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Telenovelas: Must-See TV, for Advertisers

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Ratings outstrip all four major networks.

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It may not have had the kind of glitz reserved for major Hollywood premieres, but fans and broadcasters alike awaited Televisa International's new slate of telenovelas with bated breath. They included such titles as Tomorrow Is Forever, In the Name of Love and A Blow to the Heart, which tells the story of a pro boxer who must choose between her loyal boyfriend and a seductive racecar driver who's only just entered her life.

It may sound like just another senseless soap opera, but the industry's assembly line-like production of over-the-top dramas is one of the few things keeping advertisers from pulling out of TV altogether.

In a year in which 2 advertising mainstays, FedEx (FDX) and General Motors (GM), announced they would not be producing their annual Super Bowl spots, a number of advertisers have instead been eyeing the Spanish-language soap operas - particularly given the fact that the Hispanic population of the US is expected to triple by 2050.

Among Latin America's greatest exports, telenovelas have gained a following even in global markets without a Spanish-speaking population, including Israel, Malaysia, Singapore, and large chunks of Africa and Eastern Europe. As a result, Spanish-language cable station Telemundo has become primetime's fastest-growing broadcast network.

The little brother to NBC-owned Univision saw its viewership increase 13% from 2007 to 2008, largely among the coveted 18-49 demographic. The network estimates that roughly 40% of its ad revenue is generated by weeknight telenovelas.

Attracting advertisers like McDonald's and Walgreen's, these series are cheap to produce and attract a cult-like following; as such, they provide something of a haven in a difficult economic climate.

Which brings us back to Televisa and their upcoming slate of programs. The Mexican production house has had a hand in telenovelas' global proliferation. Since signing an exclusive production deal with Univision in 1992, Televisa has helped the channel's ratings outpace those of all 4 network broadcasters (CBS (CBS), NBC (GE), Fox (NWS), and ABC (DIS)). The network has become so dependent on telenovelas that it willingly incurred a $24 million fine from the FCC for replacing parts of their children's programming with the popular soap operas.

But with the telenovela propping up TV advertising in some part -- and the Univision-Televisa partnership in a state of flux -- that lucrative landscape could be shifting soon.

For the past few years, Univision and Televisa have been entangled in a lawsuit over the terms of the companies' original contract, as well as monies the TV producer claims it's owed by Univision. Should Televisa become a free agent, able to offer its series to other channels, one of TV's last moneymakers could undergo a swift business makeover.

All of which fits nicely among some of the world's most salacious soap operas.
No positions in stock mentioned.

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