Jose Liberman’s Dream: Make Big Money Quietly With Spanish TV

It’s like the story of that little engine that could. Liberman Broadcasting (LBI) is not afraid to take challenges, as made evident by its pursuit of Hispanic TV giants like Univision (a Haim Saban group) and Telemundo (a NBC-Universal company).

According to Lenard Liberman, the group’s executive vice president, LBI now has the two top-rated shows after Univision in his Los Angeles flagship market, an area where there are six over-the-air Spanish-language TV stations.

The next challenge for LBI is to expand Estrella, its national TV signal, beyond the current 70 percent coverage that is accomplished over 24 affiliates of which six are owned and operated (O&O). Estrella TV was launched last September as a 24/7 service with 56 hours a week of new programming, mostly produced at LBI’s three sound stage studio complex in Burbank, California.

Estrella TV affiliates receive 40 percent of the ad inventory, while LBI retains the remaining 60 percent. Programming generated in Burbank is retrieved from its server storage via IPTV by LBI’s Dallas center, which then packages it in a feed for two time zones.

Estrella TV was able to achieve its vast coverage thanks to timely digital conversion, which gave U.S. TV stations three extra channels to program. In the words of Bill Garcia, the Burbank-based director of affiliate relations, the aim for LBI, is to be placed on the “dot 2,” where “dot” stands for the punctuation indicating channels after the primary one (in the case of channel 62 for example, there is 62.2).

How far does LBI want to reach? “Every market where Univision is,” answered Lenard Liberman, the 47-year old son of LBI founder and president, José Liberman.

Don José, as he’s generally known, is now 83. He emigrated to Los Angeles from his native Veracruz, Mexico, to attend college in 1946. After completing his U.S. studies, he went to work for a pharmaceutical company that was heavily advertising on radio to reach the local Hispanic community (Latin Americans in the U.S.). Realizing the business potential of radio advertising, Don José went into radio broadcasting in Hollywood in the early ’60s (he doesn’t remember the exact year) and in 1987, bought KWIZ-FM, his first radio station, in Santa Ana, California. He made the purchase with his son Lenard, who at the time had just graduated from Stanford University with a law degree. Don José also has two daughters who are not in the business.

In 1998 the Libermans acquired their first TV station, KRCA Channel 62 in Burbank, which is now LBI’s flagship station. Today, in addition to the six O&O TV stations, Liberman Broadcasting owns one TV network (Estrella TV, or Star TV in English) and a total of 22 radio stations, which, aside from being profit center of their own, provide needed cross-promotion and bonus spots for large TV advertisers.

In 2007, Liberman raised $200 million and began expanding nationally with a $10 million purchase of KPNZ-TV station in Salt Lake City, Utah and KWIE (now KRQB-FM) in San Jacinto, California for $25 million. The following year, LBI purchased KVPA, a low-power TV station in Phoenix, Arizona, for $1.25 million. While waiting to add a seventh TV station in New York City, LBI also owns TV stations in Texas (Dallas and Houston) and San Diego, California. Today, the group has a workforce of 400 people. LBI’s strategy may call for other TV station acquisitions, because as Lenard said, “Stations that a few years ago were valued at $44 million, today are worth just $5 million.” On the other hand, he acknowledged that “value is in content, not distribution.”

Perhaps unrelated to the infusion of new funds in 2008, Lenard resigned as LBI’s Chief Financial Officer, yet continued as evp and secretary of the group’s set of companies. Wisdom W. Lu, a former banker who previously served as Chief Investment Officer at Health Net, became CFO. LBI’s COO is Winter Horton.
Always one to shun the limelight, Don José is still the president of the company and goes to the station every day, but today it’s run by Lenard. Don José is also camera shy, declining to have his photo taken for this article. He reluctantly agreed to talk to VideoAge. Students and TV historians should know about your accomplishment, we pleaded. “Having money in the bank is more important,” he said, adding, “My son Lenard now runs the business, he’ll be able to answer all your questions.”

Lenard is quite tall and towers over his father, who he reveres. Personality wise, they also differ, with Don José’s easy demeanor and Lenard rather stern, rarely cracking a smile. The son is an orthodox Jew; the father is not. Following in his father’s footsteps, Lenard hopes that a few of his six children will go into the family business. “Television is my passion, and I hope it is for my children,” he commented.

For Lenard, challenging the 800-pound gorillas such as Univision and Telemundo will not be easy, but he seems to have all the answers. The first challenge is the revenue stream. While the big competitors rely on a three-tier income (advertising, retransmission fee and program sales), LBI can only depend on ad sales. Even though LBI has some 6,000 hours of programming in the can, such sales –– both internationally and domestically –– have proven to be an arduous task for the group.

“Our first goal was to create a network in order to take advantage of network sales,” Lenard explained. Now, LBI earns from national sales, both network and spot, as well as local advertising. “Our second stage [of development] is to collect some cable retransmission fees.”

National sales for the network are being handled by LBI Media’s wholly-owned rep, Spanish Media Rep Team (SMRT). Local sales are also done in-house. It is clear that LBI wants to tap into the $2 billion a year Hispanic TV network advertising market. Currently, advertising revenues for the LBI group are $43 million per year, and the growth potential is big, considering that 35 million Hispanics, about 13 percent of the U.S. population, draw just two percent of ad spending annually.

Lack of programming sales is not viewed as a drawback by Liberman. On the contrary, he sees it as an asset. “Univision and Telemundo were built on Spanish soap operas; novellas make up about 40 percent of programming at both networks. But audience research suggests interest in the genre by Hispanics is waning. Bilingual households are hungry for lighter fare,” he said. That’s why Estrella features a steady diet of variety shows, music, news and comedy for its stations. “We counter-program the Univision model, which seems to be working,” he commented. “Audiences appreciate our slapstick humor. Viewers like our physical humor.”
In his view, this is why audiences in Los Angeles, for example, reward his station with up to 16 percent share and a 2.3 primetime rating.

But, this “asset” also has some drawbacks. While the Estrella venture is relatively low risk, promoting the network nationally will be a challenge, as many of its affiliates are digital signals that are not established in the marketplace. Plus, LBI has to contend with three negative factors: the fact that Hispanics will assimilate into the U.S. mainstream and thus be lost to Anglo stations; increased competition, which will further fragment the audience (newer Hispanic TV networks are now emerging, like LATV from Los Angeles and Mega TV from Miami) and the fact that newcomers from Mexico don’t yet know about LBI.

Not so, contended Lenard in regard to the latter. “Our branding consists of big name actors, theatrical stars and the best comedians from Mexico. People know these stars and follow them on our network when they cross the border.”

Indeed, LBI has a great respect for its talent, to the point of erecting a statue to one of them in the main entrance of its Burbank station.
Shouldn’t you be on that pedestal, we ask Don José. “Not really,” he replied, “Adam Sanchez is more important than me.”

For the record, Sanchez was a popular Mexican singer on LBI who died in a car accident in Mexico when he was 21 years old. Sanchez’s father Chalino was a well known artist who was murdered on stage while performing in Mexico.