunction from a federal judge stating the ban could not immediate effect. Based on the judicial action, which came through prior to the start of the match, Cruz Azul went ahead and fielded Carmona. And then all hell broke loose when the story hit the media.

There was widespread indignation by national sports commentators. No one was buying the argument put forth by the club president that the Tribunal had put the wrong date on the letter and that besides, the letter was in English. The Federation punished the club's decision by preventing it from playing tomorrow's scheduled semifinal match. Pachuca (my favorite Mexican football club) automatically advances to the finals against the winner of the América-Chivas match. Pachuca had soundly defeated Cruz Azul 3-1 last Thursday. (And that one goal was the product of a dubious red card that may well be overturned by the Federation's disciplinary committee.)

Cruz Azul's penalty implies not only a premature end to its season but a heavy out-of-pocket expense. The club will have to compensate Pachuca for lost ticket revenue and TV Azteca for lost advertising revenue. Azteca America would have benefited from transmitting the second semifinal match between Cruz Azul and Pachuca. It would have brought in high ratings and been paired with the Chivas-América match.  Cruz Azul's decision to shoot itself in the foot will somewhat diminish the benefits that Azteca America was expecting to reap from the Liguilla semifinals.

Not a major loss but a minor setback for a Spanish-language television network that needs every strong ratings performance it can get.

Impact of Mexican Football on Hispanic TV Ratings

Mexican football league (FLM in Spanish) playoffs are changing the usual lineup on Nielsen's list of top 25 primetime Spanish-language television shows. Five separate matches (three on TeleFutura and two on Azteca America) made the list.

The impact is seasonal. And it doesn't hurt that the final four includes three high-profile clubs with a large fan base on both sides of the border. (América, Chivas, Cruz Azul) The remaining semifinal team is Pachuca, my personal favorite.

Televisa and TV Azteca each have broadcast rights to roughly half the FLM teams. Televisa, in turn, extends the rights for U.S. broadcast to Univision (although those rights are currently in dispute). Univision often opts to air the primetime matches on its sister network TeleFutura, which is a neat bit of counter-programming. Those who want to watch their novelas can do so without interruptions. And those who would never miss an América-Chivas match just turn the dial to TeleFutura. TV Azteca takes a simpler approach of broadcasting the match through its network of affiliates in the U.S. - Azteca America.  

In these playoffs, TV Azteca is the only sure winner because it has broadcast rights for Chivas, Cruz Azul and Pachuca. Televisa owns the América football club. The playoff transmission will provide a boost to a network hit hard by Pappas Telecasting's decision to drop its Azteca America affiliation in several important markets. TeleFutura also benefits although less so. The FLM matches complement TeleFutura's airing of Major League Soccer games. Although it will probably be a while before an MLS game cracks Nielsen's list of top 25 Spanish-language primetime television shows.

Telenovela To Launch On Both Sides Of The Border

Tonight Azteca America will premiere "Amor en Custodia", which is the first telenovela to air simultaneously in both Mexico and the United States. To date, there has always been a lag time of a few to several months between when a telenovela first airs in Mexico and is then re-broadcast in the United States. Azteca America execs such as COO Jorge Jaidar and communications head Daniel McCosh have stressed the importance of this development but  Martin Luna, the head of production at Television Azteca, quite literally shrugged when I asked him about it. McCosh argues that airing the same chapters of the same novela on both sides of the border should create buzz and foster promotional opportunities.

Azteca America has had a string of ratings successes during the last few months with the final rounds of the Mexican soccer leauge and of its reality show La Academia. However, Univision remains the 800 pound ratings gorilla of Spanish-language television thanks to its delayed airing of Televisa telenovelas such as La Madrastra. 

Televisa has asked producer Salvador Mejía to extend the novela, which ended last Friday by another ten half-hour segments. The additional segments will depict the lives of the characters ten years hence and air immediately before Televisa's newest telenovela,  "La Esposa Virgen."

Both "Amor en Custodia" and "La Esposa Virgen" are being put together on a tight time schedule. At Televisa's launch of "La Esposa Virgen" Mejía said he was producing the new telenovela "a todo vapor" having been asked to put it together only a month ago. Sergio Basañez told a Mexican radio program that he had been called to take the lead role a little over two weeks ago.