Entravision Communications Corparation
Entravision Communications Corparation
Sales: $154.02 million (2000)
Stock Exchanges: New York
Ticker Symbol: EVC
NAIC: 51111 Newspaper Publishers; 513111 Radio Networks; 51312 Television Broadcasting; 54185 Display Advertising
Entravision Communications Corporation is a diversified media company utilizing a combination of television, radio, outdoor-advertising, and publishing operations to reach the rapidly growing number of Hispanic customers in the United States. At the end of 2000, Entravision owns and operates television stations in 22 U.S. markets and is the largest station group in the United States affiliated with the Univision network. It also owns and/or operates 58 radio stations. In addition, the company is the owner of El Diario/La Prensa, a Spanish-language daily newspaper in New York City that is the oldest major such newspaper in the country, and about 11,200 outdoor billboards, primarily in Hispanic communities around Los Angeles and New York.
The Early Years: 1996–99
Entravision was formed in 1996 as a limited partnership by Walter F. Ulloa and Philip C. Wilkinson. Ulloa became the company’s chairman and chief executive officer, and Wilkinson became its president and chief operating officer. Ulloa had an interesting background; he was a lawyer who had then entered the Spanish-language television industry as a part-time broadcaster for Los Angeles station KMEX-TV. He rose to the position of sales manager before leaving in 1989 to build other properties for Univision Communications Inc., a dominant Spanish-language television broadcasting network in the United States. Wilkinson, on the other hand, had started out selling radio time for three FM-radio stations in the San Diego metropolitan area, one of them a Spanish-language station. After nearly four years as an account executive, he became Univision’s sales manager for all of the network’s stations outside the Los Angeles area. Later he was named West Coast sales manager.
After Ulloa and Wilkinson developed a friendship, “We began to share leads,” Wilkinson recalled to Alan Singer of the Public Record (Palm Springs, California) in 1997. “This developed into a style [of marketing] and continued discussions.” According to Ulloa, the founding of Entravision began “in kind of an ad hoc way. We really started to think seriously of bringing everything under one company. It was complicated—the transfer applications, waiting for the FCC—but we did it.”
Their first acquisition was KVER-TV in California’s Coachella Valley, which Ulloa called “a growing market, an important market adjacent to Los Angeles … outdelivering CBS, Fox, NBC and ABC, combined.” Ulloa told Singer that, among Hispanics, “Buying decisions are created by an almost three times greater awareness by advertising in Spanish.” Wilkinson added, “The Hispanic market is growing in size, income, and political clout. An advertiser who ignores this segment of the market will not be competitive if the Hispanic market is not pursued. It will be a missed opportunity.”
There were also three other original investors, who were all TV station owners who decided in 1995 to roll all of their interests into one company. Univision invested about $10 million into the project, in return for the option of converting this investment into a 25 percent equity interest in Entravision. This was part of its corporate strategy to own or control stations in the top 15 Hispanic markets in the United States. Outside of Univision’s owned-and-operated group of stations, plans called for Entravision to own the largest Univision affiliate group in the nation.
Entravision, by the spring of 1997, also owned and operated television and radio stations in San Diego, Denver, Las Vegas, the California metropolitan area that included Monterey and Salinas, and the metropolitan area including Yuma, Arizona, and El Centro, California. Soon after, it acquired Univision-affiliated TV stations in McAllen and El Paso, Texas. The $65 million needed to buy these last two stations and restructure debt was provided by Union Bank of California, which soon expanded Entravision’s credit to $150 million so that it could purchase more stations.
By the fall of 1998, Entravision owned 11 Univision-affiliated television stations and three radio stations, all with Spanish-language programming. Of the TV stations, four were in California, four along the Texas border with Mexico, two in Colorado, and one in Nevada. Entravision’s 12th television station, WBSV-Channel 62 in Sarasota, Florida, aired English-language syndicated reruns and movies to an audience of about 300,000. It was purchased for $17 million in cash, although only 2.8 percent of the population of Sarasota County was Hispanic. The station’s real appeal for Entravision was its UHF antenna, which the company sought to move to a much taller tower in another county so that the WBSV antenna signal would reach the Tampa-St. Petersburg-Clearwater area.
