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November 23, 2014

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Henry Cisneros: Hispanic Listeners Are The Foundation For Radio’s Future (05/21/07)

Henry Cisneros is a trailblazer. Going back as far as 1975, the voters in San Antonio made him the youngest person ever — at age 28 — elected to the San Antonio City Council. Six years later, that same city’s voters elected him as their mayor, making him the first Mexican America governor of a major U.S. city. In 1993, he was chosen by President Bill Clinton as the first Hispanic to serve in the White House Cabinet as secretary of housing and urban development.

Cisneros followed up his White House tenure by taking the reins at Spanish-language media powerhouse Univision, a company whose radio and television properties connect with a large segment of the Hispanic population in the United States. While this audience has for years been growing in size and importance, Cisneros recalls how the successes Univision enjoyed then laid the foundation for the explosive growth Spanish-language media is experiencing today.

“We were dealing with advertisers who thought they could pay less because there was less audience,” he recalls. “That proved not to be true; we had sheer numbers. Then they thought there was less disposable income, less purchasing power, so they should pay less. We made the argument — drove it home very hard — that they should pay the same for Latino eyeballs as they do for general-market eyeballs. And we made that mark so successfully that Univision went from a company grossing on the order of $150 million in 1992 to about $1 billion by 2000.”

Today, Hispanic radio is arguably the fastest-growing segment in the radio business. Many English-language stations that have switched to Spanish formats are reaping the benefits of the move to serve this growing population segment.
As more stations follow suit, and the spending power and population numbers of Hispanics in the U.S. continue to rise, this audience will only grow in importance to radio station owners.

With that same trailblazing vision, Cisneros now sees how the radio business can benefit from serving this ever-growing and increasingly important audience. And while many in the radio business agree that this population segment will only become a more vital part of the radio landscape, Cisneros has possibly the most optimistic outlook of anyone. “I see, potentially, a doubling of the number of Spanish-language radio stations over the next decade and a half.”

Only time will tell. But Cisneros isn’t just making pie-in-the-sky claims. His bullish outlook comes from years of working and living among the nation’s vibrant Hispanic community. And his deep understanding of the trends and habits of this important population segment inform the views, opinions, and advice that he shares here, and that the radio industry would do well to embrace.



RADIOINK: Spanish-language radio is the fastest-growing segment of the industry. What does radio connect so well with this audience?
HENRY CISNEROS:
There are a number of dimensions. First, the community is in search of a medium that puts an emphasis not just on entertainment and music, but also on news and community service information.

Second, because the Latino community is so diverse, a medium that allows for diversity of choices is equally attractive — from traditional Musica Romantica to Reggaeton and every possible iteration in between — Ranchera, Tejano, Banda, and now increasingly Talk, Sports, helpful hints, financial information, health information.

Third, many Latinos work in occupations where they can keep the radio on all day. For example, I’ve been to construction sites where the boom box is booming with Spanish radio, with no diminishing of effort or productivity. The radio is an accompaniment to workers who are doing arduous work all day long. Similarly, I’ve been into food production facilities, or the back of a restaurant, where the radio is blaring away and people are listening while they work. There are many other forms of labor that Latinos are doing in America where radio is a possible accompaniment. We are a culture that is social, that is urban, and therefore used to constant information and music. We’re a culture that is in its own way musical.

Put all of those things together, and you understand why radio has the ubiquity and presence that it does in Latino life.

RI: Despite growth in the segment, many markets have only one or a few Spanish-language stations. Are these listeners still underserved due to the relatively small number of Hispanic stations?
HC:
I think the market will address that. As the Latino population continues to grow, not just in the gateway cities but in smaller markets as well, the market will relate to that. When the community grows to a size that it dictates a diversity of choices, and the numbers are reflected in the economy and in consumer purchases — and advertisers recognize this is the way to reach this community — then you’ll see many more niches or subsets of entertainment choices and formats. In Los Angeles today, I don’t know what the number of Spanish stations is on the dial, but my guess is we’re talking a dozen. And that is probably true in New York, San Antonio, Houston, and potentially Phoenix, where we’re looking at better than half a dozen choices, at least.

