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Edward Schumacher Matos on Rumbo’s Legacy and its Future

Part two of a special two-part interview.


You said that the Rumbo operation was “ahead of its time.” When do you think that the "ripe time" will come, if at all?

Rumbo made a huge throw ofthe dice three years ago in launching four dailies over a period of five months.I think we made U.S. publishing history in doing so. But the ad market (as distinct from readers) wasn't ready for new newspapers published on multiple days, not even when we went to three days a week a year ago. It will be some time before we see any more new Spanish dailies in this country.

Because ofthe way the Hispanic print ad market works, the short term cost is too high before you achieve the mid-term gains of selling major advertisers more than one day a week. For historical reasons, major retail advertisers and many national ones heavily overweight television in their Hispanic ad mix, compared to the mainstream market. They buy little Hispanic print frequency, usually preparing the mechanicals for no more than one Hispanic ad a week. That means, for example, that you seldom get the daily department store and other such ads that the English dailies get. That practice was understandable when before there was not much of a Hispanic newspaper alternative to television.There is a credible alternative today, however. The consumer demand and ROI in Rumbo, for example, is such that greater ad frequency would be beneficial for advertisers, but it takes time to change the inertia of past practices.

By the way, a corollary to all this is that the Rumbo weeklies should be a slam-dunk success.

The internal dynamic of the ad industry will evolve as Hispanic print research becomes more sophisticated and convincing, which is actively underway, both by papers such as Rumbo and by NAHP for the industry. Several trends we all know about may temper the upside. Among them are the decline in mainstream newspaper advertising and the consolidation of retailers. Even many English metro dailies subsidize early days in the week. Still, Ithink there is room over time for some weeklies to add a second or even a third publishing day.Our three-day-a-week model, which we in fact designed in collaboration with ad agency media planners, worked extremely well editorially and with readers.I think in retrospect that we could have done a better job in selling advertisers on the different environment of each of the three days – sports and business on Monday, family service on Wednesdays and entertainment on the weekends – but we ran out of time.

Independent dailies such as La Opinion in Los Angeles and El Diario/La Prensa in New York, however, may never be replicated. The only new successful Hispanic dailies are tied to English ones, and it is difficult to know to what extent the mother ship absorbs costs. These include Belo's Al Dia in Dallas, McClatchy's La Estrella in Ft. Worth and Tribune's Hoy papers in Chicago and Los Angeles.

The web will have increasing impact on the bottom line of all Hispanic print, and will allow for daily electronic publishing of news.,Rumbo's web site, has grown in traffic and unique viewers despite little or no marketing.A major web initiative was planned for this year. But it is too soon to project the web's impact, in part because the web audience is different from the paper one.The web audience is generally younger and more bilingual.The road to online success will involve much more than just posting your print pages, but I am convinced that with proper marketing, the print sites of Hispanic newspapers can be significant financial and local community players. Young Hispanics spend more hours a day online than young Anglos.

You mentioned that mergers and alliances may be ahead for Rumbo (could you explain this?). What would be a good merger candidate (are you particularly interested in any possibilities with Tribune/Hoy?)

Consolidation in the Hispanic newspaper industry is inevitable, both horizontally across the country and vertically within cities. The ad pie is being split in too many slices. In sheer numbers, there are more Hispanic print players in most cities than there are Anglo ones. To that end, I was glad to see ImpreMedia's purchase of Hoy in New York from the Tribune Company.

The Rumbo network model was always built on economies of scale and expansion. Our initial idea, five years ago, was to launch Rumbo in consortium with major media companies. None bought into the concept at the time, and so we switched to the independent greenfield strategy, but always knowing that the real power of the model was in scaling up, whether greenfield or through mergers and acquisitions. A greenfield growth strategy is now out, for the reasons I explained, but there is still the possibility of some sort of alliance or merger in which we may or may not be the controlling or equal partner. I can't speak to any particular alliances at this time.But Rumbo has private equity backers, who naturally will be looking for growth and an eventual exit.The consolidation implicit in that exit will only leave the sector, and Rumbo, stronger.

Going public is probably not on the immediate horizon for any independent Hispanic newspaper company.

In the meantime, Rumbo has been working to expand virtually, through syndication. Rumbo now provides most of the content and does all the editing and graphics for the bi-weeklies Más in Atlanta and El Popular in Miami. We may soon be selling national ads into those and other papers. Rumbo also helps produce a Hispanic monthly for the Daily Oklahoman, and istalking to many other newspapers.

In what way do you think that Rumbo has made an impact on Hispanic newspaper publishing?

I think we helped raise the bar ofSpanish-language journalism in the country.Our stress on professionalism and ethics and our recruitment across the country has helped to increase salaries for Spanish language journalists, which often are scandalously low.

Financially, we raised a lot of money for Rumbo, raising the profile of the sector. I laugh, however, when I hear what some others think we spend. For three papers today, we don't have three sports, graphics, entertainment, national or lifestyle editors, or three IT, marketing or production directors. We have one of each of all those. I am proud that in three years, we never missed a budget on the cost side. Salaries in Anglo papers remain higher, and the efficiencies we achieved with our network model are an example for the industry in general. I am often surprised that the Anglo chains don't share more content, ad sales and operations. I suspect from the questions I get that they are beginning to consider doing so with their Spanish products, following in the steps of Rumbo.

Who knows? Some may even come full circle back to our original strategy and want to do it with Rumbo itself.

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