The U.S. Census Bureau won't deliver its head counts to President Obama until Dec. 31. But that's not keeping Spanish-language media from jockeying for position to exploit the ascendancy of their core demographic. Joe Uva, the president and CEO of Univision Communications Inc., predicted in a Feb. 25 earnings call that the census would distinguish U.S. Hispanics as the country's largest and fastest-growing minority. And thanks to an expansion rate 3 times that of the general population and 7 times that of the non-Hispanic population, this group of nearly 50 million is expected to account for more than 15% of the U.S. total.

Historically, at least, Hispanics have been better served by U.S. media than by U.S. advertisers. Despite their share of the population, consumers in this ethnic group are the target of only 5% of U.S. advertising dollars. It's a disparity crying for catch-up on two fronts: an absolute increase in advertising dollars to bring Hispanics into balance with their marketplace significance and a relative increase in CPMs, or cost per thousand of advertising impressions aimed at Hispanics, to bring the value of this increasingly mainstream audience into parity with mainstream CPMs.

Any move toward marketplace equilibrium will confer additional value on U.S. Hispanics and the media that serve them. This, in turn, ensures the emergence of Spanish-language media as a mother lode for the next decade -- particularly in light of mature-to-stagnant forecasts for mainstream media and modest growth projections for demographic groups at which other media are directed. Mother lodes, however, wreak havoc on the landscapes around them. And when it comes to Spanish-language media, the resiliency of well-run Hispanic-oriented television makes it especially ripe for disruption.

As Univision reported during its recent earnings call, its TV division recorded a fourth-quarter gain in net revenue of 7%. This compares with a decline for the overall TV industry of 11.5%, as measured by the Television Bureau of Advertising Inc. Univision's TV division also posted a fourth-quarter gain in adjusted Ebitda of 14.2%. Although the TVB doesn't offer comparable figures for the industry, it's worth noting that Univision's radio division suffered fourth-quarter declines in both net revenue (-15.8%) and adjusted Ebitda (-50.7%).

The diverging performance of Univision's two largest divisions has not been lost on smaller but similarly configured companies. Spanish Broadcasting System Inc., a longtime radio broadcaster based in Coconut Grove, Fla., launched Mega TV in South Florida four years ago. Satellite-broadcaster DirecTV Inc. began carrying Mega TV programming for national broadcast in 2007 and for Puerto Rican distribution in 2008. The self-styled Latino TV network then stayed quiet a while, only to explode this year with the announcement of six affiliation agreements, extending its reach to such markets as New York, Chicago and Dallas. The agreements already have the network accessible to 30% of U.S. Hispanic households. And that's before consideration of its pan-American distribution through DirecTV.

Also new to national competition is Liberman Broadcasting Inc., which has been building on its radio origins to encompass TV even more rapidly than SBS. It was only in September that this Los Angeles-based broadcaster announced the national debut of Estrella TV as a Spanish-language network distributed in 24 markets through 17 affiliates and seven owned-and-operated stations. Having since added two affiliates and acquired two O&Os in Denver and Chicago (announced but not yet closed), LBI is now set to compete in 27 TV markets. This will take it to 74% of U.S. Hispanic households.

Few expect Mega TV or Estrella TV to topple Spanish-language leaders Univision and Telemundo Communications Group Inc. Yet the interlopers could prove bigger threats to media's Spanish-language firmament than they perceive.

David Tomasello knows he's going to make a move on SBS. He's just not sure when. The timing depends on Raúl Alarcón Jr., the 54-year-old chairman, CEO and president of SBS, which bills itself "the largest publicly traded Hispanic-controlled media and entertainment company in the United States." It also depends on the ability of Tomasello and his activist investment firm, Attiva Capital Partners Ltd., to line up enough financing to make SBS shareholders an enticing offer -- not for the legacy radio operations founded by Alarcón's Cuban-refugee father in 1983, but for the TV division launched in 2006. And, finally, it depends on Tomasello's plan to secure Spanish-language content of a quality and at a price that can reverse the loss of $6.4 million in operating income before depreciation and amortization, or Oibda, that Mega TV contributed to an otherwise profitable SBS in 2009.

