In a sense, cable’s experience with the Latino market illustrates perfectly the value of lessons learned at CTAM: Know your customer and examine your marketing and pricing strategies. It’s well known that cable operators fell behind DBS by failing to provide Latinos with a digital assortment of Spanish-language channels. While satellite began a Latino digital tier strategy in 1999, cable did the same just two years ago. But give MSOs credit—they’ve learned from their mistakes and this knowledge has helped make Latino tiers an industry success story. Comcast and Cox estimate their national Latino digital subscriber bases have more than doubled in the two years since they’ve introduced Latino digital tiers. Cox’s San Diego system, one of the company’s largest, has posted 100% growth in Latino digital customers since 2003, multicultural marketing director Cesar Cruz says. "Nuestros Canales," the Spanish tier created in 2003, has vaulted Bright House Networks’ Latino digital subs in Orlando and nearby central Florida communities. The gains are occurring despite what MSOs acknowledge was a huge mistake early on—insisting Latino subs take most or all of a system’s digital lineup to get the Spanish channels. This tactic, known as "buy-through," discouraged many Latinos, especially Spanish-speaking customers. Another turn-off: high monthly prices. "We had a one-size-fits-all mentality, so that Latinos had to find their channels by getting a lot of English channels along the way," Time Warner Cable chief marketing officer Sam Howe says. "Cable didn’t address this because of this one-size rep, which it got away with. Operators got away with adding Latino channels, but not with changing the model." Great opportunity, poor execution, concludes Tim Kelly, Charter’s core video service marketing director. "We made the audience buy at an unreasonable price point," he says. Buy-through also played into the hands of DirecTV and EchoStar’s Latino tiers—Para Todos and Dish Latino, respectively. Operators made tiers "an expensive proposition, which hurt them," says Mark Ryan, senior marketing director for Para Todos. Upset with consumer resistance, operators switched gears in late 2003. Buy-through was dropped in many markets, and altered in others so that instead of taking all digital services, a customer would get a small, expanded basic or digital tier with Spanish channels. Comcast multicultural video senior director Mauro Panzera credits the Latino turnaround to eliminating buy-through, plus greater sensitivity in channel selection and pricing. "We’re growing subs month after month," he says. "We have choice, we have good brands with high production values, whether U.S.- or Latin American-produced. The challenge is to continue offering better quality and maintain a constant dialogue with our customers." DirecTV and EchoStar maintain cable hasn’t made an appreciable dent in their Latino business. Their tier penetration keeps growing, they say. DirecTV reached 700,000 Para Todos subs five months ago; Ryan predicts Para Todos will break 800,000 subs early this fall, compared with 347,000 subs at the start of 2004. But cable believes it can nullify satellite’s advantage and move ahead by bundling their tiers with video on demand, HDTV and Spanish-language telephony. "That’s our phase two, and it’s starting already," Howe says. Comcast launched 100 hours per month of Spanish VOD last October in all systems offering Latino tiers, and Panzera is exploring high-speed access, telephony and other bundle possibilities. Charter soon will test a combo digital tier/high-speed package in several markets for $49.99 per month, and anticipates having a triple-play bundle—adding telephony—in trial later this fall at undisclosed locations. What Charter’s Kelly isn’t hiding is his bullishness for bundles. "All the research suggests Latinos are a tech-savvy group who want to be first on the block with VOD, DVRs and you name it," he says. "That’s what we have to keep in mind." Corporate Gets Involved While cable operators refuse to provide specific figures about penetration and sub counts, their actions indicate Latino digital tiers have become a growth business. Previously, Time Warner corporate let individual systems decide what channels to run on their Latino tiers. In addition, corporate provided only minimal leadership in other areas, including promotion. Now, with guidance from multicultural marketing expert Maida Chicon, Time Warner consults with affiliates on channel selection and provides marketing materials, including cross-channel spots. In another move that signals the strength of Latino purchasing power, nine Time Warner systems have launched a Latino digital marketing co-op, pooling funds for TV ads, direct mail and other promotional ventures. The co-op will also develop media plans for Latino campaigns. It’s a safe bet that Latino-owned or -focused agencies will participate in developing those campaigns, as