It Doesn’t Add Up

For years, radio stations with large minority audiences have complained that advertisers have either ignored them or demanded ad rates far lower than those they pay to comparable stations with primarily white audiences.

And for years no one listened.

Late last month, however, the broadcasters found an unusual ally in a most unexpected place when the Federal Communications Commission began a study to determine whether advertisers have systematically discriminated against TV and radio outlets that are minority-owned or that attract large minority audiences.

The inquiry, which has the support of FCC Chairman William Kennard, the first African American to head the commission, is unlikely to result in any charges being filed: Even if investigators gather solid evidence of discrimination, it’s unclear whether they have the power to do anything about it. But according to some broadcast executives in Los Angeles, the nation’s second-largest radio market, simply bringing the focus of a federal probe to the problem is a step in the right direction.

“We have long felt . . . that if we were delivering a gringo audience, we would have been able to charge higher rates,” says Jerry Symon, vice president and general sales manager for Spanish-language KLVE-FM (107.5) and KSCA-FM (101.9), the two top-rated stations in Los Angeles, and for KTNQ-AM (1020), the top-rated Spanish station on the AM dial.

The problem isn’t so much the cost of the ads, says Symon, whose rates are already among the highest in the market. Rather it’s the lack of parity between Spanish- and English-language stations with comparable ratings. KLVE and KSCA should have the market’s highest rates because they have the market’s highest ratings, he says. But what about stations further back in the pack?

Radio advertising is generally broken down on a cost-per-point basis--that is, on what it costs to reach each percentage point of a given market’s listenership. On that basis, ads on KLVE and KSCA--as well as on other popular Spanish-language outlets such as KLAX-FM (97.9), KSSE-FM (97.5) and KBUE-FM (105.5)--cost just a fraction of what advertisers pay many of their English-language competitors on a per-listener basis. A year ago, a study by Hispanic Business magazine confirmed that, reporting that Spanish-language radio advertising nationwide lagged behind the general market on a dollar-to-population ratio.

“That’s my beef right there,” Symon says. “It’s our contention that if we were a KIIS, if were a KPWR, a KBIG, a KOST, with our ratings, [we] would be getting more dollars. If Rick Dees had the numbers we have, he’d be getting $500 to $600 a minute more.

“It’s still not comparing apples to apples. Maybe I should demand more. But the fact is advertisers won’t pay it because it’s on Spanish radio.”

Although KLVE ranked either first or second in listenership through the first seven months of 1998, it was just 10th in the market in ad revenue during that period, with $16.9 million in billings. About a quarter of the market billed more than sister station KSCA, which shared the top two spots in the Arbitron ratings with KLVE.

“We do great in the ratings,” says Richard Heftel, president of KLVE, KSCA and KTNQ. “But people don’t spend as much on our stations are they do in the Anglo market.”

According to Symon, the top 100 advertisers in the United States target just sixth-tenths of a percent of their ad dollars toward Latinos, despite the fact that Latinos comprise more than 10% of the population. In Los Angeles, the ratio is much better, with more than 15 cents of every radio advertising dollar going to Spanish stations. But given Spanish-language stations’ domination of the market, that’s still a long way from parity.

Still, there are many who argue that the reasons for that aren’t necessarily sinister. “There’s probably a rationale that makes a little sense,” says Allen Klein of Media Research Graphics Inc., an Encino-based firm that tracks Spanish-language radio.

Say two radio stations have the same ratings, but one draws 25% of its listeners from the affluent Westside while the other gets just 10% from that area and the rest of its audience from ZIP Codes with much more modest demographics. “Which one can command the better price?” Klein asks. “The income in the marketplace, the people with the biggest discretionary income, are either Asians or whites.”

The misperception that all Latinos are minimum-wage laborers, then, is one that many executives say has helped keep ad rates down. Which is why the general manager of one popular Spanish-language station in Los Angeles frequently takes advertisers for strolls through the parking lot at Spanish-language concerts, pointing out the many Lexuses, BMWs and Mercedes. In fact, several studies estimate the spending power of Latinos in the Los Angeles-Orange County market at more than $50 billion a year, a figure that continues to grow as rapidly as the population does.

“It’s harder to sell Spanish than English,” says Raquel Tomansino, an executive with Ad Americas, a Los Angeles ad-buying firm that handles accounts for major clients such as McDonald’s. “Most clients do not understand the market. There’s also the old stereotypes. But you have to explain to them that we don’t live in a tunnel. You should not ignore the top-rated stations.”

Klein agrees, and says he expects attitudes to change shortly.

“The Spanish market will catch up dramatically sometime after the 2000 census,” he predicts. “When they see the size of the Spanish market in L.A., a lot of advertisers are going to increase their budgets in the Spanish marketplace.”

In the meantime, some broadcast executives blame the stations themselves for holding down advertising revenue in Spanish-language radio. Although most advertising departments have printed rate cards, few adhere strictly to those guidelines, dipping well below the price they themselves established to make a sale. As a consequence, lower-rated stations are forced to drop their rates.

“Rates are being prostituted,” says Khalid Abdelwahed, national sales manager at XPRS-AM (1090). “Nobody sticks with their posted rates because of the competition. Some of the sales people, some of the managers in the business, they don’t know what they have. They cannot appreciate what they have because they’re really giving it away.”

Road Show: Renan Almendarez Coello’s six-hour morning show on KSCA, the market’s highest-rated drive-time program for more than a year, has gone to syndication in Las Vegas and the San Francisco Bay Area, and there are plans to take it national.

The wacky and irreverent show, which debuted in Los Angeles in February 1997, is broadcast live from KSCA’s Hollywood studios on KLSQ-AM in Las Vegas, KSOL-FM (98.9) in San Francisco and KZOL-FM (99.1) in San Jose.

The reaction, says Allie Shepard, general manager of KSOL and KZOL, “has been phenomenal.”

“I was pretty surprised,” she continued. “We’re hearing [positive reaction] in the streets. We’re hearing it in the office. He’s boosted our listenership. He’s an extremely good personality.”

All four stations are part of Heftel Broadcasting’s national radio empire.

And Then There Were Three: KLAX’s highly regarded four-man programming team, which came to Los Angeles in January, lost one of its members when Alberto Martin Perez, according to the official line, accompanied his homesick wife back to Mexico last month.

His 5-10 a.m. time slot has been filled by Lupita Pena, a longtime traffic reporter at KLVE and KLAX. Although Eddie Cancela, the station’s vice president and general manager, said Pena’s appointment is considered interim, she could become the permanent by the end of the month.