Televisa strengthens its presence in the US magazine market

Sixty per cent of US Hispanics are of Mexican origin. Does this give Editorial Televisa, Mexico's largest magazine publisher, an advantage in the competition to lead one of the fastest growing segments of the US magazine market? Televisa's publishing executives think so. That is why they are implementing a strategy to significantly increase their share of the US magazine market. The recent launches of Maxim en español and Travel + Leisure en español exemplify Televisa's renewed momentum.

Editorial Televisa already has sizable revenues in the US. Last year it had sales of US $35 million in the US market (22% of its total sales). However, the Mexican publisher is only the 28th largest of the top 50 audited newsstand publishers by retail sales in the US. Editorial Televisa's publishing executives, led by CEO Eduardo Michelsen, expect to double sales in the next five years. To reach this goal, the company must grow at an annual average rate of 15% until 2007. For 2002 Editorial Televisa expects an increase of 15% in advertising revenues from the US market.

Overall, Editorial Televisa's operating margins are far from excellent. In 2001, the Mexican publishing company had an operating margin of 14.6%, around 10 percentage points less than what is generally considered good performance in the industry. The US magazine market could give Editorial Televisa the boost it needs by improving sales and profitability.

 

Editorial Televisa already has sizable revenues in the US. Last year it had sales of US $35 million in the US market (22% of its total sales). However, the Mexican publisher is only the 28th largest of the top 50 audited newsstand publishers by retail sales in the US. Editorial Televisa's publishing executives, led by CEO Eduardo Michelsen, expect to double sales in the next five years. To reach this goal, the company must grow at an annual average rate of 15% until 2007. For 2002 Editorial Televisa expects an increase of 15% in advertising revenues from the US market.

Overall, Editorial Televisa's operating margins are far from excellent. In 2001, the Mexican publishing company had an operating margin of 14.6%, around 10 percentage points less than what is generally considered good performance in the industry. The US magazine market could give Editorial Televisa the boost it needs by improving sales and profitability.

Editorial Televisa's US strategy has several components. The first, and most obvious, is to extend the readership of its popular Mexican titles to US Hispanics. Among these titles are TV y Novelas, a biweekly magazine with a circulation in Mexico of 830,000 and the teen magazine Eres (circulation - 83,000). To promote these titles Televisa is placing subscription order forms at points of sale which are used often by Mexican-Americans – specifically, money-transfer or remmitance centers (MoneyGram, Western Union etc.), where Hispanics go to send funds to their families in Mexico and other parts of Latin America. Last June, advertisements for TV y Novelas and subscription order forms were placed in money transfer and remmitance centers in eight cities on the East Coast of the US. Televisa has not pursued this strategy with Maxim en español because this men's lifestyle magazine is targeted at an audience with higher purchasing power that does not typically use money transfer centers.

In October, Editorial Televisa also launched an advertising campaign for TV y Novelas on Univision, the number one US-Hispanic broadcaster. Televisa has a stake in Univision and is Univision's main audiovisual content provider. Televisa has not paid cash for the advertising, which is placed in Univision's unsaleable time slots. The Mexican publishing house will also promote Furia Musical and Eres through Univision.

More subscribers

Televisa is struggling to effectively use the US-magazine market's distribution and sales structures, which are very different from those same structures in the Latin American market. More than two thirds of the readers of the “typical” US magazine purchase the publication through subscription, while the remaining third are newsstand buyers. In Mexico, and most other Latin American countries, this ratio is inverted. In these countries newsstand sales are by far the most important distribution channel for magazines.

US Hispanics buy a larger percentage of their magazines through newsstand purchases than the average US citizen. However, Televisa wants to increase its share among higher purchasing power audiences. This means increasing subscription sales in order to increase its appeal to advertisers. To achieve a subscriber/newsstand buyer mix which is more in line with US publishers, Televisa's sales might have to take a hit– publishers usually lower their subscription prices by up to 30% compared to newsstand prices.

To increase advertising sales, Editorial Televisa recently reorganized its Miami based, US and Latin American sales teams around brands. Most of the advertisers targeting the Latin American market, and many addressing the US Hispanic market, are present in Miami. Televisa's strategy is to offer each advertiser a “menu”, selected from the 42 magazines Televisa publishes, of publications suited to the advertiser's particular needs. Approximately 50% of the advertising sales in Miami are derived from US companies that target Latin America and the Hispanic US. The rest of the advertising sales come from Latin American advertisers, mostly Mexican.

Most of the editorial content of the magazines, published both in Latin America and the US, is produced with a so-called editorial platform formula. This is particularly true for the magazines which Televisa publishes in the Spanish speaking world through franchise agreements with international publishing houses. Vanidades (Hearst), Maxim en español (Dennis Publishing), Muy interesante (G+J), Men's Health (Rodale) or Glamour en español (Conde Nast-Ideas Publishing Group) are all franchise ventures. Sources at Televisa note that “80% of the editorial content is translated and edited in Mexico out of material from the original version of these magazines. The remaining 20% is new content about each country written by freelancers. The low cost editorial production in Mexico and the relatively low percentage of new content keeps editorial costs low.

Televisa claims that its first issue of Maxim en español in the US already broke even. An industry insider told Portadatm that it is “quite cheap to produce a magazine for the US market

with basically Mexican content.” He claims, however, that “to produce an editorially compelling magazine for US Hispanics is another thing.” In this regard, the analyst explains that not all content travels well. “Only some editorial will travel, most will not”, he concludes.

Televisa has already taken steps to reflect the diversity of US readers in its editorial content. TV y Novelas magazine has an East Coast edition which emphasizes coverage of Colombian and Venezuelan artists who are more appealing to East Coast Hispanics. The West Coast edition has a strong Mexican flavor, in line with the very large Mexican American population in California, Arizona, Texas, New Mexico and Washington State.

Until recently, Eduardo Michelsen, a former McKinsey consultant, led Televisa's international publishing arm out of Miami. In October he was promoted to CEO of Editorial Televisa as a whole. Michelsen has been instrumental in Editorial Televisa's last two launches, the most important of which was Maxim en español. The publication has a circulation of 180,000 split between 5 editions – US-Hispanic, Puerto Rico, Mexico, Venezuela and Central America. The Mexican publisher expects one third of Maxim en español's revenues and circulation to come from the US market. CPMs for the US edition of the publication were US $111 ($6,000 per full page) for the December issue. Budweiser, Heineken and Kool were among the advertisers in Maxim en español's first issue.

Travel + Leisure en español was launched in October by Editorial Televisa in cooperation with American Express Publishing. The luxury lifestyle magazine is targeted at high purchasing power US-Hispanics and Latin Americans. Its total circulation is 120,000, two thirds of which is dedicated to the Latin American market, while the remaining one third (40,000 issues) is distributed in the US. Reynaldo Ales is the editor-in-chief of Travel + Leisure en español and works out of New York.


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