'To the Limit': Austin Radio Spanish
Austin's Hispanic broadcasting market makes huge changes, too
For Castro and fast-growing BMP, it's a $50 million bet that the Austin Hispanic radio market is about to explode. As a buying power, Austin's Hispanic community is at a "tipping point," Castro said. "It's an underdeveloped market, in terms of the advertising community," Castro said. "The advertising dollars targeted to the Hispanic community do not reflect the buying power or the size of the population."
Led by Castro who served as the national deputy finance chairman of John Kerry's presidential campaign BMP investors include Tony Sanchez, the Democrat who unsuccessfully ran for governor in 2002, and former Dallas Cowboy Danny Villanueva. In a little more than two years, the company has raised $275 million and purchased 34 Hispanic radio stations in six Texas markets.
Castro, who has already built and sold two radio companies, boldly predicts that the advertising revenue generated by Austin's Hispanic stations will more than quadruple in the next five years. "That rate of growth is consistent with what we've seen in other markets at this stage," Castro said.
Although few markets are seeing 400% growth, Hispanic radio is the one true growth sector in the radio industry, at a time when broadcasters are struggling to figure out how to compete with the brave new mass-media world. According to Miller, Kaplan, Arase & Co., a Los Angeles-based accounting firm that tracks media, revenue for the overall radio market is generally "flat" but stations with Spanish-language formats are posting double-digit growth. As a point of comparison, revenue for stations playing regional Mexican formats jumped 17% in 2003, compared to 3% for the overall market.
By quickly establishing a dominant cluster of stations in Austin there is only one other Spanish-language station in Austin, KINV-FM (107.7), owned by broadcasting giant Univision Communications BMP hopes to attract more national and regional advertisers to Austin's Hispanic market. "In general, Austin is not the first market that you think of when you think of Spanish-language," said Tracy Arrington, senior media buyer for GSD&M, the Austin-based ad agency. "Historically, minorities of all kinds are undervalued in Austin, because it's not thought of as an ethnic town."
Part of Border Media's strategy is to develop different niche-programming formats to use in its different markets, mirroring the type of selection offered by English-language broadcasters. BMP's Austin stations already feature a wide array of choices, from the Mexican pop of "La Ley" on KHHL-FM 98.9 (which is among the top-rated stations in Austin) to Spanish talk on 1600AM. In November, it launched "Digital" on KXXS-FM (104.9), an upbeat mix of Spanish pop targeting a much younger audience than traditional Spanish-language stations. BMP is also moving to upgrade facilities, including a new transmission tower for KXXS-FM, which should dramatically increase its range. And they expect to double the staff of their newly acquired Austin stations.
BMP's move into the market represents "a sea change" in Austin's Hispanic radio culture, said Bill Crawford, co-author with Gene Fowler of Border Radio: Quacks, Yodelers, Pitchmen, Psychics, and Other Amazing Broadcasters of the American Airwaves. He believes the city will see a ripple effect in concerts and community events, thanks to the involvement of an aggressive player in the Latino market. "What I'm excited about is a lot more experimentation and a lot more variety in terms of the Hispanic music," he said.
And BMP might not be done buying Austin. They have seven stations, but the current limit is eight. "We would like to go to the limit," Castro says.
But turning Austin's Hispanic radio market into a success story is not a sure bet. According to a company release, of BMP's 34 stations, "16 have new formats and produced negligible revenue in '04." In addition, BMP is almost sure to face new competition. Last year, Clear Channel Communications and Viacom, the country's two largest radio broadcasters, both announced plans to expand their presence in Hispanic radio.
Castro firmly believes Austin's Hispanic market is still in its infancy. "A lot of advertisers just haven't made the commitment" to Hispanic radio, Castro said. "The Hispanic community [in Austin] is below the radar more than in other markets."