Amador Bustos knows he will have to move fast. Fueled by new investment money, Hispanic radio companies are maneuvering for position, bolstering their strongholds, and exploring new territories.
"At least I have a little bit of a head start," says Mr. Bustos, who has put together a chain of 18 Spanish-language stations in the last 12 months. In September, Bustos Media, which Mr. Bustos founded in 2003 with his brother, John, secured more than $100 million in private equity financing. Bustos plans to grow to 40 stations in the next year, focusing on building clusters of stations in mid-size markets like Portland and Sacramento before the big companies move in. "We're trying to play a chess game, trying to protect certain territories," Mr. Bustos says.
This fall both Clear Channel Communications and Viacom-owned Infinity Broadcasting, the United States' two largest radio broadcasting companies, announced plans to expand in Hispanic radio – another indicator that the segment is the hottest sector in radio.
While revenue for the overall radio market is flat, stations with Spanish-language formats are posting double-digit growth, according to George Nadel Rivin, partner in charge of broadcast services for Miller, Kaplan, Arase & Co., a Los Angeles-based accounting firm that tracks media. Revenues for stations playing "regional Mexican" formats jumped 17 percent in 2003, compared with 3 percent for the overall market, he says. "That is why the major broadcast groups are paying attention," Mr. Nadel Rivin says.
As a result, the last year has seen an unprecedented flurry of deals in Hispanic radio. Companies sold in some markets and bought in others, as they tried to position themselves for the next wave of consolidation. The explosion of Hispanic programming may be old news in big cities like Los Angeles, New York, and Miami, where Spanish-language stations have been ratings powerhouses for more than a decade. But from Seattle, Washington, to Raleigh, North Carolina, growing Hispanic populations are creating new mid-market opportunities for radio companies.
"Now is the time to be a buyer," says Tom Castro, co-founder and president of Houston-based Border Media Partners, which has grown from six Hispanic stations to 32 in less than two years. Last year, Border Media secured more than $115 million from investors including Vestar Capital Partners and Goldman Sachs Urban Investment group.
The investment community traditionally showed little interest in emerging Hispanic radio companies, Mr. Bustos says. In the late 1990s, Mr. Bustos created a chain of 32 Hispanic stations, which he sold for $448 million in 2000 in the midst of Hispanic radio's first big expansion. Nevertheless, the investment community "didn't understand" Hispanic radio, he says. "They saw it as a niche market. They didn't see the potential."
From 1998 to 2003 the number of Hispanic stations in the United States grew from 302 to 598, according to the BIA Financial Network. And now Hispanic stations draw more than 11 percent of all adult listeners, according to the sales agency Interep. "This is a very exciting time to be in the Hispanic radio business," says Jorge Plasencia, vice-president of Univision Radio, which is also in an acquisition mode.
Univision started the latest round of activity in 2003 when it paid $3.2 billion for Hispanic Broadcasting Corp., the largest chain of Hispanic stations in the country. Univision has been shuffling its radio assets ever since, including last October's station swap with Salem Broadcasting, which left Univision with stronger signals in Chicago and San Francisco.