Entravision owned 16 television stations and 9 radio stations at the end of 1999. Its net revenue increased from $12.07 million in 1996 to $59 million in 1999. After earning $137,000 in net revenue in 1996 and $2.84 million in 1997 (when an income tax benefit of $7.53 million more than compensated for net interest expense of $5.11 million), in 1998 the company lost $3.7 million. That year, a net interest expense of $8.24 million outstripped operating income. The following year, in 1999, Entravision lost $39.96 million, including an operating loss of $27.99 million. Most of this loss resulted from compensation issued to one company executive in the form of stock.
An Acquisition-Fueled Public Company: 2000-01
The red ink at the end of the 1990s did not keep Entravision from stepping up its expansion plans. In early 2000, the firm acquired Latin Communications Group Inc. for $256 million. The purchase included 17 Spanish-language radio stations in 9 markets, including Los Angeles and San Francisco. It also consisted of Latin Communications’ publishing operations. Chief of these was El Diario/La Prensa, the largest Spanish-language newspaper serving the New York metropolitan area, with circulation of 68,000. It was also the oldest major Spanish-language daily newspaper in the United States. The other publishing operation was a Spanish-language New York City tourist guide that was soon discontinued. El Diario/La Prensa, though, had been formed in 1968 by the merger of the city’s original Spanish-language newspapers. La Prensa began publication in 1913, serving Spanish immigrants. El Diario first appeared in 1948, catering to the city’s growing Puerto Rican population. Circulation fell from a peak of more than 100,000 in the 1960s to less than 40,000 in 1989, when a partnership purchased it for about $20 million from the Gannett Co. This partnership, El Diario Associates, became part of Latin Communications Group in 1995.
Just prior to its initial public offering of stock in August 2000, Entravision reorganized itself and went from being a limited-liability company to a corporation. Ulloa, Wilkinson, and Paul A. Zevnik (a Washington, D.C.-based lawyer who had served as secretary of Entravision since its inception), along with each of their trusts and other controlled entities, exchanged ownership interests in the predecessor company for newly issued shares of Class B common stock. Meanwhile, other individuals, trusts, and entities exchanged their shares and interests for newly issued shares of Class A common stock. Univision exchanged its subordinated note and option in the predecessor—amounting to an estimated $120 million—for shares of Class C common stock. Entravision then sold 46.44 million shares of Class A stock to underwriters at $16.50 a share, and 6.46 million shares of this stock to Univision for $15.47 a share. Total realized net proceeds were $814 million.
A week after raising this money, Entravision completed the previously-announced acquisition of Z-Spanish Media Corp. for about $462 million, including the assumption of about $110 million in debt. Z-Spanish owned and operated 33 radio stations in 13 markets, including stations in Dallas, Fort Worth, Houston, Phoenix, and Sacramento. As a result of this purchase, Entravision had become the owner of the largest group of Spanish-language radio stations in the United States, and the largest centrally programmed radio network in the country who primarily targeted Hispanic listeners. The purchase also included about 10,000 billboards in the Los Angeles and New York metropolitan areas. Two months later, Entravision bought about 1,200 more billboards from Infinity Broadcasting Corp. for about $168 million—primarily in high-density Hispanic neighborhoods in New York.
These acquisitions did not end Entravision’s spending spree, though. The company also acquired radio stations in Newport Beach and Santa Monica (site of corporate headquarters), California, from Citicasters Co. for $85 million. Also acquired were four radio stations in the McAllen, Texas, market from Sunburst Media, LP for $55 million. In the early days of 2001, the company also announced that it had completed the acquisitions of WUNI-TV, Channel 27, serving Boston, from Jasas Corp. for $47.5 million; and WHCT-TV, Channel 18, serving Hartford, Connecticut, from Astroline Communications Co. and Two If By Sea Broadcasting Corp. for $18 million. This raised the number of Univision-affiliated television stations owned and operated by Entravision to 18.
- Entravision is founded by Walter Ulloa and Philip Wilkinson.
- Entravision owns several radio and television stations in the western United States.
- Entravision ends the year with 25 television and radio stations.
- Entravision raises $814 million in its initial public offering of stock; two acquisitions add 50 more radio stations and 10,000 billboards.
In March 2001, the launching by Entravision of Spanish-language TV stations in Santa Barbara, California, and Tampa, Florida (the latter replacing an Entravision low-power station)-plus new ones in Odessa and Amarillo, Texas-brought the number of Univision-affiliated television stations owned and operated by Entravision to 22.
