MediaCo acquires content and digital operations from Estrella Media

2024-04-18 23:03:23

MediaCo Holding Inc. (Nasdaq: MDIA) (“MediaCo”) today announced that it has acquired all of Estrella Media’s network, content, digital and commercial affairs operations. Among the Estrella Media brands joining MediaCo are the EstrellaTV network and its influential linear and digital video content business, and Estrella Media’s expansive digital channels, including its four FAST channels: EstrellaTV, Estrella News, Cine EstrellaTV and Estrella Games , in addition to the EstrellaTV application. The transaction closed on April 17, 2024.

MediaCo, which operates prominent urban radio stations HOT 97 and WBLS 107.5 in New York City, will add Estrella Media’s Spanish-language video, audio and digital content operations under the same umbrella. This transaction will also allow MediaCo to reach the established audiences of Estrella Media’s market-leading regional Mexican radio stations, includingHow Good Los Angeleshome of the nationally syndicated morning radio show Don Cheto Al Aire, The race em Houston and Dallas, e The North em Houston.

MediaCo’s combined presence positions it as one of the strongest providers of radio content for Spanish and urban music, across both terrestrial radio and digital audio broadcasting. These audiences represent almost a third of the US population and 100% of consumption growth in the market.

Jacqueline Hernández, an established media executive, will lead the company as Interim Executive Director. Ms. Hernández, who most recently served as Chief Executive Officer and Founder of New Majority Ready, a multicultural content marketing and strategy company, previously held the position of Chief Operating Officer at Telemundo, as well as Chief Marketing Officer at NBCUniversal Hispanic Enterprises, most recently working as a board member at Estrella Media.

“This combination of tested media brands and talented teams will drive content and distribution growth for the benefit of our multicultural audiences,” said Ms. Hernández. “We believe this combination is the first step in building a unique multicultural media company that will reach diverse U.S. audiences wherever they choose to consume content and create value for marketers working to reach these important audiences.”

“This leverages the strengths of two great companies to build something new,” said Deb McDermott, President of MediaCo. “We are committed to representing and serving the Hispanic market, as well as continuing to represent and grow the diverse audience that MediaCo already serves. We see the need for media brands to seize opportunities with all audiences, with Estrella Media being a key part of our growth strategy.”

“Today marks the beginning of a promising journey for MediaCo,” said Kudjo Sogadzi, current President and Chief Operating Officer of MediaCo. “As we embark on this next chapter, we see a great opportunity to combine our strengths and capabilities to redefine the way we deliver media to our diverse audiences.”

“This is the natural next step to evolve Estrella Media’s content operations and better serve our important U.S. Hispanic audience,” said Peter Markham, CEO of Estrella Media. “This transaction helps ensure a bright and growing future for MediaCo as the preeminent media company that serves multicultural audiences and drives advertising spend ROI and brand growth.”

As part of the transaction, Estrella Media will continue to own and operate its local radio and television stations, while MediaCo will provide the innovative programming and content that its audiences have become accustomed to. MediaCo will also work to increase distribution with other broadcast partners, as well as grow digital broadcast, CTV and AVOD assets.

Transaction Terms

The transaction was effected pursuant to an Asset Purchase Agreement with Estrella Broadcasting, Inc., owner of Estrella Media, under which a subsidiary of MediaCo purchased substantially all of Estrella Broadcasting’s assets, except its local radio and television stations. As part of the transaction, MediaCo was given the option to acquire these stations from Estrella Broadcasting at a future date, subject to receiving necessary regulatory approval. As consideration in the transaction, Estrella Broadcasting is receiving a warrant to purchase up to an aggregate of 28,206,152 newly issued shares of MediaCo Class A common stock, exercisable at an exercise price of $0.00001 per share; $60 million in newly issued MediaCo series B preferred stock, which will accrue dividends at a rate of 6.0% per year; a second $30 million secured term note with a five-year term and an interest rate of SOFR + 6.0% per annum; and around US$30 million in cash. In connection with the exercise of the option of local radio and television stations, Estrella Broadcasting would receive an additional 7,051,538 newly issued shares of MediaCo Class A common stock.

WhiteHawk Capital Partners provided a $45 million first lien term loan to MediaCo in connection with the transaction, $35 million of which was drawn at closing. In connection with the transaction, three representatives from Estrella Broadcasting were added to MediaCo’s board of directors. The transaction was approved by the boards of directors of MediaCo and Estrella Broadcasting.

Before the transaction was consummated, Standard General converted all outstanding shares of MediaCo’s Series A Preferred Stock into a total of 20,733,869 newly issued shares of MediaCo’s Class A Common Stock pursuant to the terms of the Series A Preferred Stock.

MediaCo is filing with the U.S. Securities and Exchange Commission (SEC) a current report on Form 8-K that will provide additional details about the transaction.

Fried, Frank, Harris, Shriver & Jacobson LLP and Pillsbury Winthrop Shaw Pittman LLP served as legal counsel to MediaCo in connection with the transaction. RBC Capital Markets, LLC served as exclusive financial advisor to Estrella Broadcasting, and Paul, Weiss, Rifkind, Wharton & Garrison LLP and Wiley Rein LLP served as legal advisors to Estrella Broadcasting. Sidley Austin LLP served as legal advisor to WhiteHawk Capital Partners.

Forward-Looking Statements

This release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act, as amended, and it is intended that all forward-looking statements relating to MediaCo and Estrella Broadcasting, the transaction and other matters will be subject to the safe harbor protections it creates. All statements contained in this release, other than statements of historical fact, including, without limitation, statements regarding MediaCo’s future performance, business strategy, future operations, as well as management plans and objectives and related matters, contained in this release or any documents cited herein are forward-looking statements. Words like “believe”, “may”, “will”, “expect”, “should”, “could”, “would”, “anticipate”, “aim”, “estimate”, “intend”, “plan”, “believe”, “potential”, “continue”, “project”, “goal”, “is likely”, “predict”, “future”, “guidance”, “possible”, “predict”, “seek”, “see” or the negative of these terms or other similar expressions are intended to identify forward-looking statements, although not all forward-looking statements use these words or expressions. These statements are neither promises nor guarantees, but they involve known and unknown risks, uncertainties and other important factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by forward-looking statements, including, but not limited to, the potential impact of the consummated transaction on relationships with third parties, including customers, employees and competitors; risks that the new businesses will not be successfully integrated or that the combined company will not be able to realize estimated cost savings; risks associated with exercising the option to acquire Estrella Broadcasting’s broadcast assets at a future date, failure to realize the anticipated benefits of the combined operations; unexpected costs, charges or expenses resulting from the transaction; and possible disputes relating to the transaction. These and other important factors discussed under the heading “Risk Factors” in MediaCo’s Annual Report on Form 10-K for the year ended December 31, 2023 filed with the SEC on April 1, 2024, as may be updated from time to time. from time to time in other filings that MediaCo makes with the SEC, may cause actual results to differ materially from those indicated by the forward-looking statements made in this release.

These statements reflect management’s current expectations regarding future events and operating performance and speak only as of the date of this release. You should not place undue reliance on any forward-looking statements. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee that future results, levels of activity, performance, events and circumstances reflected in the forward-looking statements will be achieved or will occur. Except as required by law, we undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, after the date on which the statements are made or to reflect the occurrence of unanticipated events. .

The original language text of this announcement is the official authorized version. Translations are provided as a facility only and must refer to the text in the original language, which is the only version of the text that has legal effect.


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