• by Erik Sass  @eriksass1, April 4, 2007

Azteca America, an underdog Spanish-language network in the U.S., experienced a setback on Tuesday with the news that Pappas Telecasting Companies is ending its affiliate relationship with Azteca--taking with it five big stations serving major Hispanic markets. In addition to losing some of its crown jewel stations, the departures jeopardize Azteca's hard-won status as a national network.

The five stations owned by Pappas leaving Azteca are: Houston's KAZH-TV, the Bay Area's KTNC-TV, Reno, Nevada's KAZR-CA, Omaha, Nebraska's KAZO-LP, and Sioux City, Iowa's KAZJ-LP/KAZS-LP. The company's flagship station, KAZA-TV in Los Angeles, could be terminated by Pappas at a future date either due to strategic realignment or a decision to sell the station. Pappas recently retained consultants Media Ventures LLC to help it reassess its strategic business options. KAZA's license renewal has also been challenged by Telemundo because the company operating it is from outside the U.S.

The stations in Houston, Nevada, and the Bay Area were among Azteca's founding affiliates in 2001. But their loss represents an even bigger blow to Azteca's prestige. According to laws referred to by the Federal Communications Commission in its regulatory activity, to qualify as a television network, a broadcaster must offer interconnected program service "for 15 or more hours per week to at least 25 affiliated broadcast stations in 10 or more states." With the loss of the five Pappas stations, Azteca now has 24 affiliates, technically disqualifying it from the term. KAZH, KAZA, and KTNC together account for about 65% of Azteca America's total prime-time audience, according to the company.

At the 2006 Spanish-language TV upfronts, Luis Echarte, chairman of the board, proudly recounted the network's growth--from its beginnings as a single station in Los Angeles, reaching 16 percent of the Hispanic population, to a national network of 29 stations reaching 70 percent of the total Hispanic population in 48 markets, according to estimates from Nielsen Media Research. Adrian Seckel, Azteca America's president and CEO, paid special attention to the underdog's network status: "We are a U.S. network, and that means the industry has changed. This means it's no longer a Univision-Telemundo marketplace."

Azteca America is a relative newcomer to the U.S. Spanish-language market, mostly targeting first- and second-generation Mexican-Americans. Most of its programming is drawn from its corporate namesake, TV Azteca, the second-largest TV broadcaster in Mexico. Created in 1993 by the privatization of nationally owned broadcasters, TV Azteca also broadcasts content in 13 Latin American countries via Azteca 13 Internacional.