Telemundo in Focus

NEW YORK Much like the battle for supremacy in the rental-car business, where the slogan of second-place Avis is “We Try Harder,” Hispanic TV network Telemundo has been striving mightily over the past few years to gain ground on its ratings-dominant arch-rival Univision.

While the tangible results of its blueprint to competitive resurgence have been building slowly, its architect, Telemundo president Don Browne, believes that groundwork is being laid by aggressive in-house production. Simply stated: The network wants to control its destiny by controlling its content.

“We’re betting the ranch on producing our own content and bringing in the best talent to help create it and act in it,” Browne says.

Producing novelas and other types of programming, while initially an expensive proposition, allows Telemundo to not only work advertiser products into the shows—an additional revenue source—but to also sell those shows abroad in dozens of Spanish- and non-Spanish-speaking countries.

Telemundo began producing novelas in Miami, first in a partnership deal with Colombian production company RTI in 2003 as Telemundo-RTI Productions. Then, late last year, it acquired RTI and began producing novelas under the Telemundo Studios name at its 100,000 square-foot studio in the Miami suburb of Hialeah (where NBC’s Miami Vice was once partially produced in the 1980s).

With the initial studio startup costs behind it, the extensive sale of programming abroad—totaling about 60 different countries including Indonesia, Romania, Poland, Hungary and Ghana—is now covering about 50 percent of the cost of Telemundo’s in-house studio production.

In addition to its Miami studio, Telemundo also produces novelas at studios it owns in Colombia (the former RTI studio) and Mexico (which it opened late last year). The three studios can now produce between 10 to 12 original novelas a year. Looking forward, with more original programming being produced—not only for initial airing on Telemundo in the United States, but also specifically for first-run sale abroad—it’s possible that all of the studios’ production costs could be recouped by foreign sales, meaning all the ad revenue generated by the novelas airing on Telemundo will be pure profit.

OWNING THE RIGHTS to all of its novelas allows Telemundo to sell product-enhancement opportunities in each of them, bringing in a different source of revenue than just airing traditional 30-second spots. It also has empowered the network to make shifts in its novela storylines as a way to bolster ratings.

The network’s most extensive product-integration deal thus far has been with Clorox, which placed several of its products (Clorox, Pine-Sol and Glad trash bags) in every episode of the network’s original novela Dame Chocolate. One particularly enticing element for Clorox: Its products will appear in all the international markets with the labeling digitally altered to reflect the exact name under which the product is sold.

Telemundo also formed a deal with Ikea, in which the home furnishings retailer supplied two bedroom sets featured throughout the novela and 30-second spots that aired in the show. Ford, Lowe’s and Wal-Mart also purchased integrations in Dame Chocolate.

In the summer of 2008, Telemundo will air its first commercial-free novela, Idolos de Juventud, which will instead have multiple advertiser product integrations woven throughout. (Unlike Telemundo, Univision is under contract to air novelas produced by Grupo Televisa, which have previously run in Mexico and cannot be altered in any way.)

Browne also has made some moves to bolster the profile of Telemundo’s sister cable youth network mun2, moving its operations from Florida to a new headquarters located on City Walk in Universal Studios Hollywood.

Not only does that new facility provide headquarters for mun2, which targets the next generation of Telemundo viewers—young Latinos 12-34—it also houses a 16,000 square-foot studio and production center, as well as a research facility and media preview center (see story, page MyM6). When Telemundo premieres the first late-night talk show in U.S. Hispanic TV, Mas Vale Tarde, later this year, it will be filmed live to tape in front of a studio audience in the L.A. studio. And all future Telemundo nonscripted programming will be produced there.

while Browne and his Telemundo team—with strong support from parent company NBC Universal—are pushing to compete more aggressively with Univision, the Telemundo president is also a realist. He understands his rival is deeply entrenched among Mexican American viewers and that it would be just short of impossible for his network, even producing its own novelas, to best it anytime soon.

Currently, Mexicans in the United States make up about 66 percent of the Hispanic population. And because Univision has traditionally aired Mexican producer Televisa’s novelas exclusively in the U.S. (albeit after they aired in Mexico), it has been able to consistently capture a majority of those Mexicans who watch TV here. “Televisa is just so ingrained in their minds when they come to the U.S., they just keep watching it as a habit,” Browne says.

