Spanish-language media in the U.S. is creating investment growth opportunities in TV and radio. Meanwhile, English-only traditional media struggle to retain viewers. The growth in the Latin American segment of the U.S. population is extremely positive for Spanish language TV and radio at a time when most of the TV and radio industry is saying “Buenos noches.”
Growth of Spanish Speakers in the U.S.
The growth of the Spanish-speaking, Latin American population in the U.S. is having a massive impact on media expansion. According to data from the Pew Research Center, the Latin American population in the U.S. reached 62.1 million, accounting for nearly 20% of the total population. The population reweighting has led to a growing demand for media content delivered in Spanish. This makes sense as those in the Latin American community seek to consume news, entertainment, and information in their native language.
As a result, Spanish-language media has experienced ongoing growth in both TV and radio. According to Nielsen, Spanish-language TV viewership has been on the rise, with networks like Univision and Telemundo often outperforming English-language networks in key demographics. In the radio industry, Spanish-language stations have also experienced growth, with the number of stations increasing by more than 30% since 2000.
Will Latin American Audiences Continue to Grow?
An increase in Spanish-language media catering to Latin Americans in the U.S. is expected to continue in the coming years. And, it makes sense because the Latin American population in the United States is projected to reach 111.2 million by 2060, according to the U.S. Census Bureau. With continued growth in this demographic, further demand expands and needs to be filled for Spanish media content. Some TV and Radio companies currently operating in this market could be set to prosper at a time when their English-speaking amigos are losing audience.
Furthermore, investing in Spanish-language media can add to the profits of media companies by enabling them to reach a large and expanding audience. According to a report by the Latino Donor Collaborative, the Latino GDP in the U.S. reached $2.7 trillion in 2019, positioning it as the eighth-largest economy globally. This economic strength presents a substantial opportunity for media companies to leverage the increasing purchasing power of the Latin American community.
Which Media Companies Are a Buy?
Not all media outlets can benefit from this population shift, and for those that do, many don’t make sense for investors. Here’s why. Many Spanish language outlets like Telemundo are subsidiaries of NBCUniversal which is owned by Comcast. This means one can’t invest directly.
However, one company stands out for its significant exposure to the sub-sector audience. Investors may find it compelling to explore as its stock price recently faced a setback due to reasons that are unlikely to recur.
The company is Entravision Communications Corporation (NYSE:EVC), and it has a 12-month price target set at nearly double its current level. The stock experienced a significant drop earlier this month when Facebook, or Meta (NASDAQ:META), altered its advertising strategy and brought it in-house. This breaking news led to declines for all companies affected by Meta’s new approach.
Furthermore, EVC stock, which traded as high as $6.26 less than a year ago and at $3.68 in late February, plummeted following the Meta news in early March this year, more than halving in a short time.
Analyst Michael Kupinski from Noble Capital Markets, the only analyst covering EVC, rates the EVC stock as a Moderate Buy with an average EVC price target of $3.50, which is double its current trading range.
Key Takeaway
To wrap up, the Spanish-language media increases customers in the U.S. have been on an upward trajectory in recent years, experiencing growth in both TV and radio. This expanded audience can be attributed to the swelling of new Spanish-speaking Americans, primarily from South America. As the Latin American population expands, there is a corresponding surge in the demand for Spanish-language media content. This trend presents a unique opportunity for media investors, particularly those with diversified investments across TV and radio outlets, as many companies in this sector are facing declining viewership numbers.
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