Mixing business with pleasure - management of Hispanic magazine - Magazine Strategies

Folio: The Magazine for Magazine Management, Nov 15, 1993 by Lorne Manly

After a starry-eyed but inauspicious start, Hispanic is making serious inroads in a lucrative market.

When it comes to magazine cover models, Secretary of Transportation Federico Pena wouldn't seem to be much of a match for Raquel Welch. For Hispanic, however, opting for government figures like Pena over celebrities like Welch has meant the difference between being a successful magazine and a flop.

The five-year-old business/cultural title began publishing in April 1988 as a kind of Latino version of People. But when readers did not show much interest--and advertisers displayed even less--the Washington, D.C.-based magazine quickly reformatted itself before the end of its first year. Today, there is still a generous dollop of lifestyle articles, from book reviews to margarita recipes. But it's business, government, career and education pieces that now dominate the English-language publication--a mix that has paid off handsomely.

Since its first full year under the new format, when ad pages rose more than 200 percent (from 91 to 281), Hispanic has posted double-digit page increases. Paid circulation now accounts for nearly 30 percent of the magazine's 152,000 subscribers. And the closely held, family-owned title has been in the black since the end of its third year, according to publisher and editor Alfredo Estrada, who, along with his father, Fred, owns nearly all of the business. The Estradas plan to spin off the magazine's Latino Entrepreneur supplement as a stand-alone title in 1994. Other offshoots, such as videos and additional magazines, are expected to follow.

Hispanic's successful metamorphosis has not been hassle-free, however. It has drawn the ire of--and threats of a copyright-infringement lawsuit from--its closest competitor, Hispanic Business. The Santa Barbara, California-based magazine claims that Hispanic's revamped editorial product, along with its similar-sounding name, confuses readers and advertisers. (Jesus Chavarria, publisher and editor of the 14-year-old title, says insertion orders and checks meant for Hispanic arrive in Santa Barbara.) Hispanic Business has retained a law firm specializing in trademark matters and is considering its next move. Meanwhile, Hispanic executives seem more amused that worried about the matter. Estrada points to other magazines that have the word Hispanic in their titles, such as Hispanic Engineer and Texas Hispanic, and says, "There is no legal cause of action here."

Ironically, before he became a publisher, Estrada was a lawyer. The 34-year-old executive, who moved to the United States from Cuba at the age of two, graduated from Harvard before attending law school at the University of Texas at Austin. After working for several years in corporate law at a New York City firm, he moved to Washington in 1987 to raise money for Democratic Presidential candidate Michael Dukakis. There, Estrada and his father hooked up with former New Mexico governor Jerry Apadaca (who had been an investor, along with Fred Estrada, on the Sunday newspaper supplement Vista) to launch Hispanic for about $2.5 million.

The attraction: a growing, affluent audience of readers beginning to think of themselves as Hispanic, and not just in terms of their country of origin. Hispanics are now 23 million strong--their numbers growing five times as fast as the rest of the U.S. population, and their purchasing power tripling over the past 10 years, from $59 billion to $182 billion. To find readers, Hispanic relies on lists from such sources as the U.S. Hispanic Chamber of Commerce, the National Society of Hispanic MBAs, the Hispanic National Bar Association and business titles like Forbes.

The first issues of Hispanic heavily emphasized celebrity and lifestyle features, with stars such as actor Edward James Olmos and crooner Julio Iglesias gracing the covers. The response was underwhelming. "It wasn't necessarily what people were interested in," says the younger Estrada. More important, it wasn't what advertisers were interested in--a crucial point for a new, controlled-circulation magazine. Cosmetic, retail and liquor advertisers paid little attention to the new launch, and by late 1988, an infusion of capital was desperately needed.

"The biggest mistake we made was thinking we'd be unlike anyone else and turn the money corner quickly," says founding publisher Apadaca. Because he did not have the financing necessary to sustain his investment level, Apadaca decided to leave the company before the reformatting rather than become "a glorified employee." The Estradas, meanwhile, poured more of their own money into the project and retooled the magazine.

Broadening the base

Lifestyle and celebrity aspects, which once accounted for about two-thirds of the editorial coverage, now fill about one-fourth of the edit well, while cover stories focus on Hispanic role models in politics and business, such as Secretary of Housing and Urban Development Henry Cisneros and Colorado Rockies co-owner Linda Alvarado. The magazine--written in English because, as Estrada points out, "English is the key to economic success for Hispanics in this country"--explores issues such as Latino machismo and "What Clinton will do for Hispanics." There's also the annual Hispanic 100, which salutes the 100 Fortune 1000 companies that provide the most opportunities for Hispanics (although some competitors counter that since the magazine does not publish its criteria for the Hispanic 100, some of the honorees may be named just to snare their advertising dollars).