Alarcon takes dissident in stride

Past quarterly conference calls at Spanish Broadcasting System have included some testy exchanges between CEO Raul Alarcon and investors who don't agree with some of his management decisions, but yesterday's call had none of that, despite the recent letter by an activist hedge fund, Discovery Group, demanding changes at the company (3/11/08 RBR #49). Alarcon did make mention of the letter in his comments, but he was quite gracious. "I want to briefly comment on the letter addressed to the SBS board of directors from investor Discovery Group, which suggested strategic alternatives. As with all shareholder inquiries, recommendations and suggestions, the board will properly consider this matter in due course and it would be inappropriate for me to comment further at this time, except to thank the Discovery Group for their attention and interest in the future of SBS," Alarcon said.

Q4 revenues were up 4% to 46.2 million at SBS. That was mostly due to the rapid growth of Mega TV, which is still in a start-up phase, where revenues shot up 80% to just over three million. Radio revenues were up 1% to 43 million, with national and barter sales up, but local sales down for the quarter. The company said the local radio shortfall was primarily in the Los Angeles, New York, Chicago and San Francisco markets, offset by a gain in the Miami market.

SBS is projecting that Q1 revenues will be down in the mid single digits, with radio doing worse than that, while TV is, according to Alarcon, "up significantly." Despite criticism, the CEO declared that launching the TV venture was the right thing to do and he said Mega TV will be profitable in well under five years.

RBR/TVBR observation: No, there was no reference to the mysterious media giant "XYZ" that Discovery Group says is interested in buying SBS for double the current stock price. Raul Alarcon has taken heat from investors before, particularly for launching Mega TV, so, while Discovery Group's tactics may have been a shock to company CEOs elsewhere, the hedge fund may not find Alarcon easily cowed. 

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