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Radio Unica gets new accent

Daily Deal, The - February 9, 2004

Byline: Richard Morgan

Spanish-language radio broadcaster Radio Unica Communications Corp. is expected to emerge from prepackaged bankruptcy today as a $150 million addition to Multicultural Radio Broadcasting Inc.

But the 13 stations New York-based MRBI is to acquire will soon give up their Spanish roots and, in a transformation inconceivable a few years ago, convert to Asian-language formats. Specifically, MRBI plans to sell air time on the acquired assets to sponsors in search of Asian dialects ranging from Mandarin and Cantonese to Korean and Vietnamese.

The broadcaster also produces its own Asian-language programming out of its New York studios. While some of this might run on MRBI's Korean-only station in Los Angeles, programming in other languages is often rotated across blocks of time at stations elsewhere.

The all-cash acquisition is for stations in such major cities as New York, Los Angeles, Chicago and Miami. It also delivers outlets in Sacramento and Fresno, Calif., Phoenix and Tucson, Ariz., and Houston, Dallas and San Antonio.

Privately held MRBI is already a leading ethnic media company, with 30 AM and FM radio stations covering ethnically diverse markets in the U.S. The additional stations from Miami-based Radio Unica, which filed a prepackaged Chapter 11 petition in the New York court on Oct. 31, will turn MRBI into the country's 18th-largest radio broadcaster.

PGP Capital Advisors of Los Angeles served as MRBI's M&A adviser on the all-cash deal. Its managing partner, Stewart M. Kim, readily acknowledged that most observers expected Radio Unica to be taken over by one of the Spanish-language consolidators that have been busily rolling up properties in recent years.

That MRBI walked off with the prize "shows what is now possible in the Asian-language market," Kim said. "What we are about to see in Asian-language media market is the same consolidation we saw in Spanish-language media market, which spawned billion-dollar companies."

Demographic trends give Kim's remarks credibility. MRBI's statistics show that Asians represent the fastest-growing group in the country, increasing in number by 69% from 1990 to 2000. That compares with a 54% population increase for Hispanics, 16% for African Americans and 5% for Caucasians.

Asians are also the best-educated, with 42% receiving college degrees (compared with 25% for the total U.S. population). What's more, MRBI noted that the population group, while diverse by language, is geographically concentrated: 65% reside in the five MRBI-defined markets of Chicago, Los Angeles-San Diego, New York, San Francisco-Sacramento and Washington, D.C.

These factors, according to Kim, make Asians "an advertiser's dream." Yet they've been virtually ignored by U.S. marketers, the Korean-born banker continued, for reasons he attributed to fragmentation in the Asian-language media market.

Kim, a former managing director of investment banking at Merrill Lynch & Co., estimated there are now 120 Asian media companies in the U.S. But most operate in just one city, he said, with ownership that rarely extends beyond one family.

Kim's PGP, which includes Bear, Stearns & Co. veteran James Kenefick a partner, has committed itself to serving this particular media community, focusing on middle-market businesses the boutique bank historically considers underserved and undiscovered. But Kim added that change was already under way: "With the acquisition of Radio Unica, our client is well ahead of the trend."

For Radio Unica, CIBC World Markets was financial adviser, while Gregory Milmoe and Marc Gerber from the New York office of Skadden, Arps, Slate, Meagher & Flom LLP provided bankruptcy counsel.

-- Terry Brennan contributed to this report.

COMPANY: Radio Unica Communications Corp.

COMPANY: Multicultural Radio Broadcasting Inc.

COMPANY: PGP Capital Advisors

www.TheDeal.com

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