more and more MSOs are taking this route. Increasingly, the campaigns are developing separately from English-language digital marketing and urge potential customers to call special hot lines staffed by Latino customer service reps. Comcast has even incorporated messages for its Cable Latino package into its DBS buy-back programs. "You can’t translate general market" into this special sector, Panzera says. And you shouldn’t dilute the message. "When you make it too complicated, they won’t buy it," says Cruz. And while many of these suggestions hark back to general marketing strategy, the Latino sector retains unique characteristics. Participation in local events, like street fairs and concerts, coupled with retail demonstrations, is an important way to turn Latino heads, Bright House Networks’ Central Florida senior marketing director Arden Piazza says. "You have to get out to the community," she says. "These people are loyal and want to be reached." Dear Old Mother—Country On occasion, Latinos also want to reach back to their homelands, MSOs are learning. Recently three Charter markets in California and Nevada introduced a version of Charter Latino, the company’s Latino digital package. Each system is offering upward of 20 Spanish nets, plus VOD, digital music and broadcast basic. The difference is that the channel lineups feature more services from Latin American countries, aimed at Latinos of specific descent, such as Mexican or Puerto Rican. "Your HBO and CNN and Discovery en Espa�ol resonate very well with the population," Kelly explains. "When you get closer to the audience, they demand a bit more. Mexicans want to see more programming from their homeland. If you’re in a mostly Mexican market, does it make sense to bring in a channel from Peru?" Bright House Networks Central Florida had a similar experience. "At the beginning, we looked for channels that had brand recognition and variety," Piazza says. "The reaction was not phenomenal, and the research and focus groups we did showed that we needed more channels from the homeland." That meant adding choices to the tier. Bright House Networks’ Central Florida effort started with six channels; now there are 16. Nuestros Canales sells for $29.99 per month, and includes digital music services and an interactive program guide. I’m pleased with what we’ve done since," Piazza says. Indeed, all of the Spanish digital tiers or packages operators offer mix U.S.-originated/produced services with imported channels. That’s a critical step, says Cox’s Cruz. The offering should appeal to both predominant Spanish-speaking people with strong homeland ties and bilingual residents well assimilated with U.S. culture. "Programming is great if it’s great, wherever it’s produced," he adds. "The key is relevancy. We need to carry products with appeal to the lifestyle and background of Latinos." Several MSOs have responded with choice and variety. Cablevision’s two-year-old "iO (Interactive Optimum) en Espa�ol" tier offers 31 Spanish channels. Time Warner’s "Nuestra Tele" comes in three levels. The basic package at $24.95 per month includes at least 15 Spanish-language digital nets. Comcast’s Cable Latino offering comes in three flavors, ranging from $25 to $54 per month. Cox launched "Paquete Latino" last October, with as many as 35 channels in the tier ($34.95 per month). For Panzera, Latino tiers represent a major step on the road to a day when local operators offer digital tiers and service bundles to every local cultural group. "This is a revenue business," Cruz says, noting cable is likely to go where the money is. Tips for Tiers These tips can eliminate the tears from your Latino digital tier experience. Know your audience; tailor content to it. Ethnicity matters. If most of your Latino base hails from a particular country, make sure there’s plenty of programming from that country on your channel menu. Mix top U.S. cable brands with top foreign brands. Have your fill of CNN, ESPN, Discovery channels, but make sure the channels you import from Latin America are best of breed. Offer more than one Latino option if possible. Have basic and expanded Latino digital tiers. Try digital/premium channel, digital/broadcast basic and digital/VOD combos. Price sensitivity is crucial. Just a glance at our story tells you why. Promote tiers with Spanish-language and English/Spanish campaigns. That way, you reach bilingual, assimilated Latinos and the predominantly Spanish-speaking crowd. Use Spanish radio and publications. Don’t translate English campaigns into Spanish verbatim. Have a community presence. Demonstrate your product at street festivals and carnivals. The crowds they draw can yield sales and earn your system a better reputation. Pool resources. Consider starting a marketing/promotion/ad sales co-op with other systems, or join a project such as Time Warner Cable’s nine-division effort.

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