RI: Is that an enticement for English-language radio companies to get into Spanish-language radio?
HC:
It is a market opportunity for whomever chooses to address it. Major players with the capacity to buy stations will see this opportunity. At the same time, it’s a tremendous opportunity for individual entrepreneurs to start a radio station in places where the Latino population is growing. In Marietta, GA, or Raleigh, NC, you’ll see individual entrepreneurs, small-power stations following the traditional route of growth. Some of those will become radio companies themselves, like SBS and Hispanic Broadcasting, and some of them will grow in their own right and remain independent, joined by other Spanish-language radio in that market.

I see a proliferation of Spanish-language stations because the nature of the medium is such that if you’re in Bridge City, NE, it makes sense to have a small-power Spanish radio station serving the western part of the state. You’re isolated from other markets, so it’s not like a television network where you can’t start a local station because cable obviates the need for it. There is a need for radio as a uniquely local medium to provide local news, local information, local weather, local traffic, local school needs, local current information — which is why I see, potentially, a doubling of the number of Spanish-language radio stations over the next decade and a half.

RI: What is driving Latino population growth in these smaller areas?
HC:
As other populations leave these areas, Latinos are drawn to the unfulfilled jobs in food production, agriculture, and construction in the Midwest; textile and furniture work in Georgia and North Carolina; poultry work in Arkansas; agricultural work in Michigan and Maine and Washington state. Construction is a big draw in the big cities. That’s what is attracting people — the unfilled jobs and the recognition on the part of employers that these are very, very good workers.

That migration will account for the increased number of stations in the next decade and a half. Where there is no great penetration today, you’ll see more stations in these markets, because the market will demand it.

RI: Who do you expect will launch Spanish-language stations in these smaller markets?
HC:
The principal route will be individual entrepreneurs starting up stations or small groups of stations. These small stations know how to serve the market; they have a nuanced feel for the market. I have been in small towns in New Mexico campaigning for a candidate, and the logical thing to do is go to the local Spanish-language radio station. It is about as basic as it can get. The station and personnel relate to the local community for survival purposes, knowing the local news, the local political figures, the local advertisers, the local tastes in music. That’s the natural route.

If people do not know how to serve the market, not just with musical tastes and programming, but with community relations and outreach to the community with sensitive programming, then they won’t be around very long. The community won’t be listening to them, and the advertisers will figure that out.

What we will also see, however, is people like Tom Castro of Border Media, who recognize the opportunity to assemble groups that have potential. At the same time, successful operators in the market will reach the point in life when it’s time to cash out. They’ve done what they wanted to do, and now their payday is due. You’ll see that process play out. I doubt if you’ll see a large company that owns a hundred stations or a couple of hundred stations start a handful of Spanish stations from scratch. I just don’t see that organic growth as the principal dynamic.

RI: And what will convince advertisers to go along with this shifting dynamic?
HC:
I faced this dilemma during my years at Univision. We were dealing with advertisers who thought they could pay less because there was less audience. That proved not to be true; we had sheer numbers. Then they thought there was less disposable income, less purchasing power, so they should pay less. We made the argument — drove it home very hard — that they should pay the same for Latino eyeballs as they do for general-market eyeballs. And we made that mark so successfully that Univision went from a company grossing on the order of $150 million in 1992 to about $1 billion by 2000. So the advertisers were not only becoming more numerous, but were paying more in the end because they realized that it was valuable to reach this audience, and that the audience did in fact have that kind of spending power.

I looked into many industries in that era. We were able to show theater companies and film distributors, for example, that Latinos attend movies on a greater rate per capita than other populations because teenagers go in groups and our families are larger. I could make the same arguments for Proctor and Gamble home products or for automobile dealerships at the local level. We had a Ford dealership in Garland, TX, that absolutely mastered how to reach the Latino community. Radio was a big part of it, and they ran away with the market in terms of share of Latino customers. I have examples of how advertisers are getting both macro, big-league advertisers like Proctor and Gamble and Wal-mart, but also the local auto dealer, the local independent grocer, etc.

RI: So the growing Latino population will significantly affect the broader economy…
HC:
There are some industries whose future literally depends upon relating to and selling to the Latino population. There are entire industries in America that will see the peaking of population at particular ages and then the beginning of the decline in their sales if they rely on the traditional population. As Latino youth move to their adolescence, their teenage years, their household formation years, they will provide the fuel for such industries as automobiles, home building, appliances, household goods, children’s products. It will be highly dependent. This is no longer an interesting sideshow; this is core business strategy for many, many industries.

