The Hispanic media and advertising world has been severely affected by the excessive leverage and greed that has plagued the U.S. business community in recent years.
Spreadsheet calculations on how high ROE's (Return of Equity can get as a result of an increasing debt ratio have been th norm rather than the exception in Hispanic advertising and media investments. To be sure, sound financial analysis is essential for any media company to remain viable.
The problem is that the financial analysts often have become th only decision makers. And here is where the problem starts, as these financial managers often do not have any hands-on media experience to help them deal with the realities of the media business. It is likely that more media companies will fold this year. It should be noted that oftentimes these companies are failing because they are overleveraged (ie. high debt and interest burdens) and not necessarily due to any failure of the media business, itself.
A look at the financial statements of many of these companies reveals that interest and principal repayment have grown to be too much of a burden.
Now in an attempt to save themselves, these companies are cutting costs significantly, often to the detriment of editorial quality. Quality content is and will be the foundation of a sound media business.
Even in these challenging times, there are many examples of sensible approaches to engaging non-commoditized content.
As Julio Saenz, publisher of Orange County's Spanish-language newspaper Excelsior tells Portada: “I see the future of successful media being tied to how exclusive one's content is, so we hav deals with the local Hispanic soccer leagues to be their exclusive media partner. Only we have their soccer scores, standings and game reports. Some of these leagues have 3,000-4,000 players. This has driven our subscriptions up by over 50% in just a few months and we plan to pass 15,000 this year.”
Similar positive examples can be found in cable TV. Although the bulk of its programming comes from translated Discovery Networks content, the Spanish-language division of Discovery Networks produces between 10 percent and 20 percent original content aimed specifically at Hispanic audiences.
The success of its Hispanic media product has a lot to do with the company's 6% subscriptions increase in 2008. “We want to make our channel more relevant to the consumer by featuring stories that are very local,” says, Enrique Martínez, executive vice president and managing director of Discovery Networks Latin America/U.S. Hispanic.