Puerto Rico's TV industry in flux as new owners take the field
Puerto Rico’s local commercial television industry has been undergoing dramatic changes, most notably in ownership and the digitalization of broadcasting stations. In addition, last November, a new player entered the $200-million-plus advertising market, which has been hobbled by a weak economy. (Cable and satellite TV account for an additional $20 million in ad spending.)
In October 2007, NBC Universal put on the block Telemundo de Puerto Rico (WKAQ), the island’s No. 2 station, along with sister station KWHY in Los Angeles, Cal., to help finance the $925 million acquisition of the cable channel Oxygen Media targeted to women. NBC Universal hired investment banking firm JP Morgan as financial advisor; the local station is expected to be sold before the end of this year. NBC, a unit of GE, acquired the Spanish-language broadcast network in 2001.
Puerto Rico has three main commercial TV stations -- WLII-TV Channel 11 (Univision), the NBC-owned WKAQ-TV Channel 2 and WAPA-TV Channel 4 (branded as Televicentro)—which boast approximately 80% of the local TV viewing audience. The growth of cable and satellite TV in Puerto Rico has cut into the big three’s share of audience which once exceeded 90% of TV viewers. Nonetheless the fragmentation is not nearly as severe as in the U.S. where paid services (cable and satellite) have taken a significant number of viewers from the big networks—some from sister cable subsidiaries.
During 2006, two separate private-equity deals reshaped the ownership of two of the three major stations on the island. In June 2006, a group of investors, which included billionaire Haim Saban and four private equity firms, offered $12.3 billion for Univisión Communications, which included Puerto Rico’s WLII-TV Channel 11, out-bidding Mexican broadcast giant Grupo Televisa. In March 2007, the Federal Communications Commission approved the consortium’s purchase of Univisión Communications.
A second group, private equity firm InterMedia Partners, L.P., purchased Televicentro from LIN TV Corp for $130 million in October 2006. The acquisition included a second station, WJPX-TV Channel 24, the popular MTV Puerto Rico, and WAPA America, a U.S. cable and satellite channel targeting Hispanics. Channel 24 was subsequently sold to Grupo Pegaso, a Mexican consortium, for between $35 million and $40 million, returning to the air Nov. 1 as Caribe Visión, with an island-wide network. Caribe Visión has headquarters in San Juan and Miami and its president is Carlos Barba, a former WAPA-TV general manager.
Univisión’s WLII-TV Channel 11 is the top rated among the three main television-broadcasting stations with more than 35% of households from sign on to sign off during 2007. WKAQ Channel 2 holds the edge over Univisión in the weekday prime time (6-10 p.m.) slots, but WLII maintained a strong lead in TV audience share during Saturday and Sunday prime time. Mediafax, Inc. measures TV watchers, supplying the stations and advertisers with overnight and monthly data on which stations capture the largest audience and demographic information about the viewing audience. Both Channels 2 and 11 program to the same demographic, women from 18-to-49 years old, dishing out <I>telenovelas<I> -- or soap operas—to capture their target audience.
Of the three, Televicentro has taken the lead in integrating the new media into its mix, streaming programming on its Internet website—its news and other programs are also accessible to mobile telephone users subscribing to one of the big cellular signal providers. This year, WAPA plans to have its programming stream on all mobile networks.
Like their U.S. counterparts, local television stations have invested big bucks in converting from analog to digital television, considered the biggest change for the industry since color brightened the black and white screen. On Feb. 18, 2009, from Maine to Puerto Rico, the analog television signal dies to be replaced by a digital. Local broadcasters have undertaken an educational campaign to inform viewers regarding the conversion.
In terms of population, Puerto Rico boasts one of the largest radio markets under the U.S. flag, ranked No. 13, according to Arbitron, Inc., the company that measures listening audience. With more than 120 AM and FM stations, radio is probably the most densely concentrated media segment in Puerto Rico. Yet the market has remained flat at a little more than $80 million in ad revenue during the last three years. Uno Group is the No. 1 radio platform followed closely by the Spanish Broadcasting System (SBS). SBS, the largest publicly traded, Hispanic-controlled media company in the U.S., owns 11 FM stations on the island that broadcast five musical brands, from reggaetón to mainstream U.S. music aimed at young upwardly mobile professionals. The top FM stations, reported by Arbitron, are Uno Radio Group’s Salsoul, Univisión Radio’s KQ-105, and SBS’ La Z and Reggaetón 94. A move of morning personalities from Uno’s Salsoul to SBS is expected to shift ratings in favor of SBS.
Puerto Rico has four daily newspapers led by El Nuevo Día, owned by Grupo Ferré Rangel, a dominant force politically, culturally and socially. El Día accounts for approximately 60% of more than $300 million of the dailies’ ad revenue in both 2006 and 2007. Primera Hora, targeted to younger readers, is also owned by Grupo Ferré Rangel. Other dailies include El Vocero and The San Juan Star. The death of Vocero founder Gaspar Roca in April 2007 does not appear to have had a negative effect on the operations of the newspaper.
In addition to the dailies, more than 14 weeklies crowd the field, mostly regional newspapers, the majority distributed free of charge. The largest weeklies are led by CARIBBEAN BUSINESS, owned by Casiano Communications, followed by regional papers La Perla del Sur and La Estrella. In addition, Casiano publishes the leading magazine titles Imagen and Buena Vida. Last year the company introduced two new titles: Puerto Rico Sports aimed at male readers and a new entertainment magazine TVAquí.
Billboards, huge mesh advertisements and other traffic-centered media dominate the out- of-home media. The growth however was cut by the recession which began to be felt in 2005. Nontraditional media, such as Internet, cellular phones and promotional events continue to grow.
