ImpreMedia Buys El Mensajero: The Inside Story
Impremedia announced the acquisition of El Mensajero, the San Francisco Bay Area's free Spanish language weekly. Brad Westerhold, publisher of El Mensajero, tells Portada® that his family sold the publication to Impremedia.
Westerhold adds that the deal “is going to give us more resources across the board, national ad-sales, editorial, market research”. There will be synergies and economies of scale in every area of the business. El Mensajero's national advertising will be sold both by an in-house ad-sales team of El Mensajero and by Impremedia's national ad sales team. El Mensajero had advertising revenues of US $1.89 million during the first 10 months of 2005, according to TNS Media Intelligence. “A high percentage of our ad revenues is national,” says Westerhold. “National preprints are a strong segment: That includes major retailers like Office Depot, Circuit City and Kmart." El Mensajero has a total circulation of 112,139 copies (93,895 are home delivered). The newspaper has 3 editions with different content (both editorial and advertising): Oakland (approx. 35,000) , San Jose (40,000 circ), San Francisco (circ approx. 35,000).
El Mensajero also joins ImpreMedia's Domingo Network, a home delivery newspaper network. With the addition of El Mensajero's audited weekly circulation of 111,564, ImpreMedia's Domingo Network now distributes 750,000 free publications each week in high density Hispanic neighbourhoods in Los Angeles, Chicago, San Francisco and New York.
YoungSoo Cho, VP and director of Communications at Headquarters Advertising, thinks that the acquisition is a good fit. “El Mensajero is a strong newspaper and Impremedia is a well known entity." Cho buys ROP advertising in El Mensajero for PG&E, a Northern California utility. Cho cautions that the acquisition should not only be used to realize economies of scale and do cost cutting.
Impremedia's three other newspapers Los Angeles' La Opinion, New York's Diario La Prensa and Chicago's La Raza had combined advertising revenues of US $72.3 million.
- The History of El Mensajero
El Mensajero, now owned by Impremedia, was purchased in July 2003 by Ernest “Skip” Westerhold, the father of current El Mensajero publisher Brad Westerhold, from former El Mensajero publisher Jose C. del Castillo. Castillo sold the last part of his stake to Westerhold in November 2004. In 2003, Westerhold integrated El Mensajero into the Latino Newspaper Network an ad sales network of home delivered Spanish-language newspapers launched in October 2003 by El Mensajero, San Diego's Enlace, Impacto USA and The Daily News' La Hora Hispana. a weekly published by the New York Daily News that was scheduled to be launched in May 2004. The Latino Newspaper Network folded in 2004, mostly doe to its inability to attract significant national advertising.
- Valuation estimate (Between US $4.3-6 million)
Impremedia did not disclose the amount of the transaction. However, Portada® estimates the value of the transaction between US$ 4.3 million and US $6 million. According to TNS Media Intelligence El Mensajero had advertising revenues of US $1.89 million during the January-October 2005 period. Portada® estimates that, including the traditionally strong November and December months, El Mensajero's ad revenues for 2006 will be US $2.65 million. Including a 35% rate card discount the “real” 2006 revenue figure is US $1.72 million. Applying a high premium sales multiple of 2.5 times (3.5 times), due to the good fit with Impremedia and its good position in the Bay area market, El Mensajero's valuation lies at US $4.3 million (US$ 6 million).
- Synergies between Northern and Southern California
El Mensajero's acquisition is a particular good fit with Los Angeles' La Opinion, another Impremedia newspaper. “We also open the door to greater cooperation between El Mensajero, which is distributed weekly in Northern California, and La Opinion, which serves Southern California," states John Paton, Chairman and CEO of ImpreMedia. Monica Lozano, Senior Vice President of ImpreMedia and Publisher and CEO of La Opinion noted that "the ability for newspaper advertisers to directly reach Hispanics in both Northern and Southern California through one Spanish language buy is an opportunity whose time is long overdue." Other areas for cooperation between both newspapers could include content. “What is important in Southern California is also important in Northern California,” says Headquarters Advertising YoungSoo Cho.
- San Francisco Bay area, an interesting market
The Bay Area's Hispanic market has a higher than average purchasing power. With the recent closure of Nuevo Mundo (published by Knight Ridder's San Jose Mercury News), El Mensajero will command a higher market share. YoungSoo Cho, VP and director of Communications at Headquarters Advertising, tells Portada® that as a result of Nuevo Mundo's closure, he recently increased print advertising in El Mensajero. YoungSoo Cho also buys print in other newspapers of the Bay area including El Observador and El Bohemio News. Another interesting development in the Californian newspaper market is the expansion of Vida en el Valle, published by the Fresno Bee, to other California markets including Sacramento, Stockton and Modesto. El Mensajero's purchase by Impremedia also has to be seen in the light of this increased competition in the Californian newspaper market.
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