04-01-04 | Printable Version

Hispanic Newspaper Market

Newspaper Owners Speak Spanish

Can there be any room left on this bandwagon? It seems as if every day another Hispanic newspaper is launched.

Indeed, there are now more than 1,500 Spanish-language newspapers, with distribution exceeding 13 million households and advertising revenue estimated at $625 million, according to the Latino Print Network.

The fervor around Hispanic newspapers is not limited to the Southwest and major metropolitan areas -- places that immediately come to mind when you think of Spanish-speaking communities. You now find Spanish-language newspapers in places like Grand Island, Nebraska; Garden City, Kansas; and Goshen, Indiana.

While these three newspapers are relatively new, a few of the papers have been around for a long while: El Diario/La Prensa in New York City is approaching its 100th anniversary and La Opinion in Los Angeles is in its 77th year.

In March, Tribune Company began publishing Hoy, its color-splashed Spanish-language newspaper in Los Angeles. Tribune’s Hoy is taking on the nation’s largest Spanish-language newspaper La Opinion, in what likely will be an intense battle.

Tribune was once part owner of La Opinion, acquiring a 50% stake at the time it bought Times Mirror in 2000. After Tribune sold its stake to the Lozano family, which owned the other 50%, the Lozanos teamed up with the owners of El Diario/La Prensa in New York and formed a new company called Impremedia, LLC. The new company has plans to roll out additional Spanish language newspapers in the U.S. El Diario/La Prensa is owned by private equity firms Halyard Capital and Clarity Partners, among others.

Tribune also publishes Hoy in New York City, as well as in its hometown Chicago, and there is speculation that the company also intends to roll out Hoy as a national brand in several other major U.S. markets.

How do you know if you should be jumping on the bandwagon and starting a Spanish-language newspaper in your market or instead waving with a smile on your face as the bandwagon passes you by?

As attractive as this emerging segment of the market appears, publishers who have tried will tell you that it is difficult to capture. Many of the smaller Spanish-language newspapers have barely eked out an existence for years. Those funded by large conventional newspaper companies have failed to reach average performance profit margins for their owners and in some cases have never turned a profit.

On the surface the facts seem overwhelmingly positive. However, there are also lessons learned by battle-scarred publishers that somewhat color the otherwise tantalizing and seductive statistics.

THE FACTS

The Hispanic population is the fastest growing segment of the U.S. population, reaching 37 million in the last census.

Twenty-two states doubled their Hispanic population in the last decade.

One out of every two new workers in the U.S. in the next decade will be Hispanic.

By the time today’s 45-year-old newspaper executive reaches retirement age, there will be 55 million Hispanics in the U.S. Their numbers at that time will represent 17% of the total population, an increase of 79% from 2000.

Although Hispanic households do not have as high a median income as the average U.S. household, they have more workers per household, are larger than non-Hispanic households (3.3 persons compared with 2.6), and tend to spend a great deal of money on specific items.

Total annual Hispanic Buying Power will reach $500 billion this year, an increase of more than 100% since 1990. It is projected to more than double by 2010. THE LESSONS

Faithful readers of Spanish-language newspapers are unlikely to become faithful readers of an English-language newspaper as they become more acculturated. Initially some major newspaper companies built their business models around this “funnel” approach. They reasoned that they would extend the brand of their conventional daily in the market to a local Spanish-language newspaper, and as the Spanish-speaking readers assimilated into the mainstream and learned English, they would funnel into the English newspaper as faithful readers. History suggests it just doesn’t happen.

Translating the English version of your newspaper into Spanish does not work. A number of U.S. companies have found that Spanish-speaking residents in their communities have quite different interests from their English-speaking counterparts. They want, and only will read, a newspaper edited for them.

Business models needing circulation revenue are unlikely to succeed. The vast majority of recent immigrants have not developed a habit of paying for news nor have they developed strong Sunday reading habits -- the traditional high circulation revenue day for many larger conventional dailies. Most successful Spanish-language newspapers are a combination of free- and controlled-distribution. The exceptions would be in the six largest Hispanic markets of Los Angeles, New York, Dallas/Fort Worth, Chicago, Miami and Houston where the Spanish-speaking population is large enough to make a paid newspaper work effectively.

Spanish-speaking residents are not monolithic. Communities with a large concentration of Spanish-speaking residents from one area of Mexico or Latin America are the communities most likely to coalesce around a Spanish-language newspaper. Newspapers that are published in markets where there are Spanish speakers from various countries or even from different areas of Mexico (where 60% of Spanish speakers in the U.S. come from), often find that residents have little in common other than the language. Such markets have proven difficult for editors to create a newspaper of wide interest.

Creating value will take time. There will be many more Spanish-language newspapers before there will be fewer, and it will take a reduction in the number of newspapers before significant value will be created. In the Dallas/Fort Worth market for example, both Knight Ridder and Belo, owners of the Fort Worth Star-Telegram and Dallas Morning News respectively, publish Spanish-language dailies. In addition to these two dailies, there are 10 smaller Spanish-language newspapers in the market vying for the same ad dollars. If that were not enough competition for the Dallas/Fort Worth market, there are 40 Spanish-language cable channels, five Spanish-language television stations and 12 Spanish-language radio stations. Not all will survive.

Hispanics tend to be more acculturated to television and radio than print. Unlike the English-speaking population, from whom newspapers and television garner about the same percentage of the total advertising pie, Spanish-language newspapers represent only 12% of advertising dollars aimed at Hispanics, while television captures about half and radio gets about a third. This is not likely to change dramatically anytime soon.

Observers also have differing opinions regarding whether the Spanish-speaking community will assimilate into the English-speaking population or continue for many generations as predominately Spanish-speakers. Non-English speaking immigrants of other ethnic groups have historically made, and continue today to make, a complete conversion to English after the second or third generation. Some believe this pattern will not be true with the current Hispanic community because they are migrating faster than they are assimilating, and live in larger, more concentrated communities than other ethnic groups. Because transportation is so easy and affordable, they will move back and forth between their native lands and the U.S with much greater regularity, which will reinforce the use of Spanish as their primary language. They also do not have the same pressure to drop their native language as other immigrants to the U.S. have. In fact, in many instances there is now an advantage to speaking Spanish in the business community in portions of major U.S. cities.

Most publishers of Hispanic newspapers we spoke with in connection with this story felt a minimum population of 40,000 Spanish speakers was essential before attempting to launch a new paper. They also cautioned that patience would be necessary to establish a newspaper that had the credibility and acceptance that conventional newspapers have enjoyed. As far as profits, at this point it appears one needs to take a “build it and they might come” approach. Sources: 2000 Census; 2002 National Hispanic Media Directory; Western Publication Research; Nielson Media Research; Hispanic Consumer Market Report