Analysis: Prisa – Liberty Takes Charge

Yesterday’s announcement that Spain’s Prisa is reducing an additional 18% of its workforce (2,500 employees) is a clear sign that Liberty Acquisition Holdings, the New York City based private equity fund that recently bought a 70% stake of Prisa, is taking charge.

Liberty’s mandate for Prisa is clear: Increase profitability by reducing costs and by expanding the company internationally, particularly in the Latin world (U.S. Hispanic market and Latin America).

Spain’s Group Prisa has an important, and growing, presence in the U.S. Hispanic market and in Latin America. It’s “American” assets include U.S. Hispanic broadcaster V-Me, as well as panregional radio broadcaster Union Radio and textbook publisher Santillana.

Too much debt…

Prisa had overleveraged itself during the first half of the last decade to expand in the TV business. This line of business dragged down the overall P&L, especially after the economic recession of 2008 which hit Spain’s economy particularly bad..

…leads to a restructuring…

As part of it’s restructuring Prisa recently sold a substantial part of its TV assets and also closed the Spanish TV channel CNN+. Other assets of the company either break even (e.g. financial daily Cinco Dias), or are clearly profitable (e.g.. Cadena Ser, daily El Pais and textbook publisher Santillana).  

…and headcount reductions…

The headcount reduction announced yesterday will impact all units of the company including Spain based radio Cadena Ser, El Pais , Cinco Dias and marketing and advertising sales units. Some observers criticize that some of the most talented employees will leave the company. The company is offering voluntary buyouts which are prone to be accepted by employees who have worked there for a long time (some of them can be considered “core employees”). 

…nevertheless, expansion outside of Spain…

It does not seem that there will be many cuts outside of Spain. In fact, to expand its digital operations in the U.S. and Latin America, Prisa has been hiring in its Miami office. Prisa’s U.S. and Latin American expansion will have a particularly strong digital component. Interestingly, former Terra executive Alvaro Palacio, based in Miami, just was named director of sales and operations in the Americas of the Digital Development Unit of Grupo Prisa .The unit is led by Kamal Bherwani.

… a new guard takes over.

Yesterday’s announcement that Fernando Abril Martorell, a leading Spanish executive, will be Prisa’s Deputy Chief Executive Officer and Chief Financial Officer of the Group, starting 1 April  also implies that Abril has a good chance to succeed Juan Luis Cebrian as the CEO of the company, once Cebrian leaves his position in three years. (Spanish website El Confidencial says that Cebrian offered the number two position to Unidad Editorial’s
Antonio Fernandez Galiano (keynote speaker at our 2010 Latin American Advertising and Media Summit), who rejected the offer.
 Cebrian is a “historic” executive linked to Prisa since its inception together with the Polanco family. The Polance family lost the majority of the shares after Liberty invested the much needed $900 billion a few months ago. Liberty is starting to show its clout.

Read our columnist Pepe Cervera’s take on Prisa in his recent articles:

Prisa: Its past and its future.

Analysis: Prisa: Its Past & Its Future (Part 2)