Learning that those who have the gold make the rules didn't poison an idealistic Tom Castro as he applied his Harvard degree in international relations as a Senate aide.
It just made the scholarship student from the Watts neighborhood in Los Angeles realize that he could do more good as a capitalist than a wonk. He focused on creating and then selling radio chains. His latest, 37-station Border Media Partners, founded in 2003, is the largest privately owned Hispanic-focused radio company in the country – and the best capitalized Hispanic startup company in history, having raised more than $275 million in its first 30 months.
The co-founder and first chairman of the board for New America Alliance has abandoned idealism – the former chief economic adviser to John Kerry's presidential campaign is an apostle for Hispanic economic and political empowerment.
It was an accident…I had made a little bit of money at a young age and by chance one day I got a phone call from a guy that I knew who was buying a radio station in Phoenix and he needed $50,000 more. So a friend and I invested $50,000. We subsequently invested $30,000 more and we became the proud owners of 49 percent of the radio station. That was 1979. I was in this industry before it was cool, before Wall Street discovered it.
Given your pedigree – Harvard, Capitol Hill, the oil business in Mexico – why stay in a staid business?
I stayed in it because it mixes two things I consider important. There's an old saying, do well by doing good. It's a lucrative business and you can also impact the community you serve.
What are your broad plans?
We believe there are going to be opportunities to acquire additional stations over the next few years. Our geographic focus is the Southwest, basically from Texas to the Pacific Ocean.
Some of your latest acquisitions broadcast in English and you've said you're not changing that.
We serve Hispanic people, and we'll serve them in Spanish, in English, in Spanglish, or any other language or combination of languages we think will reach them.
We're focused on Hispanic people – we are not Spanish-language broadcasters, per se.
Is this a level of sophistication in analysis that a Clear Channel or a CBS would not bring?
I cannot speak for them, but I think if you are not Hispanic, you are clearly at a disadvantage in trying to understand this. There are some very good broadcasters who serve the Hispanic population who are not Hispanic. But it's like me going to China – I might learn Chinese, I might even study the hell out of the place, but at the end of the day there's certain insights I'm never going to have because I don't understand the culture inside and out.
What are your feelings on consolidation, especially since you are a consolidator?
Well, I don't believe it is in the public interest. But it's reality so you have to live with it…We have chosen to buy as many stations as we can in the key markets where we operate to have enough stations to compete against these big guys.
You say you're the best capitalized, but are you sufficiently capitalized at this point?
Well, we're big enough to compete in the markets where we operate, which is really one of the requirements in the post-deregulation era. But as we grow we'll have to raise additional capital from our partners.
With your success, do you still believe lack of access to capital still hampers many Hispanic firms?
Really the only thing lacking in the Latino business community is access to capital. NAA was created (in 1999) in part to address that imbalance. It's really due just to irrationality that more capital is not dedicated to this sector – there are such huge growth opportunities and so many capable people. One of the problems is the Latino community has to get more sophisticated about how to be the recipient of investment capital.
We come from a tradition where people basically fund business through family and friends and maybe eventually a commercial banker. Equity capital and other forms of capital require one to make compromises and create structures that will attract and keep investors. And that's just a whole new ballgame for the Latino community.
What do you foresee for capital markets in the next 10 or 20 years?
If you want growth in America, you're going to find it in three places: technology, the Hispanic population, and serving senior citizens. Capital will eventually become more rational.
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