News Analysis: Impremedia acquires Rumbo

Below are some interesting questions Portada's editorial team has tried to answer.

  •  What was the price of the transaction?
     John Paton, CEO of Impremedia, told Portada that the acquisition is aprivate deal between two private companies”. Therefore no information was disclosed. However, it is very likely that the price has been very low. Rumbo had been operating in the red for a long time and despite the value of its brand, pure cash flow figures suggest that the acquisition price must have been low.
    Will Rumbo’s executives and editorial team continue to work in their positions?
    “We like the product very much and the team we have found there” Impremedia’s Paton noted. “We are always looking for the best people”, he added.

  •  Why was Rumbo an interesting acquisition target for Impremedia?
    Before the Rumbo acquisition Impremedia was present in four of the top 10 Hispanic markets. After the acquisition, through which it ads a presence in Houston, San Antonio and The Rio Grande Valley, Impremedia is now present in 7 of the top ten markets. Texas was the big hole in Impremedia’s footprint and it now has been filled.
    “We will review all of the strategies Rumbo has. Rumbo is the number one Hispanic newspaper network in Texas and we will grow that. It is a high very high quality product and fits very well into our strategy.  The Rumbo brand is going to continue to be developed.” After the Rumbo acquisition 11 million Hispanics use Impremedia media vehicles for news and information and its websites have more than 2 million unique users a month. “We did not exist four years ago and are now in all these markets”, Paton proudly states.

  •  Is Impremedia looking to acquire more print and online properties?
    Yes. Private equity backed Impremedia is a very acquisitive company whose strategy is to buy companies/strong brands and offer them, bundled, to media buyers. “We are looking at other acquisitions in Texas and other leading markets. We are very interested in print and online news and information properties”, Paton said. After buying Vista, at the end of 2006, Impremedia acquired Hoy New York at the beginning of 2007 and now Rumbo.  Ultimately Impremedia investors want to exit their investment by either going public through an IPO or selling the company to another media company.
    The development of the digital strategy is going to be very important. In a few weeks Impremedia Digital will be launched. Paton recently hired Impremedia Digital’s CEO Arturo Duran. The to-be launched digital platform will use the content of the different Impremedia brands.

  •  Why was Rumbo not able to prosper as an independent company?
    It is very difficult to launch four dailies in four different markets. And even more challenging to operate them successfully (financially) in a very short period of time. Expectations of Rumbo’s private equity backers, and the assumptions they based their growth models on, were unrealistic.As Renee Labran, partner of Rumbo private equity backer Rustic Canyon, tells Portada  “Advertisers have still not flocked to Hispanic media at the pace we have hoped for.   Not all advertisers believe that they need to have a Hispanic market strategy to reach the English dominant Latinos, or even necessarily the bilingual segment.  Also, many properties were started by immigrants, and their perception of the value of the business may not be based on traditional market metrics, making it hard to come to agreement on terms.”
    Impremedia’s Paton adds that Rumbo underwent a number of ownership changes and capital issues in a very short period of time. “Despite launching in multiple markets they did not have that many resources”. Paton notes that Impremedia has these resources (e.g. hundreds of advertising sales presentations). “These are the kind of things that really drive sales”, he concludes.

  •  Is the Hispanic print bubble bursting?
    Some industry insiders think so. Rumbo was the most ambitious project in the recent history of the Hispanic print media industry: because of its high standards of editorial quality and, more importantly, because it launched four daily newspapers from scratch. According to John Trainor, CEO of Papel Media “ Within the last five years we have witnessed a bubble being created in the Hispanic publishing world in which unrealistic expectations have been set. In the very near future, we expect to see that bubble burst, very similarly to what happened in the "dot-com" era. As we saw back then, some great companies emerged like Google or E-Bay while many others sank. I believe that in the long run, solid business plans with realistic expectations will prove that the Hispanic Newspaper FSI marketplace is and will continue to be a very viable option for advertisers."

 

 Related articles:

 February 26, 2007:Edward Schumacher-Matos Gives “Definitive Statement” on Rumbo

 March 05, 2007: Edward Schumacher Matos on Rumbo's Legacy and its Future

 October 10, 2005: What Conditions need to be in Place to Launch a Successful Spanish-language Publication?


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