RI: Is that something that you feel has evolved since your days at Univision?
HC:
To my surprise, it is happening faster than the projections that I saw. I knew this was a substantial trend, but the rate of population growth has been much more substantial than I envisioned. We’re now probably 40 million people in the United States, and destined to grow to 100 million by 2050 — the fastest-growing segment of the American population by far, providing something on the order of half of the growth in the United States over the next four decades. It’s a function of the youth of our population and the size of our families; put those two things together, those young people forming their own families and having children, and the American Hispanization process will proceed to pace.

But, in addition to sheer numbers, I’ve also been surprised at the capacity of this population for hard work, for making money, for saving, and for moving into the middle class. It’s the fastest-growing segment of the American middle class, the fastest formation of small businesses. It is a hard-working population that moves into careers that have low barriers to entry: insurance and real estate, various forms of small-business entrepreneurship, construction, sub-contracting, framers, masons, concrete work, roofers. This is a population that is amassing substantial income destined to be a trillion dollars in disposable income by 2010, which would make it larger than the GDPs of any Spanish-speaking countries, but for Spain and Mexico, right within the boundaries of the United States. We have an economic engine of that power.

This will be enhanced if we have meaningful immigration reform. Suddenly, the 12 million un-documenteds — of which some substantial percentage over 8 million are Latino — will be out of the shadows, able to conduct economic transactions without fear, able to bank, save money, make deposits. The economic impact in the country will be immense.

In addition to the economic impact, there may be one other: the cultural presence of Latinos on the American scene. Food, clothing, fashion, music, entertainment, all those visible presences will add value not just for Latinos but for the general population as well. We will share tastes in fashion; for example, Paloma Picasso, Oscar de la Renta, and Carolina Herrera are three Hispanic designers enjoyed by many more than just Hispanics.

RI: Along the cultural lines, I recently saw a blonde Caucasian woman at a traffic light listening to a Spanish-language station. That jumped out at me.
HC:
There are three possibilities, all of which are relevant to your analysis: one, she likes things Latino, as more and more Americans do; two, she is one of that substantial portion of the population that is now intermarrying among Latinos and Anglos; or three, she is a Latina and just had her hair dyed!

RI: All good possibilities. The notion of Latinos and Anglos intermarrying, and the growing assimilation of Hispanics into the larger populace, raises another issue: How much influence will they have on the political landscape in years to come?
HC:
Much more substantial, and relevant to radio interests. Ten years ago, we had no United States senators who were Hispanic. Now we have three — Robert Menendez of New Jersey, Ken Salazar of Colorado, and Mel Martinez of Florida, who is also chairman of the Republican party; and mayors of major cities like Los Angeles and Miami. The governor of New Mexico, Bill Richardson, is running for president of the United States. The numbers will grow from here dramatically.

RI: How will your average person running for office connect with Latino voters?
HC:
We now have 5,000-plus Latino local elected officials who are in the incubator of talent for the future — first a city council or school board member, later a state representative or senator, eventually a congressman or U.S. senator or governor. We’ll see the best of that talent rise. Both Hispanic and Anglo candidates will have to relate to the community, and Spanish radio is clearly the principal vehicle for political discourse, both in paid format advertising as well as in the Talk format. Spanish radio is the principal vehicle for communication of information, for persuasion. Television is either too expensive or doesn’t relate, at this point, to the local nature of Hispanic politics. If you are a city council member or county commissioner, you cannot buy citywide television; it’s too expensive for a district race. But it makes sense to buy radio because it is priced properly, and you know who you’re reaching, how, and where. So radio is without a doubt the principal vehicle for the Latino community’s political discourse.

If we had any doubt, last year’s immigration discussion and marches were principally viral through Spanish radio. They were articulated by iconic figures in Latino radio; the people who Latinos are listening to in drive time and during work hours are the ones who articulated the message of concern about the more onerous provisions of the immigration bills, and who got people onto the streets. The influence was everywhere, because once it went viral, it shocked people across the country. There were a million people on the streets in Chicago, half a million in Dallas, massive marches in Phoenix. People didn’t know where the marches came from or how they happened. Los Angeles had a large one, but it was not by any means in its own league.

RI: Could that have happened 10 years ago?
HC:
No, it couldn’t have.

RI: How has the Hispanic landscape in the U.S. changed since your days as San Antonio mayor?
HC:
It’s much more vital, much more vigorous, much more vibrant, much more numerous, much more potent, much more significant in the country.


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