Telemundo may never be No. 1, but Browne believes there is nothing wrong with being a stronger, more competitive and solid second. “We don’t necessarily have to overtake Univision,” he explains. “It would be OK to be a healthy No. 2. Right now, we have about a 22 to 23 percent share of the prime-time ratings. We would like to see that grow to about 35 percent. With that ratings share, we can bring in enough additional revenue to be a nice, profitable business.”

And while even picking up 10 to 12 share points in the U.S. Hispanic viewer race is a daunting task, Telemundo appears to have turned some kind of corner. Just a few years ago, when it was officially acquired by NBC Universal in 2002, the network’s audience share hovered at about 10 percent—and the future existence of the network was in doubt.

Several previous owners, including Sony Pictures, failed to find a formula to change the network’s fortunes. In Browne’s own words, Telemundo “was in a free fall.” Much of that was the network not being able to come up with the right programming formula to attract new viewers as well as draw viewers away from Univision.

At one point, during its ownership by Sony, the network tried replacing its novelas in prime time with scripted sitcoms and dramas based on American shows, hoping that would bring in U.S.-born, second- and third-generation Mexicans and other Hispanics. Suffice it to say the move bombed.

Telemundo did initially get a boost when it first aired Betty la Fea, the Colombian novela produced by RCN, in 2000. But beyond that, Browne recalls, “There were just not a lot of high-quality novelas out there to buy that could compete with Univision’s Televisa novelas.” That’s principally what led Telemundo to change course and open its own production studio.

Shortly after being acquired by NBC Universal, in 2002, Telemundo entered into a partnership with RTI Colombia, the Spanish-language TV production company headed by Patricio Wills, and called the operation Telemundo-RTI Productions.

Telemundo acquired full ownership of Telemundo-RTI in November 2006 and renamed it Telemundo Studios Miami. Wills was tapped to run it. The network also bought Tepuy International, its foreign distributor, and named Tepuy’s president and COO, Marcos Santana, president of Telemundo Internacional.

“We had to reinvent ourselves,” Browne says. “We had to get our business back on track again because we were in a free fall. We had to be more than just a distribution company. We had to become a content company.”

The move was risky. “Creating your own content is expensive—there is a lot of trial and error. It’s not for people with weak knees,” Browne says. “But we have been doing it for four years [the previous three in conjunction with RTI]. We have moved from a prototype to a mature production business.”

Today Telemundo is the second-largest producer of Hispanic programming in the world behind Televisa. It produces 1,040 hours of original content a year for its own network, while the studio also produces programming that can be sold directly abroad.

“Telemundo has been on the right track for a couple of years now,” says Monica Gadsby, CEO of Publicis Groupe’s SMG Multicultural, which does Hispanic TV buying for such clients as Procter & Gamble, Kraft, Miller and Coke.

“The fact that it is not seeing the ratings erosion it did a few years ago is a positive thing,” Gadsby adds. “Telemundo realizes that the name of the game for advertisers is to offer options and flexibility. Organic integration of products is important and while they haven’t totally mastered it yet, they are on the right road to finding another way to monetize their programming. Even if Telemundo can’t capture a large portion of that Univision audience, it will do fine if it can even protect the share it has now.”

Gadsby fully expects Univision to begin to respond to Telemundo’s moves down the road. There is nothing in Univision’s contract with Televisa that prevents it from airing other novelas, but because the network has a deal with Televisa through 2017, it would be adding costs if it chose to buy other novelas.

Another of Browne’s competitive initiatives in his quest to be a stronger No. 2 is Taller Telemundo: Escritores. The project, which first launched in 2004 in conjunction with Miami-Dade College, is designed to provide students with a curriculum that specifically prepares them to write novelas. The first class graduated 14 writers, the second class graduated 13, and the third class (held at Loyola Marymount College in Los Angeles) graduated eight.

“We found out early on that there weren’t enough writers to produce novela scripts in the U.S., so we created a writers’ program geared toward that,” Browne notes. Not all the graduates are guaranteed jobs with Telemundo, but Browne says, “For the first class, we had 4,300 applicants, selected 33, graduated 14 and hired eight of them.”

“Writing novelas is different than writing for Hollywood,” Telemundo Studios’ head Wills says. “On U.S. scripted shows, there are teams of writers, and the shows only air once a week or 26 originals a season. With novelas, the episodes run each day, there are about 128 episodes per novela, and usually one or two writers do it all. You need a person that can write the same show for seven months straight.”

