Impremedia Buys La Raza as Part of Larger

Impremedia announced the acquisition of PrensAmerica Holdings Corporation, publisher of La Raza, La Raza Autos y Mas and La Raza Online. Impremedia also acquired a minority stake in Hispanic Digital Network, a network of Spanish-language newspaper websites.

What was the value of the transaction?

Impremedia would not disclose the amount of the transaction, saying only that it was “100% in cash” and that there were no changes to its financial structure. Hispania Capital Partners (financial backer of Prensamerica Holdings-La Raza) and Robert Armband (publisher of La Raza) most likely sold La Raza for a high multiple of earnings since Prensamerica is the only other private equity-backed Spanish-language newspaper consolidator—besides Impremedia—in the U.S. Buying out its only major competitor could lower the purchase price of future acquisitions by Impremedia. “We are always looking for acquisition opportunities,” Impremedia's Knight notes. Some industry observers think that that La Raza sold out to Impremedia due to “defensive reasons”, as the competition with Hoy in the Chicago market was lowering its margins.

Why did Impremedia buy La Raza?

Undoubtedly, to increase national advertising dollars. Douglas Knight, chairman and CEO of Impremedia says, “We now publish the #1 Spanish language newspapers in the nation's top 3 Hispanic markets.” Thirty-two percent of US Hispanics live in these three markets (Los Angeles, New York and Chicago). After buying La Raza, Impremedia joins Tribune and Knight Ridder in the exclusive club of the largest Spanish-language newspaper chanes. Tribune has Hoy editions in New York, Chicago and Los Angeles and Knight Ridder owns Nuevo Mundo, (San Jose, CA), Diario-La Estrella (Dallas-Ft. Worth) and El Nuevo Herald (Miami).

Impremedia's goal is to increase national ad revenues in all three papers. Impremedia's ownings, which also include the entertainment supplement La Vibra, published inside La Opinion and The Houston Chronicle, have the wide reach national advertisers are looking for in Hispanic print media. Impremedia's acquisitions also put the company in a better bargaining position when negotiating advertising rates.

How much clout do Impremedia's three newspapers have?

According to figures provided by CMR, La Opinion (daily, circ. 126,628 for the six months ended in 3/31/2004) had advertising revenues of US $31.9 million during the first eight months of this year. El Diario/La Prensa (daily, circ. 50,019) had revenues of US $15.81 million, and La Raza (weekly, circ. 198,000), US $7.1 million. The three papers were the second, third and seventh largest Spanish-language newspapers in the U.S.

What other reasons are behind the acquisition?

Impremedia will be able to realize synergies by owning three large publications. These synergies, and savings will apply to a wide array of expenses (branding, advertising, purchasing of content, centralized departments, etc…).

Where will Impremedia and its investors go from here?

“We want to be the premier publisher of Spanish-language newspapers in the U.S.,” said Doug Knight. To reach its goal, Impremedia has to grow existing operations and acquire Spanish-language newspapers in new markets. Knight tells Portada® that Impremedia's investors (Clarity Partners, Halyard Capital Fund, ACON Investments and Knight Paton Media) are patient. However, all of Impremedia's investors, excluding Knight Paton Media, are financial investors and expect a high return on investment through an exit strategy. Impremedia investors can exit in one of two ways. Either through a trade sale to a large U.S. newspaper company interested in increasing its Hispanic exposure, or by Impremedia going public and listing its stock on the stock exchange. If this happens, Impremedia would be the first “pure” Spanish-language newspaper company in the U.S. to go public.


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