Spanish network Estrella launches but will its star shine or fade?

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Jay Leno isn’t the only one in Burbank taking a big gamble today. LBI Media Inc., a Burbank-based family-owned broadcaster, has picked today to launch a Hispanic television network.

Estrella TV will reach about 70% of the nation’s Hispanic television households. LBI Media is the parent of Liberman Broadcasting, which owns several major-market television stations including KRCA Los Angeles. Several other broadcasters including Hearst Television, Belo Corp. and Sunbeam Television have signed on as affiliates.

KRCA has already become something of a presence in the Los Angeles television market as the station has made some inroads on its bigger competitors Univision and Telemundo. Its prime-time ratings jumped 30% in the 18 to 49 demographic in July.

Still, this is hardly the ideal time to launch a new channel, particularly a broadcast network. Besides a tough economy, Univision and NBC Universal’s Telemundo are also fairly entrenched and have stronger television stations carrying their programming.

LBI has been feeling the pains that every broadcaster has as of late. For the second quarter of 2009, its revenues fell 16.4% to $28.4 million. Operating income was off 5.6% to $19.2 million.

None of this worries Lenard Liberman, executive vice president of LBI who co-founded the company with his father Jose. They bought their first radio station in 1988 and expanded into television in 1998 and now own seven television stations and 22 radio outlets.

Early on, Liberman recognized that he couldn’t compete financially with the much bigger Univision and Telemundo. So instead of trying to buy pricey telenovelas, Liberman went with cheaper programming he could produce himself. ‘We went from producing one show a week to 60 hours a week,’ he said. Now the company has a library of more than 5,000 hours. Most of their content is reality, talk and variety as well as some news programming. Many of the shows and formats developed for KCRA will transition to Estrella.

In 2007, Liberman raised $200 million and began to think national. Because the company is already producing the bulk of its content, its programming costs won’t rise dramatically with the expansion into a network. The company plans to program original material six days a week (Monday through Saturday) from mid-afternoon through prime time. It will keep 60% of the ad inventory from its affiliates. It’s a fairly low-risk venture, but the challenge will be promoting Estrella nationwide especially because many of its affiliates are digital signals that are not established in the marketplace.

‘I don’t want to be cavalier and say we’re going to beat Univision,’ Liberman says, but ‘I think the future is bright.’

-- Joe Flint