Posted on 10/12/2001 6:49:26 AM PDT by truthandlife
NBC announced Thursday that it is buying Telemundo Communications Group, the nation's No. 2 Spanish-language broadcaster, for nearly $2 billion.
The deal would give NBC a strong foothold in the burgeoning arena of Hispanic media, which has attracted the attention of major media conglomerates because of the rapidly expanding Hispanic population.
"I think this is the day that Spanish-language television really arrived. It represents mainstream media recognizing the power of the Hispanic market," said James McNamara, president and chief executive officer of the network noted for its offbeat soap operas like Yo Soy Betty La Fea ("I Am Betty the Ugly").
The $1.98 billion purchase price will be paid half in cash and half in stock of General Electric, which owns NBC, the nation's first broadcast network. NBC will also assume $700 million in Telemundo debt.
Analysts say NBC paid a hefty price for Telemundo, which owns 10 stations, including KTMB Channel 48 in Houston. It has 40 affiliates, serving a total of 86 U.S. markets. Still, Telemundo lags far behind Univision Communications, the country's largest Spanish-language broadcaster, which draws 80 percent of the market, compared with Telemundo's 20 percent share.
Bob Wright, vice chairman of GE and chairman and chief executive officer of NBC, said the relatively high price NBC was paying would be justified by cost savings and opportunities to grow Telemundo's revenues by applying NBC's expertise in selling advertising, running broadcast stations and developing shows.
NBC executives said they are buying the potential to tap into the Hispanic market, with its huge purchasing power.
"This is the most dynamic television market in the United States," Wright said. "We are eager to draw on Telemundo's expertise to serve this important audience."
Wright noted that while the nation's 35.3 million Hispanics represent 14 percent of U.S. television viewers, Spanish-language television is capturing less than 3 percent of the advertising pie that corresponds to it.
Telemundo and other Spanish-language media have been growing despite an overall downturn in the advertising market.
Telemundo's news operations may benefit most.
"On the local level, all of our local stations will receive an immediate shot in the arm," said Joe Peyronnin, executive vice president of news and information programming for Telemundo. NBC will provide "resources, video and even helicopters in major markets like Los Angeles, New York. It will make us incredibly competitive."
Wright said the company had been in talks to buy Telemundo for more than three years.
Sony Corp. currently owns about 40 percent of the closely held Telemundo, while Liberty Media, a company controlled by cable pioneer John Malone, has a 35 percent stake. The rest is held by other investors.
GE has denied frequent rumors that it wants to sell NBC, and it has charged the network's management to expand its base of operations. The Telemundo deal would certainly fit the bill -- Wright expects the deal to add up to $600 million in revenues and $250 million of cash flow within two years.
NBC is the only major network not owned by a larger media empire. ABC is owned by Walt Disney Co.; Viacom owns CBS and UPN; Rupert Murdoch's News Corp. owns Fox; and AOL Time Warner owns WB.
Earlier Thursday, GE reported that NBC's revenues had tumbled 45 percent in the third quarter. Like other broadcasters, NBC has been hit by a revenue shortfall as advertisers pulled back in the wake of the terrorist attacks.
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