Univision and Hispanic assimilation: a market test

When Univision [the major Spanish-language TV station] put itself on the auction block earlier this year, it was widely seen as an effort…to capitalize on the surging interest in the fast-growing Hispanic media sector.  Univision signaled early on that it was seeking $40 a share, or more than #13 billion, and was confident it would attract interest from both major media companies and private-equity investors.

But big media…never emerged as serious bidders.

Some of the issues were the general decline in television advertising and regulatory constraints on cross-ownership.  The article continues:

And then there is the demograhic issue: New Hispanic immigrants to the U.S. frequently are drawn to Univision and its popular telenovelas — essentially Spanish-language soap operas  But their children eventually become more mainstream media consumers, after immersing themselves in English-language programming.

That is from The Wall Street Journal, 23 June 2006.  The share price has been falling. 

If you disagree with me on immigration and assimilation, as I know a few of you do, I urge you to buy stock in Univision.

Comments

You are right on the mark. Data from the USC demographics unit says that despite the over heated rhetoric in LA this generation of immigrants are assimilating very rapidly in language as well as other characteristics - for example in marriage outside their ethnic group.

Tom, I think that's exactly Tyler's point. Immigrants undertake the non-trivial task of learning another language because of the content.

No one (or very few people) learns a new language just because it's a different language, they learn it because of what it gives them access to, be it jobs, schools, or in this case, superior television programming. That's almost the definition of assimilation.

Herr Cowen,

Assimilation is a possible factor. However, it could also be the quality of the programming on Univision. After all, it is one station with programming that includes many lame, cheesy soap operas. The assimilation argument would be stronger if there were more stations with more variety/better quality and support from the next generation remained low.

"lame, cheesy soap operas?"

My spanish is what it is today because of the smokin' hotties that grace nearly every telenovela. Cheesy, sure, but lame??

As for the political climate and the prospects for Univision's market, I believe the premise is that:

a) if the 10M+ immigrants and their offspring did not assimilate then,
b) Univisions market share will grow forever
c) if a) does not hold then their marketshare may stagnate

I doubt the perceived value of Univision hinges totally on recent congressional debates on immigration.

Univision dropped 7% between Tuesday's close and Thursday's close, which fits nicely with my theory that the announcement on Wednesday by the Speaker of the House that the House would take a hard line on immigration has hurt Univision's price.

It makes a lot more sense than Tyler's theory (a.k.a., wishful thinking) that the world suddenly realized in the middle of last week that immigrants were assimilating.

http://www.investorguide.com/stock-charts.cgi?ticker=UVN

http://edition.cnn.com/2006/POLITICS/06/21/immigration.hearings/

http://dimer.tamu.edu/simplog/archive.php?blogid=3&pid=3799

Excerpt:

I recall that when the World Cup was going on in France, my students preferred to watch the games on Univision, even when the same games were on an English language station at the same time in the same room at the Rec Center. The students reporting their preference for Univision were not native English speakers...they were Chinese.

I don't think either Univision's stock price or how much they paid for the World Cup says much about assimilation.

I don't have any idea how to check this -- but I am pretty sure that the local ABC affiliate in LA ran a Spanish Language spot for Mercedes during one of the WC games. I remember noting how strange it was, it took a couple second for it to dawn on me that advertisment was in Spanish

I realize it is a taunt at immigration realists, but I sure hope that Cowen's economics is better than the post indicates. There are, for example, many reasons other than demographics why Univisions stock my be falling. For example: Have other broadcasters entered the Spanish-Language market? (I believe Clear-Channel has in a pretty big way, but I might be wrong).

Here is another (better) test of language-wise assimilation. How much of the radio spectrum, as licensed by the FCC in, say, LA is taken up by Spanish vs. English? I'd bet dollars to doughnuts that English is retreating rapidly by this test.

'...you just let your emotions run away with you on the topic of immigration.'

People..glass houses...stones.

The immigration debate would have a big effect on Univision's future if we assume Tyler's right about assimilation over time (that is, that most immigrants' kids will speak English fluently). Why is there a big pool of people currently in the US who can only function in Spanish? To a large extent, it's because there is a consistent inflow of immigrants from Spanish-speaking countries. Even if their kids speak English just fine, the original immigrants are likely to feel more comfortable in Spanish, even if they speak English well enough to get along.

Not being a fan of football/soccer nor the World Cup, I have no direct knowledge, but I overheard a conversation the other day where a non-Spanish speaker (I'm assuming) said that he enjoyed watching the Spanish-language broadcast of the game because the announcer was just so much more excited about the game than the English-language announcer. I think this was in Canada. I don't know if in Canada people get their World Cup on ESPN or a Canadian channel.

From a melting pot perspective, I find the late night ads on Univision encouraging. Lots of "Learn English" tapes and CDs being sold. The ads typically show a young Mexican woman working as a maid, then she buys the tapes, then the ad show her driving a nice car, working an office job, eating out at a nice restaurant, etc, etc.

The incentive to learn English is strong. Especially the incentive to make sure your kids learn English. Most Mexican immigrants know that Spanish is the language of busboys, maids, construction workers, etc, etc. To be successful in America they know they (or at least their kids) need to learn English.

If folks are leaving California due to the ravages of illegal immigration then why are they coming to Texas?

Tyler wrote recently in the Washington Post:

"America is not becoming a bilingual nation."