Entravision in the New Millennium
The Entravision television station available to the largest number of Hispanic households as of March 2001 was KNVO-TV, a UHF station serving southern Texas, including the communities of Brownsville, Harlingen, McAllen, and Weslaco. The company either owned or held large interests in four San Diego UHF stations, but all were low-power. Among the top-15 Hispanic markets, it also owned two UHF stations serving the Albuquerque and Santa Fe markets in New Mexico, and KINT-TV, a UHF station in El Paso, Texas. The other Entravision stations were in California, Colorado, Connecticut, Florida, Nevada, Texas, and the District of Columbia, and the company held minority interests in UHF stations in Tecate and Tijuana, Mexico.
Entravision’s television stations were enhanced by the availability around the clock of Spanish-language programming from Univision, the leading Spanish-language broadcaster in the United States. Univision’s broadcast coverage was reaching more than 92 percent of all Hispanic households, and represented about an 84 percent market share of the U.S. Spanish-language network television prime-time audience as of December 2000. All but two of Entravision’s television stations were affiliated with Univision by means of agreements that provided each station with the exclusive right to broadcast Univision network programming in its respective market. This programming began in the morning with talk and information shows, followed by telenovelas, a talk show, a game show, a news magazine and national news, and local news. During prime time, Univision was airing telenovelas, variety shows, a talk show, comedies, news magazines, and lifestyle shows. Also aired were specials and movies, followed by late news and a late-night talk show. Entravision’s local news was rated first in nine markets in any language among viewers 18 to 34 years of age.
Furthermore, radio stations owned and/or operated by Entravision formed the single largest U.S. Hispanic radio market, with more than 17 million potential listeners. They were available to about 58 percent of the Hispanic population, and all but two were located in the top-50 Hispanic markets. The company was also providing programming to 39 affiliated stations in 38 markets. Five stations (three AM, two FM) were in the Los Angeles metropolitan area (including the Riverside-San Bernardino area), the largest in the United States in terms of Hispanic households. The company had a radio presence in all other top-5 Hispanic markets except the New York City metropolitan area. States represented in addition to California were Arizona, Colorado, Florida, Illinois, New Mexico, Nevada, and Texas.
Entravision’s radio operations combined network programming with local time slots available for advertising, news, traffic, weather, promotions, and community events. Affiliates received Entravision programming in exchange for two minutes per hour for network commercials. Entravision was producing programming in a variety of music formats simultaneously distributed via satellite with a digital CD-quality sound. The four primary formats offered were Romantica (adult contemporary, romantic ballads/current hits, primarily for females); Tricolor (Mexican country, primarily for males); Super Estrella (pop and alternative Spanish-language rock); and La Zeta (top Spanish-language hits, primarily Mexican, with recognizable radio personalities, primarily for males).
Entravision’s net revenue almost tripled in 2000, reaching $154.02 million, of which television accounted for 54 percent. Radio accounted for 28 percent; publishing accounted for 10 percent; and outdoor advertising accounted for 8 percent of revenues. The company’s expenses also rose, however, resulting in an operating loss of $31.37 million. While television operations were solidly profitable and publishing and outdoor advertising marginally so, the radio sector lost nearly $26 million. General corporate expenses and stock-based compensation accounted for another $18.5 million in expenses. Combined with net interest expense of $23.92 million and a special interest expense of $39.68 million (relating to the conversion of stock options and subordinated notes mainly arising from acquisitions), the company incurred a net loss of $92.24 million. Entravision’s long-term debt was $255.15 million at the end of 2000. Univision owned 13 percent of the company’s Class A common stock and 19 percent of its Class C common stock in early 2001.
Entravision, L.L.C.; Entravision Communications Company, L.L.C.; Entravision Holdings, LLC; Entravision 27, L.L.C.; Latin Communications Inc.; Latin Communications EXCL Inc.; Latin Communications Group Inc.; LCG Holdings, L.L.C.; Z-Spanish Media Corporation; Z-Spanish Media licensing Company, LLC; Z-Spanish Radio Network, Inc.
Hispanic Broadcasting Corp.; Outdoor Systems Inc.; Spanish Broadcasting System Inc.; Telemundo Group Inc.
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