The new round of financing for Rumbo papers has interesting implications for the development of the Hispanic print media sector.
- One more piece of the Hispanic print puzzle
Rustic Canyon, one of the two major Rumbo investors, is backed by Tribune Corp. Rustic Canyon was established in 1999 in order to invest a portion of the funds created by the recapitalization of the Times Mirror Co. (since acquired by Tribune Co.). Tribune Corp. publishes Hoy Spanish-language dailies in the three largest Hispanic markets (Chicago, Los Angeles and New York). Rumbo, distributed in Houston (4th largest), San Antonio (8th), Rio Grande Valley (10th) and Austin (19th), has a complementary, non-competing footprint.
Additionally, Hoy and Rumbo are both represented by Publicitas-Leading Hispanic Media, which acts as an extension of the national ad-sales force for both papers. Could there be more collaboration/integration between Rumbo and Hoy in the future?
“We have a friendly relationship with them,” Meximerica Media's Schumacher-Matos told Portada®, adding that it is too soon to announce anything specific. The US $18 million inversion in Rumbo papers by the Hispanic oriented Pinto America Growth Fund, L.P. and the media/technology oriented private equity house Rustic Canyon Partners highlights an increased interest on the part of venture capitalists and private equity institutions in the Hispanic market and, more specifically, in Hispanic print.
In many ways, Rumbo, which started four Texas dailies from scratch last year, is the Hispanic print media property with the most potential. At the same time, it is the most risky venture. Private equity houses, like the backers of Impremedia and Yellow Pages Publishers (like Hispanic Yellow Pages of America) say that print has a lot of potential in the booming Hispanic market. Successful newspaper companies can have EBITDA margins of up to 25%. Establishing a successful newspaper media company in an underexposed, almost virgin market is an attractive proposition for private equity houses.
- Hispanic print is hot, VC and private equity houses like it
- Good news for Spanish-language newspapers
The investment in Rumbo is very good news for Spanish-language newspapers. Meximerica Media's CEO Edward Schumacher-Matos frequently states that his company intends to raise the level of Spanish-language journalism. After only one year of publication, Rumbo has become known for its quality, complete, strong service journalism, as well as its lively, all-color design.However, providing a high-quality product is expensive. Rumbo pays substantially higher salaries, particularly for journalists, than most other newspapers targeting Spanish-speaking audiences in the U.S.