BY ANDREA FIGLER Listen up cable operators. EchoStar Communications has a little secret when it comes to selling satellite service to Hispanics. It’s called Playboy TV en Español. It’s the only premium network on EchoStar’s basic Dish Latino Dos package. And it’s arguably the first adult network included in a basic multichannel video tier. At a cost of $31.99 per month, this package is the “most popular Spanish-speaking package offered to consumers in the United States,” said Richard Yelen, VP of marketing for Charter Communications, at the Cable & Telecommunications Association for Marketing conference in Seattle this summer. “It’s deemed very effective and kind of like their secret hook as far as differentiation.” Of course, Playboy TV en Español is not the only element of the “most popular” Hispanic television package. EchoStar has many unique Hispanic networks, price points and marketing tactics. Yelen and his colleagues have been dissecting exactly how EchoStar and its satellite sister, DirecTV, target the fastest-growing ethnic market in the country. They have to. Satellite has the lead over cable when it comes to targeting Hispanic subscribers. Scarborough Research found that Hispanics are 7% more likely than the rest of the country to have a dish on their roof. At the same time, they’re 13% less likely to subscribe to cable compared with the average U.S. consumer, according to data measured from August 2001 to September 2002, the latest available. This disparity between satellite and cable is only amplified when considering the Hispanic population’s explosive growth. Cable operators can’t let this market get away from them. In fact, in a week or two, Charter plans to launch a national campaign with bilingual ads, just in time for Hispanic Heritage Month and the celebration of Mexico’s Independence Day. “It’s not revolutionary for cable but it is the beginning of something big for Charter,” Yelen said. The cable operator has hired an undisclosed Hispanic ad agency and two new executives to help create national ads as well as local marketing campaigns targeting Hispanics. “The best thing we can do on a marketing basis is grassroots,” Yelen explains. “Cable is like old radio in the sense that we can project something on a local basis like no one else can.” While he won’t reveal the particulars of the planned grassroots campaign, Yelen’s research into satellite’s Hispanic marketing efforts may shine some light on things to come for Charter. For example, EchoStar won praise from Yelen and other cable executives for sponsoring a lunch for employees of a rug manufacturing plant in Dalton, Ga. The satellite provider bought lunch for the plant’s mostly Spanish-speaking Hispanic employees, during which it explained its Hispanic packages and offered to sign up the workers for a subscription right then and there at an extremely low price. No driver’s license or credit cards were required. And EchoStar sponsored this lunch on exactly the right day — payday — said John Vonk, VP of marketing for Comcast Corp.’s West division, who also spoke at CTAM’s conference in July. “It is probably one of the most brilliant things they could have ever done in reaching out to that community,” Vonk said on a panel on Hispanic marketing. Grassroots campaigns are already under way for Comcast. The operator is sponsoring events such as Fiesta Broadway in Los Angeles, which celebrates Hispanic culture for Cinco de Mayo. Comcast has hired Castells & Asociados, a Hispanic advertising agency, to help create culturally relevant campaigns. “We’re educating people on what cable is offering,” said Alfred Valdez, EVP and account director for Castells & Asociados. At these community events, Comcast rolls out a truck showing Hispanics the advanced services cable offers such as high-definition television and video-on-demand. Comcast’s divisions in California will also launch some new retail agreements with undisclosed brick-and-mortar companies targeting the Hispanic community in about a month, Vonk told Cable World. The idea is to insert Comcast’s product in a place frequented by Hispanics, making it easier for them to pay their bills and order new services if so desired. But one of the best ways to beat the dish at its own game is to convert its front men — independent retailers who target Hispanics — to the cable side. In essence, cable could prompt satellite retailers to pull a sort of Benedict Arnold. Vonk has already begun this process. He said he has agreements with several satellite retailers to sell Comcast’s Hispanic packages as another choice for consumers looking for multichannel Hispanic programming. While Vonk would not release the names of the retailers or any further details about the agreements, he said they are excited to sell cable. “It’s just a business arrangement with another distributor,” he said. “It’s better to be in a [sales] channel than not be in that channel just as long as it’s a cost-effective channel.” Satellite traitors and grassroots lunch deals aside, traditional marketing to Hispanics works well despite the naysayers, Vonk said. He can prove it. On May 5, Comcast’s California division launched a massive campaign targeting Hispanics. It invested $550,000, funded by Comcast corporate, in direct response television ads, radio commercials and direct mail. All of these venues, which were touting its new package of ten Spanish-language channels for $19.95, fit within traditional marketing standards. Comcast’s division in Los Angeles put these traditional ads in Spanish and the results surprised them. In just one month, Comcast’s Los Angeles division had 8,104 gross subscribers to its Hispanic package and a total basic net gain of 4,355. This addition was over a fourth of the division’s overall Hispanic subscribers that Comcast inherited when it took over the AT&T Broadband system last year. “What excited us the most was a majority of these subscribers were new to the video category,” said Vonk, who would not release the campaign’s results in July and August. This traditional advertising worked so well that just two weeks ago Comcast launched a national direct mail campaign for its first-ever Hispanic satellite dish win-back program, said Scott Tenney, VP of national marketing for Comcast’s core video product. As part of this program, Comcast offers Hispanics who dump the dish $200 in credit if a consumer buys the second level Hispanic tier, which costs $29.95. They must also agree to stick with cable for 16 months. That equals $12.50 off their monthly bill for 16 months. The program