Although Tomasello declines to go into details, except to say he has yet to meet Alarcón, his designs on SBS became public in a regulatory filing last August. Therein, after disclosing ownership of 7.7% of the company's Class A shares, the activist investor announced his intentions "to encourage the board of directors to evaluate the benefits of separating the television and radio businesses through a spin-off, sale or tracking stock for the benefit of the shareholders, to unlock equity value that is currently trapped in the undiversified operations."

Alarcón has not responded to Tomasello's filing and may never have to. The most recent proxy puts his economic interest in SBS at 31.8% and his voting power at 79%, the latter courtesy of Alarcón's lock on the company's supervoting Class B shares. Tomasello, nonetheless, senses vulnerability. He notes the price of SBS stock, at $10.50 per share when Alarcón signed off on a messy and expensive divorce settlement in December 2003, has fallen below a dollar.

The low price has had SBS dealing with a potential delisting from Nasdaq since August 2008. A hearing granted SBS in January resulted in another extension until June 2010, at which time the company's stock must trade above $1 per share for a minimum of 10 days. The threat of a delisting, which would curb analyst coverage and dampen institutional interest, may be enough to warm Alarcón to the idea of a restructuring along the lines proposed by Tomasello. Alarcón, after all, made his reputation as a second-generation radio operator. So the admission of a lamentable but correctable foray into TV could play well with SBS' long-suffering shareholders.

In his final report on SBS before dropping coverage in August, Morningstar Inc. analyst Tom Corbett went so far as to dismiss the company's move into TV as "an example of management's proclivity to engage in empire-building at the expense of shareholders. ... Besides marking a departure from its core radio business, its TV acquisition has been a money loser since day one. We think the firm would have better served shareholders had it redeployed that capital to pay down debt and shore up its highly leveraged balance sheet."

The analyst also called into question Alarcón's compensation of $1.25 million base pay, plus $600,000 discretionary bonus, as well as perks like a company-paid car and driver. Not only are they excessive relative to the performance of SBS stock, Corbett wrote, but the "richly structured compensation package fails to properly mirror the profitability of its incipient television business unit, which has been a tremendous drain on shareholder value."

Any play for Mega TV would likely offer more than a quick fix to delisting. Tomasello, a dual citizen of Italy and Venezuela who studied finance at Boston University, admits to having retained Cross Border Srl, Italy's leading independent merger-and-acquisition adviser, to sound out not only financial players but also content providers for a Mega TV bid. "Italy wasn't as badly affected by the credit crisis," says the well-tailored 36-year-old. "And with the euro so strong, big Italian media companies are anxious to expand."

These companies have almost as many interests in Spanish content as they do in Italian content. Milan-based Mediaset SpA, founded by Italian Prime Minister Silvio Berlusconi, has a majority interest in Spanish broadcaster Gestevisión Telecinco SA. RCS MediaGroup SpA, also of Milan, owns all but a sliver of Unidad Editorial SA, which has broadcast interests in addition to being Spain's leader in daily newspapers and online information. And De Agostini SpA, Milan again, shares ownership of Antena 3 de Televisión SA -- another national radio and TV broadcaster in Spain -- with Barcelona's Planeta Corp. Srl.

Tomasello realizes U.S. Hispanics won't embrace all programming originating from Spain. But he's confident some of it could be hits here, too, if picked up by Mega TV. Consider live broadcasts of European soccer. "Every Saturday, everybody stays home and watches the Spanish-league game," Tomasello says of Spaniards and Italians alike. "And every Sunday it's the Italian league. I'd bet those same games could take eyeballs away from Univision and Telemundo."

Moreover, in a lunch interview near Attiva's New York office, Tomasello acknowledges reaching out to additional content-providing prospects in Venezuela and Colombia. Radio Caracas Televisión Internacional, or RCTV, would appear a promising fit. Its director of business development, Jorge Granier Phelps, sits alongside Tomasello on the board for NeoMagic Corp., a San Jose, Calif.-based maker of semiconductor chips for media and mobile devices. And Jorge's father, Marcel Granier, serves as general director of RCTV, which ranked as Venezuela's most-watched over-the-air broadcaster until President Hugo Chávez yanked its license in May 2007.

