Hispanic media firm plans IPO.

Liberman Broadcasting Corp., a Spanish-language media company based in Burbank, has filed an initial public offering, hoping to raise $184 million to pay off debt and expand its radio and television properties.

The move comes as IPO activity in all business sectors picks up dramatically, and Hispanic media, once a broadcast niche, increasingly gain mass market stature.

"If it succeeds it will demonstrate one more time that serious money continues to flow into the Hispanic space," said Hector Orci, co-chairman of La Agencia de Orci & Asociados, a Los Angeles-based Hispanic advertising agency. "I'm really tickled that they're doing this, because they're going to prove the case one more time."

Terms and timing of the IPO have not yet been determined, and Liberman officials were unable to comment on their plans because of a so-called "quiet period," required until the stock begins trading, likely to be sometime in the next several months.

Liberman is one of a growing number of companies that are moving to take advantage of the improved outlook on Wall Street.

So far this year, 46 companies have filed their intention to go public, compared with 15 foraresame period last year, according to Thomson Financial.

Another 22 deals have gone off in the same period, twice as many as last year.

"The differences in the market last year versus this year are that we had the uncertainty of the economy conjoined with tears of the war, and it acted as a rocking chair on a garden hose," said David Menlow, president of IPOfinancial.com, an IPO research firm. "So the overall market psychology has improved, and that's why deals are coming more rapidly."

The last burst of IPO activity in the late 1990s was, by and large, an attempt by startups burning through vast sums of money to raise operating capital and keep their doors open, Menlow said. In contrast, the current rash of fliers tends to be revenue-producing companies seeking additional resources to pay off debt and expand further.

Aggressive strategy

Liberman, which owns a total of 16 Spanish language radio and television stations, has pursued an aggressive acquisition strategy designed to develop clusters of radio and television stations in the markets where it operates, amassing about $303 million in long-term debt, according to its prospectus.

In its IPO filing, the company said it earned $7.2 million in the first nine months ended Sept. 30, 2003, on revenues of $61.9 million. Based on its current trend, the company is expected to post a little more than $80 million in revenues for the full year, compared with $51.9 million in 2002.

Liberman, founded by a father and son team in 1987, has only posted a profit in one of the previous six years, but the company said that its nine-months earnings compare to a net loss of $15.6 million for the comparable period in 2002.

Liberman operates five Spanish-language radio stations and one television station in the Los Angeles area, including Que Buena, a contemporary regional Mexican music station that broadcasts on KBUE-FM (105.5), KBUA-FM and KEBN-FM, La Ranchera, with mariachi programming that broadcasts on KHJ-AM, and KRCA Channel 62, a local television station known for talk shows, local news and some reality-based programming.

Among the programming it produces at its own studio, Empire Burbank Studios, is Los Angeles al Dia, a live morning talk show, three local news shows, Buscando Amor, a dating show and El Shiny de Maria Laria, a talk show.

Mexican focus

The company, which employs about 419 workers, is far smaller than the major Spanish-language broadcasters, but it has garnered a strong local following.

In its filing, the company noted that its radio programming has been able to compete with its larger rivals, which include Univision Communications Inc., Entravision Communications Corp. and Spanish Broadcasting System Inc., by focusing its programming on Hispanics of Mexican heritage, a group that accounts for the vast majority of Latinos in the markets where Liberman operates.

"We believe our ability to produce locally targeted programming gives us an advantage over most other Spanish-language broadcasters that develop and distribute their programming on a national or regional basis," the company said in the report. "As a result, we have generally been able to achieve and maintain strong station ratings in our markets."

Last fall, the company ranked fourth in the top five Spanish language radio stations in Los Angeles, about 16 total stations, and it has fluctuated into the number one and number two spots over the past year, said David Joyce, senior equity analyst for cable and media companies at Guzman & Co. in Miami.

"They are definitely a solid competitor," said Joyce.

Getting noticed

Just as important, the Spanish-language sector has received growing attention from advertisers, a trend that is expected to continue.

In the fourth quarter, revenues at Univision, the largest Spanish-language broadcaster, increased by 11 percent while the overall radio industry posted a slight decrease in fourth quarter revenues, said Joyce. And as their numbers and their buying power increases. consumer spending by Hispanics is expected to grow at more than twice the rate of general market spending.

"The Spanish language broadcasting sector is the growth area in overall broadcasting," Joyce said.

In part as a result, shares in Univision have increased by nearly 60 percent over the past year, Entravision has seen a 33 percent increase in its share price and Spanish Broadcasting shams have nearly doubled.

"The competition is stronger because they are bigger players," said Orci, however Liberman is very competitive, and one of the things that happens in the Hispanic market, there's room for a lot more media than there already is."