Spanish Broadcasting System Inc.
Spanish Broadcasting System Inc.
headquarters: 2601 bayshore dr. coconut grove, fl 33133 phone: (305)441-6901 fax: (305)466-5148 url: http://www.spanishbroadcasting.com
Based in Coconut Grove, Florida, Spanish Broadcasting System is the second-largest U.S. operator of Spanish-language radio stations. With 26 radio stations in the United States and Puerto Rico, Spanish Broadcasting is the largest Spanish-owned radio broadcasting company. These stations, which target Hispanic adults from 18 to 49 years of age, are located in the top ten Hispanic markets, including New York City; Los Angeles and San Francisco, California; Miami, Florida; Chicago, Illinois; and San Antonio and Dallas, Texas. Music formats include Spanish adult contemporary, regional Mexican, and contemporary salsa, merengue, and cumbia. The firm reaches roughly 61 percent of the Hispanic population in the United States.
Although sales grew nearly 10 percent in 2001 to $134.3 million, Spanish Broadcasting posted a $7.6 million loss that year. The firm had also posted a loss, totaling $10.7 million, in 2000, on sales of $122.7 million. In 1999, the year that the firm completed its initial public offering (IPO), earnings had reached $5.8 million on sales of $97.4 million. Stock prices, which had jumped to $27.75 immediately following the IPO, fell to a low of $4.95 per share in September of 2001 after a sluggish North American economy prompted companies in nearly every industry to trim their advertising budgets. Earnings per share in both 2000 and 2001 were negative.
According to an October 1997 issue of Broadcasting & Cable, "although Hispanic radio has moved into the listener mainstream...the industry's share of ad revenue continues to lag behind the share of audience it attracts." This gap continued to exist in 2002. Some analysts questioned whether advertisers would begin to spend more dollars targeting this market. Those who predicted advertising dollars would eventually make their way to Hispanic broadcasters believed that Spanish Broadcasting was positioned for growth.
Spanish Broadcasting was founded in 1983 when Cuban emigree Pablo Raul Alarcon acquired an AM radio station in New York City. In February of 1989, Spanish Broadcasting acquired WEVD-FM, another radio station serving New York. The firm changed the station's call letters to WSKQ-FM and its format to tropical, which included popular salsa, merengue, and cumbia music. Eventually, this station grew to be one of the largest in New York's broadcast market. In fact, by the mid-1990s, WSKQ's morning show was second only to the Howard Stern Show.
Spanish Broadcasting incorporated in 1994. As Spanish radio broadcasting throughout the 1990s grew in popularity, advertising sales for Spanish Broadcasting began to climb. The firm added to its New York holdings in 1996 with the purchase of easy listening station WPAT-FM. Spanish Broadcasting changed its new station's format to Spanish adult contemporary, which included ballads, pop music, and love songs. Headquarters moved from New York to Miami in 1997. By then, Spanish Broadcasting operated 12 radio stations. Along with rival Heftel Broadcasting, the firm accounted for 85 percent of the Hispanic radio market.
FAST FACTS: About Spanish Broadcasting System Inc.
Ownership: Spanish Broadcasting System Inc. is a public company traded on the NASDAQ Stock Exchange.
Ticker Symbol: SBSA
Officers: Raul Alarcon, Jr., Chmn., Pres., and CEO, 45, 2001 base pay $1.9 million; Joseph Garcia, EVP and CFO, 56, 2001 base pay $380,000; William Tanner; EVP, Programming, 57, 2001 base pay $703,000
Principal Subsidiary Companies: Spanish Broadcasting System Inc. operates 26 radio stations in the United States and Puerto Rico. The firm also owns an 80 percent stake in JuJu Media, which operates LaMusica.com, a Spanish music Web site that broadcasts various Spanish Broadcasting radio stations via the Internet.
Chief Competitors: Spanish Broadcasting System's major rival is Hispanic Broadcasting Corp. The firm also competes with Infinity Broadcasting, Radio Unica, and other radio broadcasting companies.
In April of 1999, Spanish Broadcasting acquired LaMusica.com, a Spanish-English Web site featuring Latin music reviews, interviews, news, contests, videos, and shopping. As a result, LaMusica.com began broadcasting the Spanish Broadcasting's radio stations via the Internet. In October of that year, the firm conducted its initial public offering, selling 21.7 million shares for a total of $435.8 million. Spanish Broadcasting used the fresh capital to pay down debt and to purchase more radio stations. In fact, in January of 2000, the company acquired eight radio stations in Puerto Rico from AMFM Inc. A few months later, Spanish Broadcasting also bought Rodriguez Communications Inc. for $165.2 million in cash and stock. The deal added the following stations to the firm's holdings: KFOX-FM and KREA-FM, both serving Los Angeles, California, and surrounding areas; KXJO-FM, based in San Francisco, California; KSAH-FM, serving San Antonio, Texas; and KTCY-FM and KXEB-AM, both serving Dallas, Texas, and nearby areas. Growth continued in November, when Spanish Broadcasting paid $250 million to purchase KFSG-FM from International Church of Foursquare Gospel.