RCTV rebounded quickly, however, cutting distribution deals for its programming not only with DirecTV Latin America but with cable companies. So even though it was no longer over-the-air in a country with only 30% cable penetration, RCTV went on to reclaim its status as Venezuela's most-watched channel. Then, in January, Venezuela's National Telecommunications Commission decreed that the channel must comply with domestic media law despite having relaunched itself as an "international broadcaster." RCTV's initial resistance triggered what Venezuelan news accounts termed "temporary closure." But in February, RCTV agreed to register "under protest" as a domestic content provider subject to domestic standards.

In the U.S., meantime, RCTV feeds its telenovela-heavy fare to Univision. But this long-standing output deal comes up for renewal in January 2011. And one of few details Tomasello concedes is the desire of RCTV to become an equity player in the U.S. as well as a content provider. This ambition, in conjunction with the expiration of the broadcaster's U.S. output deal and an uneasy truce with the Venezuelan government, could embolden RCTV as never before. As Robert Routh, who covers media for independent equity-analysis firm Wedge Partners Corp. and serves as an adviser to Attiva, explains: "They've always been interested in increasing their presence here. Now they're incentivized."

Equally incentivized is Lenard Liberman, the 48-year-old CEO and president of LBI, which bills itself "the largest privately held, minority-owned Spanish-language broadcaster in the United States." Like SBS, LBI is the outgrowth of a father-and-son partnership: Jose Liberman owned and operated the first Spanish-language FM radio station west of the Mississippi, having put Los Angeles' KLVE-FM on the air in 1976. Then, a year after selling it as part of a package to Heftel Broadcasting Corp. (now part of Univision Radio) in 1986, he went into business with his son.

Lenard Liberman, who didn't assume his current titles until October, has nonetheless managed day-to-day operations at LBI since its founding. And, soon enough, the younger Liberman proved himself a gifted provocateur as adept at generating ratings as he was controversy. For example, within a decade of acquiring the radio empire's flagship TV station in 1998, Liberman took to the media several times himself to address LBI advertising and programming.

A particularly noteworthy ad campaign, splayed on 75 billboards in Southern California, featured the TV station's news team under the banner "Los Angeles, CA." Only "CA" was crossed out to highlight "MEXICO," which was printed bigger, bolder and brighter. Liberman defended the campaign that many interpreted as a wink at illegal immigration with deadpan earnestness. "How can a board based in LA, promoting itself to 2.68 million documented Hispanics living in LA, be promoting illegal immigration?" he asked on Fox News. Yet when the announcer countered, "But the bottom line is you have got more people watching your broadcasts," Liberman admitted, "Absolutely."

That outcry was mild, though, compared with one generated by LBI's reality-TV show "Gana la Verde" (Go for the Green), which aired in the mid-2000s. Last year, under the headline of "The Roger Ailes of Spanish TV," Forbes magazine described "Gana" as "Fear Factor with a twist: Contestants ate tamales filled with worms and dashed through mud as they were shot with paintballs by men resembling border patrol agents. The show drew nearly 1 million viewers, but caused an uproar from immigrant rights groups."

That winners received a year's worth of transferable free legal immigration services -- "verde" being short for green card -- seemed to rankle as much as the indignities suffered by show participants. Yet on his media stops to account for "Gana," Liberman was undeterred. "Give Maria breast implants and everyone's cool with her having bigger breasts," he told the Los Angeles Times. "Help Maria go from nanny to nurse and everyone's freaked out."

To think of Liberman as a Johnny One Note, however, is to miss the point. The graduate of Stanford's law and business schools is really a master at counter-programming. He purposely leaves telenovelas to his competitors, focusing instead on music, comedy, variety and sometimes reality formats. "On an average evening in prime time, three stations are playing telenovelas," Liberman explains. "That's a pretty saturated market in our view." And so he chooses to steal from the best that mainstream TV has to offer and "adapt" it by casting Latin stars and layering it with Hispanic references to give Estrella programming distinct appeal.

