Newspaper giants set off the race to reach Hispanics

Large newspaper chains are feeling the pressure of a fast-growing U.S. Latino population. Publishing giants, like Media General and Gannett, are strategizing on how best to meet the needs of an expanding Hispanic readership. Last week, Lee Enterprises (Davenport, IA) announced the acquisition of Hispanos Unidos, which publishes Spanish-language newspapers in the Nebraskan cities of Lincoln and Columbus (bi-monthly, free, circ. 5,000 each).

In markets like Atlanta, where the percentage of Hispanics relative to the overall population has grown from 2% in 1990 to 6% in 2000, and Washington DC-VA where the population has gone from 5% to 8%, large publishers have already begun to buy up smaller Hispanic publications.

The Washington Post Company bought El Tiempo Latino, a Spanish-language weekly serving the greater Washington area, from Farragut Media Group, Inc., whose principal owner is Armando Chapelli, Jr. “The transaction is motivated as much by readers' needs as by revenue potential. An important part of the local population prefers to get content in Spanish,” a Washington Post Company official tells Portada®. “Over time, we hope that there will be opportunities to use El Tiempo Latino to encourage Hispanics to read The Washington Post.”

Cox Enterprises, owner of Atlanta Journal Constitution (circ. 401,077), is in a similar situation. “The Hispanic community in Atlanta is exploding,” says Tony de Feria, who, until recently, was director of consumer marketing at the Atlanta Journal Constitution (AJC) and is now executive vice president of Mundo Hispánico. After months of analyzing different Hispanic publications in the Atlanta region, Cox concluded that Mundo Hispánico, a bilingual weekly, was the best fit for AJC, which acquired Mundo Hispánico and Mundo Hispánico Yellow Pages. Negotiations between Mundo Hispánico and AJC were initiated in July of last year.

Still peanuts, but growing

The revenue bases for El Tiempo Latino and Mundo Hispánico look insignificant when compared with those of large U.S. newspaper chains. El Tiempo Latino has annual revenues of US $1.8 million and is growing at a double digit rate. The Washington Post's revenue base was US $572 million (ad revenues only) in 2003 and US $2.6 billion for the whole Washington Post Company. Mundo Hispánico's staff of 16 will increase to 20, but that figure is still only about 3% of the total editorial headcount at the Atlanta Journal Constitution>

Both the Atlanta Journal Constitution and The Washington Post had several year relationships with the weeklies they finally acquired. The Washington Post has shared content with El Tiempo Latino since 2001. Mundo Hispánico has been printed by Atlanta Journal Constitution's printing plant for the last two years. “El Tiempo Latino will continue to be an independent paper,” an official at the Washington Post Co. tells Portada®. “Advertising will continue to be sold by El Tiempo Latino's staff, led by advertising director Zulema Tejero. We want to become familiar with the operation in a gradual way and determine over time whether or not it makes sense to cooperate and cross-sell advertising from one publication to the other.” Cox Enterprises's Tony de Feria says that “AJC is not going to change anything overnight.” Lino Dominguez signed a three year contract with AJC to continue on as director of Mundo Hispánico.

AJC will provide Mundo Hispánico with more resources to better cover issues of importance to Atlanta's Latino readers. “We can't compete without the necessary resources,” said Dominguez. Some additional efforts will go into distribution. Mundo Hispánico circulation is expected to increase from 55,000 to 70,000 by the end of the year. Additionally, home-delivery is currently being analyzed by Cox Enterprises.

Roger Kintzel, senior publisher at Cox Newspapers, said AJC had contemplated launching its own Spanish-language publication, but decided it would be faster and better to buy an established paper. Robert Armband, publisher of La Raza and CEO of Prensamerica, explains that it can be advantageous for a large newspaper chain to buy an existing publication, because the chane can immediately acquire know-how and help advertisers interested in reaching Hispanics. Additionally, large chains can realize economies of scale by adding relatively small Hispanic publications to their general market endeavors. One deterrent to buying existing Spanish-language print properties is that they are increasingly expensive. The EBITDA (earnings before interested taxes depreciation and amortization) multiples currently being paid are as high as 10. According to Armband, these multiples are being driven up by two kinds of suitors: The local general market local newspaper plus two or three national Spanish-language newspaper consolidators.

Some large publishers have chosen to launch new publications. Hearst's San Antonio Express News (circ. 244,547) launched the weekly Conexión last May. Earlier this year, Cox Enterprises, owner of Atlanta Journal Constitution, launched the weekly La Palma in the Palm Beach market, a spin-off of The Palm Beach Post.

Jeff Heard, vice president of Media General's North Carolina Community Newspapers, leads a task force in charge of researching and evaluating opportunities in the Hispanic market. “We are looking at this from the perspective of trying to please consumers through different types of media” he tells Portada®. Richmond, VA based Media General is a multimedia company that publishes The Tampa Tribune, the Richmond Times-Dispatch, the Winston-Salem Journal and owns and operates 26 network-affiliated television stations.

In August 2003, Gannett, the nation's largest newspaper chain, acquired a majority interest in The Ashland Media Group (Phoenix, Ariz.). Ashland Media publishes the weeklies TV y Más, La Voz and TV Shopper. It also owns the direct marketing business, AZ Mail. “We are looking at this from a local perspective,” Dan Ehrman, who works on acquisitions for Gannett, tells Portada® (see “Gannett steps up efforts to reach Latino readers,” page 11, Portada® No. 4, July/August 2003). A “USA Today for Hispanics” has been suggested, but Ehrman says that “this is not at the forefront of Gannett's plans.”