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Alarcón, Raúl Jr. 1956–

Raúl Alarcón Jr.
1956

Chairman, president, chief executive officer, Spanish Broadcasting System

Nationality: American.

Born: May 1956, in Havana, Cuba.

Education: Fordham University, BS, 1981.

Family: Son of Raul Alarcón Sr.; married Maria (maiden name unknown; divorced, 2004); children: two.

Career: Spanish Broadcasting System, 19831985, account executive; 1985, president and director; 1994, CEO and president; 1999, chairman, CEO, and president.

Address: Spanish Broadcasting System, 2601 South Bayshore Drive, Coconut Grove, Florida 33133; http://www.spanishbroadcasting.com.

Controlling a Latino radio empire, Raúl Alarcón Jr. helped make the Spanish Broadcasting System (SBS) one of the largest operators of Spanish-language radio stations in the United States, with 25 stations located in eight of the largest Latino markets in the country: Los Angeles, Puerto Rico, New York, Miami, San Francisco, Chicago, San Antonio, and Dallas. Alarcón was driven by both his cultural roots and his father's dreaman American dream that mirrored, and was enabled by, the fastest-growing cultural group in the country. America's Latino population grew 61 percentfrom 21.9 million to more than 35 millionbetween 1990 and 2001. By 2004 Alarcón's radio stations reached more than 61 percent of the U.S. Latino population.

LIKE FATHER, LIKE SON

Raúl Alarcón Jr. fled Cuba for the United States with his family in 1960. His father, Raúl Alarcón Sr., had been a radio entrepreneur when he left Cuba as a political refugee, giving up 14 radio stations and vowing to replicate the business in his adopted homeland. In New York City, Alarcón Sr. began working as an announcer at a Spanish radio station and climbed the ranks to programming director and station manager. As a teenager growing up in the Bronx section of New York, Alarcón Jr. was deeply influenced by his father's job. He worked at the station after school and listened to records with his father at night. Describing his childhood in an interview in Billboard (July 26, 2003), Alarcón Jr. said, "I met all his colleagues and the music people and the artists. All of that of course affected me. I grew to love it."

Despite his affinity to the business, Alarcón never planned to follow his father's career path. He was a premed student at Fordham University in New York and expected to pursue a career in medicine. However, in 1983 his father made a bold move and borrowed $3.5 million to buy an AM radio station, WSKQ (La Super 1380). Eager to help his father, Alarcón Jr. took a job in the sales department. His first advertisement contract was with an electrical repair shop on Broadway. "They would hear it on the air and it was like, wow! It was a very exciting time for me," he told Billboard (July 26, 2003).

TIMING IS EVERYTHING

WSKQ-AM introduced a modern Spanish-language format in New York. In 1983 father and son formed SBS and began working together to build the empire. By 1988 SBS was profitable and generated sales of about $20 million. That year the Alarcóns purchased their first FM station, regional Mexican KLAX (97.9 FM) in Los Angeles. When they bought their third station, New York's WSKQ-FM, in 1989 and reformatted it as Mega 97.9, La Mega, it seemed unlikely that a Spanish-language radio station could dominate the metropolitan New York market. Yet by 1998 WSKQ surpassed the market's longtime leader, the light-rock station WLTW-FM. Many industry analysts said a major turning point for Spanish radio happened that year when media researchers at Arbitron rated La Mega's morning show number one over that of the radio personality Howard Stern. By 2003 WSKQ was the most listened- to Spanish language radio station in the United States.

SBS was profitable in its first year, generating sales of about $20 million. The company went public in the fall of 199l, raising $435.8 million by selling 21.8 million shares at $20 per share. The success of the station, one of a dozen around the nation run by SBS in 1998, confirmed the influence of the growing Spanish-speaking audience. From 1993 to 1998 the number of Spanish stations in the United States ballooned from 365 to 454.

INSTINCT TRUMPS DUE DILIGENCE

In 2002 the company created SBS Entertainment, a concert production arm. Around the same time, it diversified by purchasing 80 percent of JuJu Media, the operator of the Spanish-English Web site LaMusica.com, which offered Latin music, entertainment, news, and culture. Later that year, at the insistence of Alarcón Jr., SBS launched KZAB-FM (La Sabrosa 93.5), targeting the Central American population in Los Angeles and offering programming distinct from anything else in the market. Alarcón attributed the bold move to a mix of research, which provided a road map, and gut instinct. In 2003 he told Billboard, "My opinion is that radio programming continues to be an art. It is not a science. I will not argue with the fact that research gives you a good indication, a good road map."

MAKING MONEY REQUIRES SPENDING IT

A big challenge for SBS was its heavy debt load. To avoid bankruptcy in the early 1990s, the company issued $175 million in high-yield debt and another $175 million in a privately placed issue of preferred stock that paid its holders an annual return of 14.25 percent in additional shares. The company's ratio of debt and preferred stock to operating profits in 1998 was a large 10.9, according to Bishop Cheen, a media analyst at First Union Capital Markets. With a weakened financial position, the company was vulnerable to takeover attempts. Cheen told the New York Times (December 14, 1998), "When they are surrounded by giants, the question is whether to consume or be consumed. What they really should have is a smart strategic partner with deep pockets."

STAYING FAITHFUL TO CORE MARKETS

Although SBS considered financial options, Alarcón remained committed to retaining the company's independence. In much of its marketing, the company proudly described itself as owned, controlled, and managed by Hispanics. In 2004, including pending transactions, SBS had a stable of 26 radio stations in the United States and Puerto Rico that offered music in a wide variety of formats, including "Cumbia," "Meringue," "Salsa," and "Tejano."

A GROWING MARKET IS SLOW TO MATURE

While Latinos were the hottest media market, Spanishlanguage stations ironically faced a continued stigma: advertisers still tended to favor a more mainstream audience. In 1997, when Mega 97.9 ranked third in the New York market in ratings, it was only 13th in revenue, with $21.5 million. That was well back of the top-ranked WLTW, or Lite-FM, which took in $38 million from advertisers, according to James Duncan Jr., editor of Duncan's Radio Market Guide.

As a savvy executive, however, Alarcón intuitively knew how to turn negatives into positives. Where others saw stigma, Alarcón sensed opportunity. While recognizing that Hispanic media revenue had increased, he acknowledged the downside of that growth. "I don't believe the Hispanic market has achieved parity in terms of being able to capture the revenue it really deserves," he told Billboard (July 26, 2003). "But that again is a positive. You flip it around, and that is the potential for the future. Everyone is pointing to Hispanic media as the future."

Raúl Alarcón Jr. believed that his fortunes were tied to America, as were those of the ethnic community that was his sales base. "Defeat is in acceptance, and winning is in striving," he told Laurie Flink of AOL Latino, Latin Access. "It certainly holds true for myself, my family, and for my company, but only as a result of the great country that we live in, the United States of America."

See also entry on Spanish Broadcasting System, Inc. in International Directory of Company Histories.

sources for further information

Cobo, Leila, "SBS: 20 Years of Success," Billboard, July 26, 2003, p. 25.

Fabrikant, Geraldine, "Spanish Broadcasting Builds on Growing Radio Audience," New York Times, December 14, 1998.

Flink, Laurie, "The Business of Spanish Radio: How One Man's Dream Is Rockin' the Country," AOL Latino, Latin Access, http://www.aola.com/ush/latinaccess/archives/7_raulalcan.htm.

Whithead, Mimi, "SBS's Roots in Radio Broadcasting Go Back a Generation," Miami Herald, January 17, 2000.

Tim Halpern

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