THE MOST RECENT CLASS at Dade, which began Sept. 17, was shifted from a writing to an acting course, again, with the goal of trying to find home-grown, new, talented actors and actresses for its novelas. Ranging in age from 19 to the mid-30s, the 35 students, mostly with theater training, are from both the U.S. and various Latin American countries. About a dozen or so are expected to make it through the course, with students being weeded out along the way.

Teaching the course is Adriana Barraza, a Golden Globe and Screen Actors Guild award best-supporting actress nominee in 2006 for her role in Babel, who also has directed assorted Mexican soap operas.

Certainly bolstering Telemundo’s prospects is its synergy with parent NBC Universal.

“When Telemundo was first bought by NBC Universal, a big goal behind the deal was based on creating synergy between the two companies,” says Browne. “It has taken us a little longer than we thought it would to get there, but we are there now.”

JEFF GASPIN, who oversees Telemundo corporately for NBC Universal in his role as president and COO of Universal Television Group, agrees that synergies between Telemundo, NBC and the NBCU cable networks are already in play.

For the June premiere of Bravo’s Top Chef 3: Miami, the contestants cooked for the cast and crew of Telemundo’s Dame Chocolate, and the show was cross-promoted by both networks. Miguel Varoni from Telemundo novelas Te Voy a Enseñar a Querer and Seguro y Urgente appeared in the Oct. 18 episode of My Name Is Earl on NBC. Gaspin says he expects to see more cross-network appearances and cross-promotion in the future.

In addition, NBC Entertainment president Ben Silverman and the Telemundo programming team are looking at scripts that can be developed in both English and Spanish to air on each network.

Another synergistic benefit, Gaspin adds, is “when Telemundo programming does good ratings on television in other countries, it opens up the content possibilities for our owned NBCU content in those countries.”

But the central player in Telemundo’s game plan is still Wills’ in-house production capabilities. With 30 years in TV production, Wills began his relationship with former Telemundo president Jim McNamara in 2001 when the network was owned by Sony.

“[McNamara] ordered 10 novelas and we entered into a co-production deal,” Wills recalls. “Then in late 2003 we bought the studio space in Miami and began co-producing them there. It was a slow process because there were no production people in the U.S. who knew how to do novelas. We had to train each one of them. And we started out with only six actors. Now we have a line of people outside the door for our open casting.”

Wills realizes going up against Televisa novelas is a formidable task but believes that once Telemundo begins producing novelas out of its Mexico production facility, it will give the network some visibility there, and that will create a domino effect on viewers who immigrate to Los Angeles.

“Right now, Telemundo novelas are very competitive with Univision in New York and Miami, but we are far behind in Los Angeles,” Wills says.

One way the network is trying to differentiate itself is to offer different storylines to its novelas. “You can’t reinvent the novela formula,” Wills says. “There always needs to be that romantic angle. But you can tell the story in a different way that viewers won’t get on Univision with the Televisa novelas.”

He cites the Telemundo novela El Cuerpo del Deseo, in which the lead character dies and comes back to life in a younger man’s body.

He also points to Zorro: La Espada y la Rosa.

“The Telemundo version of Zorro was different than the traditional story,” Wills says. “Since all novelas have love angles, and Zorro is an action story, not a love story, the writers had to revise it to add some love story arcs that would blend in. We did it so well that Sony Pictures (one of three rightsholders to Zorro) is asking us to do a sequel.”

WHILE TELEMUNDO continues to try harder, Univision still takes in the bulk of the ad dollars in the Hispanic TV marketplace, pulling in about $1.15 billion to Telemundo’s $450 million annually.

But media agency folks are watching the situation carefully to see where Telemundo’s strategy will take the network in the eyes of the Hispanic TV audience.

“With the moves Telemundo has made to better position itself, the competitive arena between the two networks will get much more interesting in the years to come,” SMG Multicultural’s Gadsby predicts.

“Telemundo is ahead in the risk curve and is already seeing the fruits of its investment in the production area, while Univision is still mapping out the road. Telemundo may never break Univision’s monopoly on overall ad dollars, but it can be a stronger No. 2.”

And that’s all Telemundo president Don Browne’s really wants—for now.