A growing number of cable operators are realizing that ethnic markets — specifically the fast-growing Hispanic segment — are key to taking on satellite-TV providers who've been much more successful at attracting multicultural audiences.
“Let's be honest: The satellite guys have owned this space,” Comcast vice president of content acquisition David Jensen said April 2 at a Broadcasting & Cable/Multichannel News-hosted panel discussion at The Cable Show in Washington, D.C. “For 10 years, they have been beating cable by a more than 2-to-1 margin in the competition for the ethnic subscriber.”
Jensen took the breakfast as an opportunity for the first time to issue a call for cable operators to take back the ethnic segment.
When AlternaTV said it would launch three additional channels on Comcast's Hispanic lineup in Chicago earlier this month, the general manager of the Mexico-based programmer referred to the MSO's expansion of its Spanish-language offering as “groundbreaking.”
“By launching this new programming tier, Comcast is making a bold, positive move for the Hispanic community,” AlternaTV general manager Leonardo Alvarado said of Comcast's addition of Ecuavisa, Telemicro Internacional and AYM Sports. “[Comcast is] recognizing how important the Hispanic consumer is and are giving them the attention they deserve.”
The new channels from AlternaTV were just Comcast's latest move to beef up its offering in the largest U.S. Hispanic markets it serves. The 24.6 million-subscriber MSO expanded its Hispanic lineup in Chicago, nearly doubling its previous offering to 60 of the most popular Spanish-language networks and adding 125 on-demand programming choices.
But Comcast is not alone. Time Warner Cable last year launched El Paquetazo in Southern California and is focusing on expanding its digital package in New York, Texas and other important Hispanic markets. And Cablevision Systems continues to run an aggressive TV campaign, pitching the Optimum Triple Play en Español.
Cox Communications revamped its Hispanic offering in 2004 with the launch of Paquete Latino, which allows subscribers to buy the Hispanic digital tier in combination with basic cable at a more-competitive $29 a month for about 30 channels, instead of the $55 Cox used to charge for seven to eight channels.
“However, we didn't lower our price by doing so,” said Cox Communications vice president of acquisition marketing and sciences Tony Maldonado. “Because we allowed the consumer to bypass expanded basic, we allowed the price point to drop.”
Price is a thorny issue for cable operators, which have a much-higher price structure than satellite providers DirecTV and Dish Network. For Cox and others, the best way to compete with satellite is with value, not price.
“Our price needs to be competitive,” said Maldonado. “But the best value is not always the lower price.”
The strategy of offering additional services around a tier has worked so far. According to Cox, more than half of the households who purchase Paquete Latino end up acquiring other services, including digital phone and high-speed Internet. Overall, said Cox, growth of its Hispanic products has outpaced its general-market offerings in high-speed Internet, digital phone and bundle sell-in by 120%.
As the Hispanic population continues to grow, moves to revitalize cable's Spanish-language offering are not limited to just the five largest operators.
“Cable has not been vigilant enough to attract multicultural programming and take away [market share] from Dish Network and those guys,” said Glenn Goldsmith, vice president of programming at Middletown, N.Y.-based Mediacom Communications, the No. 8 U.S. MSO with about 1.3 million basic subscribers.
In markets such as Nogales, Ariz., which is more than 90% Hispanic, Mediacom is for the first time adding a few Hispanic networks to its family cable package at no additional cost. To promote the service, Mediacom has hired Spanish-speaking personnel to attend grassroots and other community-oriented events and walk would-be customers through its offering.
“If you try to attract certain people there you also have to make sure your staff can communicate with those audiences,” said Goldsmith. “The Hispanic market is going to be very important to our future growth.”