Liberman works cheaply, too. "He waits until the unions are off the clock, then tapes five shows in one night," marvels a visitor to the company's Burbank studios. "Between each show, producers get the audience to move around, swap coats and then sit down for another taping." The same discipline exercised over production costs also gets applied to dealmaking. "If he doesn't get what he wants, he'll just walk away," says a source who has negotiated with Liberman for years.

His willingness to step away from the bargaining table served Liberman well last June, when the domestic TV industry switched to digital broadcasting. LBI no longer found it necessary to sink millions of dollars into buying its own stations but could line up affiliates merely by sharing national ad revenues in exchange for their carrying Estrella TV.

"The average general-market station no longer needs all the spectrum for its core channel," Liberman says of the switch to digital. "And so our highly rated programming became valuable to other broadcasters who want to capitalize on the growth of the Spanish-language market and offer it along with their general-market stations."

What's more, because Liberman would be producing the same 60 hours of programming each week for his own stations, the 60% of national ad revenue that affiliates repatriate to LBI falls directly to its bottom line. "Network revenues in the Hispanic market are like $2 billion a year," Liberman says, "and we weren't getting a dollar of that."

The cheap modus operandi hasn't kept LBI from scoring rich ratings. For its most recent "sweeps period," Estrella's flagship Los Angeles station ranked second to Univision as the market's leading Spanish-language broadcaster. As measured by Nielsen Co., the station's prime-time viewership increased 21% among 18- to 49-year-olds, whereas both Univision and Telemundo saw declines. It's the sort of performance that, when asked why he was just now taking Estrella national, gives teeth to Liberman's response. "We realized that if our programming is so highly rated in our own markets it should be extended to a national footprint."

A rising tide lifts all boats. And the one rolling in bearing the 2010 U.S. Census promises unprecedented recognition and compensation for Spanish-language media and the demographic they serve. But not all media categories will be enriched by the event.

Publishers catering to this ethnic group must continue to struggle with a business model that, without reinvention, threatens all print participants. Spanish-language radio not only awaits an advertising turnaround but needs resolution to an otherwise troubled transition to Arbitron Inc.'s Portable People Meters. The switch to PPM-obtained ratings from archaic diary-obtained ratings has been so contentious that Arbitron sued SBS in February to force it to resume encoding its broadcasting signals for audience measurement. Yet SBS and others remain adamant that PPMs, as currently deployed, unfairly discount the listening audiences of Hispanics.

Despite the dramas in print and radio, the most excitement over the coming decade will be in Spanish-language TV. The category's two battleships, Univision and Telemundo, have significant issues of their own before even contemplating how to keep two potential speedboats, SBS and LBI, at bay.

Univision's sale in 2007 for $13.7 billion to a private equity consortium -- a leveraged buyout engineered by Madison Dearborn Partners LLC, Providence Equity Partners LLC, Saban Capital Group Inc., Thomas H. Lee Partners LP and TPG Capital--freighted this leading Spanish-language media company with $10 billion in debt. More than $8 billion of that debt comes due in 2014, an amount nearly 10 times the Oibda that Univision recorded for 2009.

Then, in 2017, its program license agreement with Grupo Televisa SA expires. Bad blood between the two companies all but dictates Univision will have to replace the 15 hours of prime-time programming it now imports from Televisa, Mexico's leading multimedia conglomerate.

Telemundo, meanwhile, is likely to be as distracted by takeover issues as Univision is constrained by take-private debt. Even when not distracted, this perennial also-ran of Spanish-language TV never lived up to the potential it held when NBC Universal Inc. paid $2.7 billion for it in 2002. That it will thrive in limbo, as regulators weigh the transfer of NBC U control to Comcast Corp. and new management rethinks Telemundo's future inside what will then be America's largest media conglomerate, is at best a long shot.

So while the tide may be high, it'll be turbulent, too -- at least until Univision deals with its debt coming due and Telemundo's new owner charts a stable course for the network. Then, with the expiration of Univision's program license agreement, the most prominent feature of U.S. Spanish-language media over the past quarter of a century will no longer be. And the category as we know it will undergo so much change as to be unrecognizable when census takers regroup for another head count in 2020.

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