And then this month, while traveling, I found that the airports in Little Rock and Indianapolis both do their PA announcements in both English and Spanish, and yesterday I read in the Post that the D.C. Metro is about to go bilingual.

But Univision's stock price is down, so America must not be becoming a bilingual society. The disparity between ivory tower economists' theoretical views of the world and how it really looks once you leave campus is hilarious.

Gringo Salad,

Texas has far fewer immigrants than California, 2.9 million versus 8.9 million. See http://www.migrationinformation.org/USFocus/display.cfm?ID=61 for some details. The percentage of foreign born in Texas is 13.9% versus 26.2% in California.

Immigration has driven California to the point of critical land scarcity. The densest cities in the US are now in the West. See http://www.washingtonpost.com/wp-dyn/content/article/2005/08/10/AR2005081002110_4.html for an article on the subject. As the article makes clear, immigration is the underlying problem. By contrast, Texas is not (yet) land scarce.

Texas has also been better at limiting the growth of the welfare state (so far). In California, the welfare state has become ever more popular, as immigrants gain voting power. In time, this will probably happen in Texas. So far Texas has avoided a state income tax. By contrast, California has a highly progressive one.

Overall, the burden of immigration hasn’t yet reached the boiling point in Texas, as it clearly has in California. When it does, people will start leaving Texas as well.

Peter Schaeffer,

That was a nice article about urban density but I didn’t see where it said CA was facing a land shortage. A shortage of cheap rental space, maybe†¦

†¦is your position that native born Californians are being forced to leave because immigrants have snatched up all the $700 a month rental spaces? If enough Californians existed to fill up this market previously then where did the jobs come from that the immigrants are using to pay rent?

Immigrants cram three families into a space fit for one so they can send more money back home and pay off the coyotes. If we created legitimate immigration paths sufficient to fill the demand (yes, demand) for them this wouldn’t be the case; the coyotes would go out of business and more immigrants would bring their families with them and spend their entire paycheck here.

So far we know that

a) CA ranks # 1 in % of foreign born
b) They demand very cheap housing
c) Lots of folks are leaving CA

Can anybody show that a) & b) are the chief explanation and cause for c)?

I recognize the fact that recent immigrants are a drain on social services, but this has to do with their economic status and not where they were born. Evict all the poor folk and you will solve the problem.

Your comparison of illegal immigrants with felons is also misplaced since the vast majority of them are otherwise law abiding citizens who come here to work and pay taxes. At any rate their crime is not a felony, and not a crime against property.

So it appears to me that your only salient argument against immigrants apply to anybody who is poor, and should apply less, it would seem, to recent immigrants if we can show they are even slightly less likely to apply for such services (which seems reasonable given their legal status and the language barrier, decreasing but still very real) and often contribute to SS w/ no hope of ever collecting due to the widespread use of bogus SS numbers used on INS I-9 forms everywhere.

So I can’t help but conclude that you just don’t like immigrants for reasons in addition to the fact that they are very poor. I suppose that is your prerogative. Obviously the millions of native born Americans who are employing these folks (and renting them apartments) don’t feel the same way.

A reader writes to me:

In this particular case, Cowen argues that the market's unwillingness to pay $13 billion for Univision says something about the growth of Spanish speakers in the US. In fact, the market's willingness to pay even fraction of this amount is evidence that the number of Spanish speakers will grow rapidly.You could buy CBS right now for only $20.5 billion, only twice the current price of Univision, despite the fact that CBS (which also owns UPN) is seven times larger. Univision is priced like a growth stock, with a price to revenue ratio of about 5. CBS, by contrast, is priced like an old industrial dinosaur, with a P/S of about 1.4.

And in fact Univision has sold for $11.1 billion, at a share price $36.25. The stock closd Monday at $32.03. BOOYAH!

Because they are our fellow citizens.

"You say that illegals “ravage† public education? Really? They RAVAGE it?"

Take a look at LA or any community flooded with illegal alien spawn. One of the great benefits of public education is that it acculturates the lower class to middle class values. What is happening to the remaining middle class in these areas is the OPPOSITE, at least for those who remain.

I'd also like to point out that if you had bought UVN when Tyler told you to, presumably Monday morning, you'd have already gained 6% on your investment by this afternoon. Nice little pop! Viva Tyler!

Gringo Salado writes:
[yes the taxpayers are subsidizing this labor, but again, if you think theses subsidies are misguided then say so, but why apply this argument only to those born in geographic location X and not those born in location Y?]

To a woman struggling to take care of her child with downs syndrome, would you only give her two choices: a) adopt more downs syndrome children, or b) get rid of the one she has? What is wrong with the sensible middle road: Keep the disabled child she has, but don't adopt more. The same applies to net tax recipients.

Goober,

Your analogy is pretty distasteful, I think it is offensive to liken illegal immigrants to a severely disabled child. The majority of them are hardworking and productive citizens, and are a net cost to us through no fault of their own.

1) Unlike the mother/caregive in your example, nobody is forcing employers to hire these folks, and they are getting value for their wage dollar, or they would not pay it
2) I grant that this net benefit employers enjoy is offset somewhat by various subsidies for low wage earners and their children
3) There exists some perfect level of allowable immigration that is well above zero, and, given the 10M+ extralegal employees we have, this # also appears to above the current # allowed entry under the law
4) Trying to deny the reality of point 3 above has created the problematic situation we find ourselves in today.

In other words, clearly the mother in your example can care for more than one child as there are currently 10M+ doing her yardwork.

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