is too new to have any substantial results to report, Tenney said, though it is “going really well.” Again, this tactic to discount pricing of a programming package in return for a 16-month commitment mimics a similar marketing tactic launched by EchoStar in the general market last year. Keeping the price low for Hispanic programming is key, according to Comcast’s focus group research. Comcast prices its basic introductory Hispanic product at $19.95. Relevant content also was a key reason why Hispanics went to the dish, Tenney said. But cable has been adding Hispanic networks at a rapid pace throughout the past few years. Cablevision, for example, launched 30 channels in Spanish in July. That’s in addition to the Hispanic broadcast mainstays Univision and Telemundo. Similar to Cablevision, many cable operators now offer Hispanic packages that outdo or rival EchoStar’s broad Hispanic lineup. Cable operators offer a wide range of channels, from soccer network Gol TV to Spanish sci-fi Infinito. Still, many Hispanics, particularly the recent Spanish-speaking immigrants, don’t even know what cable, is let alone what it offers, said Mark Hotz, SVP of marketing for NBC Cable Networks, which owns the second-ranked broadcast Hispanic network Telemundo as well as Hispanic cable network mun2. Many recent immigrants come from Latin America, a part of the world dominated by satellite television, he said. Hotz and his colleague Lynette Pinto, VP of marketing, suggest that cable operators must market to Hispanics as aggressively as they did to the general public when cable first began. And to help with this process, NBC will launch the “Más” (“More”) campaign the week of Sept. 22. “Más is clearly designed to help build awareness of cable as a category, almost like cable’s beginning in the ’60s and ’70s,” Hotz said. The NBC campaign will use television and radio commercials as well as print ads and door hangers. The tag line is “Quiero más. Quiero cable.” (“I want more. I want cable.”) There are three TV spots with three separate objectives. The first seeks to grow cable’s penetration; the second shows that cable is a good value; the third markets high-speed Internet. Telemundo will run a minimum of 25 spots, at least five in prime time, during the week. Telemundo also will make an additional 75 spots available for local ad use. Mun2 will also air 100 spots, at least 50 in prime time, to help get the word out. This advertising airtime, especially on broadcast channel Telemundo, is crucial for cable operators. Broadcast leader Univision — the top Hispanic channel in the country — refuses to let cable operators advertise their carriage of competing Spanish-language networks, according to a majority of cable executives interviewed for this story. Univision did not return calls on this subject. Imagine the frustration for cable operators. You pick apart the satellite approach to the Hispanic market. Then you cut the deals needed to carry new, relevant Hispanic channels. And then you drop your price point so much that it could seriously hurt your bottom line if the quantity of new subscribers fails to come through. And now you can’t even advertise this sexy package on the main television station viewed by a majority of Hispanics in the country. So NBC’s campaign could be key. On top of the commercials, the news shows on Telemundo and mun2 will run segments on cable and its advanced offerings of premium networks, high-speed Internet and even phone service. Spreading the news about how cable offers all of these services, especially in one neat bundle, may help cable to snatch Hispanics away from satellite, said Adriana Waterston, director of marketing for Horowitz Associates. About 40% of all Hispanics interviewed for the research and marketing company’s latest report on urban Hispanic media interests — FOCUS: Latino III — said they would switch their multichannel video provider if it offered a bundle of phone and Internet service. What’s even more interesting is this percentage stays about the same regardless of whether the Hispanic consumer mainly speaks Spanish or English. About 38% of the Spanish-speaking Hispanics would switch to a bundled package and a little over 40% of the English-speaking Hispanics would switch, Waterston said. This research is music to Tony Maldonado’s ears. As VP of marketing for Cox Communications in Arizona, Maldonado helped roll out a new marketing campaign two weeks ago aimed at Hispanics. The Cox system offers a Spanish-language entry-level video package with 14 Hispanic channels and one phone line for under $30 a month. Consumers who take this package will receive 60 minutes per month of free phone service to Mexico. This phone service allows Cox to target more Hispanics, Maldonado said. In his area, five out of ten Hispanic households have a multichannel video service; nine out of ten have telephone service. “Phone service allows us to start a relationship for all of those households,” he said. It also sets Cox apart from EchoStar and DirecTV. And Cox plans to add a lot more networks to its Hispanic package in Arizona. “We will be strengthening our tier in this market,” Maldonado said. “We are going to probably be taking that up to 25 channels. Fourteen is pretty good. But we don’t want to be pretty good. We want to be outstanding.” So back to EchoStar’s secret. Will Cox and the rest of the cable operators add Playboy TV en Español? “I would say that every major cable operator has been calling to do Playboy en Español,” said Gary Rosenson, Playboy’s VP of sales and affiliate marketing. “Right now it’s carried primarily as pay-per-view. Some operators are looking at structuring it as part of a tier.” According to Playboy’s last quarterly earnings report, cable offered Playboy TV en Español to 3.3 million digital households as of the second quarter while EchoStar alone made Playboy TV en Español available to 7.6 million satellite households. DirecTV does not carry Playboy TV en Español. Playboy launched its Spanish-language version of the softer adult content on EchoStar in the late ’90s. “When we saw how well it did in Latin America, and understanding the growing population in the U.S., it seemed like the perfect opportunity to launch the service here,” Rosenson said. The big question for cable operators who are considering launching Playboy TV en Español is whether to carry it a la carte or as part of a tier. Seems language really does matter — even when it comes to programming that requires no words at all.

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