Rumbo Receives US $18 Million Cash Injection, Expects to Break Even in 2006
Pinto America Growth Fund, L.P. of Houston and Rustic Canyon Partners of Los Angeles announced an $18 million investment in Meximerica Media. The funds will enable Rumbo to finish building its four Texas dailies and expand to other cities in the U.S. Pinto America and Rustic Canyon are co-leading a consortium of investors. “We are coming out stronger than we did with Recoletos,” said Schumacher-Matos. “These domestic investors will open the doors to new and more advertisers.” Meximerica Media expects to break even by mid-2006. “The $18 million will also enable us to begin investing in other markets and launch one or two new papers,” noted Schumacher-Matos. Richard Vaughan, managing director of Pinto Partners, echoed this sentiment. “We are looking forward to the expansion of Rumbo into underserved Hispanic markets, perhaps as early as next year.”
Under the new ownership structure, investors have majority control in the company. Management has a minority share. In April of this year, Schumacher-Matos bought 80% of the company from former majority investor Grupo Recoletos (Spain). Schumacher-Matos would not disclose the details of that transaction, but said that Recoletos was marshalling capital to undertake its own management buyout in Madrid.Last year, Recoletos, then majority owned by UK's Pearson, invested US $16.5 million in the start up. Meximerica Media had originally planned to break even in 2007.
Fine-tuning its strategy
In an interview with Portada®, Schumacher-Matos said that for the past few months Meximerica has been focusing on fine tuning its strategy. In April, Rumbo reduced its staff by 30, going from 165 to 135 employees, and discontinued publication of the Wall Street Journal en español. “There is the possibility we could publish the WSJ again. We are great fans of the content, especially personal finance and tech. We will study the matter”, says Schumacher-Matos.
Rumbo has expanded controlled circulation home-delivery in all four markets where it is distributed – Texas, San Antonio, Rio Grande Valley and Austin. Roughly 2/3 of its distribution is home-delivery; the rest is newsstand sales.
Initially, Rumbo was distributed primarily through newsstands. “Advertisers prefer home-delivery,” said Schumacher-Matos. “We have been studying each of our markets for the past year and can now offer highly targeted home delivery.” Rumbo newspapers are distributed at the sub-zip code level, often in areas where higher income Hispanics live.
Rumbo newspapers reach more than 260,000 unique Hispanic households at least once a week. The San Antonio, Houston, and Rio Grande Valley markets have rotating distribution, which means that households receive an edition of Rumbo one day a week. The edition includes a flyer inviting them to subscribe and receive Rumbo five days a week.
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