The firm formed an alliance with America Online Inc. in January of 2001. The cross-marketing deal called for Spanish Broadcasting to include AOL advertisements in its broadcasts in exchange for AOL's promotion of LaMusica.com. By then, the firm operated 26 radio stations.
Spanish Broadcasting's strategy is to target the top ten Spanish markets in the U.S., with a particular focus on the top four: Los Angeles, New York, Miami, and Chicago. This has helped the firm differentiate itself from rival Hispanic Broadcasting Corp., which operates in both the leading markets and the smaller markets. The reason for the firm's focus on the top four markets is the fact that Hispanic populations are growing more quickly there than anywhere else in the United States. By the early 2000s, Hispanics made up more than 45 percent of the population in Los Angeles, more than 65 percent of the population in Miami, and more than 25 percent of the populations in Chicago and New York. In addition, the Hispanic populations in those areas were becoming more affluent. According to Joseph Garcia, the firm's chief financial officer, "The Hispanic market is not only increasing in terms of its population, but also in terms of its purchasing power, growing three times faster than the U.S. total consumer spending. One thing we want to emphasize to our advertisers is that the Hispanic consumer needs the basic necessities of life like everybody else...our listeners fit very well the advertisers' target audience."
To maintain its competitiveness, the firm uses a 14-person team to perform market research on a regular basis. These individuals are responsible for things like creating listener focus groups and conducting telephone surveys in order to determine the success of each of the stations.
The growing popularity of Spanish music, even among non-Spanish cultures, helped to boost the number of Spanish Broadcasting's listeners in the late 1990s and early 2000s. One reason for this trend was the emergence of Hispanic music stars like Ricky Martin and Jennifer Lopez.
CHRONOLOGY: Key Dates for Spanish Broadcasting System Inc.
Spanish Broadcasting is founded
Spanish Broadcasting is incorporated
Spanish Broadcasting completes its IPO
Headquarters move from New York to Miami
Spanish Broadcasting acquires LaMusica.com
Spanish Broadcasting acquires eight radio stations in Puerto Rico
SPANISH BROADCASTING FORMATS
Radio stations owned by Spanish Broadcasting make use of a wide variety of formats. For example, radio stations with a Tejano format play Mexican music that was produced in Texas. The Spanish Tropical format includes salsa, merengue and cumbia dance music. A Regional Mexican format can include ranchera, nortena, banda, and other music played in different regions of Mexico. Spanish adult contemporary includes ballads, pop, and Latin rock.
Spanish Broadcasting operates 26 stations, including WRMA-FM, a Ft. Lauderdale, Florida-based station serving the Miami area with Spanish adult contemporary programming; WLEY-FM, an Aurora, Illinois-based station serving the Chicago area with regional Mexican music; KLEY-FM, a regional Mexican and South Texas-style station serving San Antonio, Texas; WCMQ-FM, a Spanish oldies station serving Miami; WXDJ-FM, a contemporary salsa and merengue station serving Miami; and KXOL-FM, a Spanish adult contemporary station serving Los Angeles.
After the September 11th terrorist attacks on the World Trade Center Towers in New York City and the November 12th crash of an American Airlines flight in Queens, New York, Spanish Broadcasting sponsored a benefit concert to raise funds for the families of victims. Performed in the Music Square Garden in December of 2001, the concert raised roughly $400,000.
SOURCES OF INFORMATION
bachman, katy. "sbs expands west." mediaweek, 22 may 2000.
"cfo of spanish broadcasting system comments on the size of the spanish market." the wall street transcript, 23 july 2001. available at http://www.twst.com.
fakler, john t. "spanish broadcasting looks to buy stations, expand reach." south florida business journal, 22 december 2000.
haley, kathy. "radio rides hispanic population boom; stations moving into listener mainstream as ratings grow." broadcasting & cable, 6 october 1997.
"spanish broadcasting announces acquisition of full-market fm signal in los angeles." pr newswire, 3 november 2000.
"spanish broadcasting system and america online announce strategic promotional alliance with lamusica.com, the popular site for latino entertainment." business wire, 2 august 2000.
spanish broadcasting system, inc. home page, 2002. available at http://www.lamusica.com.
For an annual report:
write: spanish broadcasting system, 2601 s. bayshore dr., coconut grove, fl 33133
For additional industry research:
investigate companies by their standard industrial classification codes, also known as sics. spanish broadcasting's primary sic code is:
4823 radio broadcasting
also investigate companies by their north american industry classification codes, also known as naics codes. spanish broadcasting's primary naics code is:
513112 radio stations