NEW YORK & LOS ANGELES—MediaCo Holding Inc. has announced that it has acquired all of Estrella Media’s network, content, digital, and commercial operations. Estrella will continue to own its TV and radio stations but MediaCo has acquired an option to buy them at a future date.
The Estrella Media brands joining MediaCo include the EstrellaTV network and linear and digital video content business, and Estrella Media’s digital channels, including its four FAST channels – EstrellaTV, Estrella News, Cine EstrellaTV, and Estrella Games – and the EstrellaTV app.
The transaction closed on April 17, 2024.
MediaCo, which operates urban radio stations HOT 97 and WBLS 107.5 in New York City, will be adding Estrella Media’s Spanish-language video, audio, and digital content operations under the same umbrella.
The companies reported that this transaction will also allow MediaCo to reach the audiences of Estrella Media’s market-leading Regional Mexican radio stations, including Que Buena Los Angeles, home of the Don Cheto Al Aire nationally syndicated morning radio show, La Raza in Houston and Dallas, and El Norte in Houston.
As a result of the deal, the combined footprint of MediaCo in both terrestrial radio and audio streaming will allow it to reach almost one third of the U.S. population.
Jacqueline Hernández, will lead the company as the Interim CEO. Hernandez, who most recently served as CEO and founder of New Majority Ready, a multicultural marketing and content strategy firm, has previously held the position of COO at Telemundo, as well as CMO at NBCUniversal Hispanic Enterprises, and recently served as a board member of Estrella Media.
“This combination of tested media brands and talented teams will fuel growth of content and distribution for the benefit of our multicultural audiences,” said 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, chair of MediaCo. “We are committed to representing and serving the Hispanic marketplace, as well as continuing to represent and grow the diverse audience that MediaCo already serves. We see a need for media brands to embrace opportunities with all audiences, and Estrella Media is a key part of our growth strategy.”
“Today marks the beginning of an exciting journey for MediaCo,” said Kudjo Sogadzi, current president and COO of MediaCo. “As we embark on this next chapter, we see a great opportunity to combine our strengths and capabilities to redefine how we deliver media to our diverse audiences.”
“This is a natural next step in the evolution of Estrella Media’s content operations to better serve our important U.S. Hispanic audience,” said Peter Markham, CEO of Estrella Media. “This transaction helps secure a bright and growing future for MediaCo to become the preeminent media company serving the multicultural audiences who drive ad 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 provides the programming and content to which their audiences have grown accustomed. MediaCo will also work to increase distribution with other broadcast partners, as well as to grow digital streaming, CTV, and AVOD assets.
In addition, MediaCo has received an option to acquire its stations from Estrella Broadcasting at a future date, subject to receipt of necessary regulatory approval.
As consideration in the transaction, Estrella Broadcasting is receiving a warrant to purchase up to a total 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 of newly issued shares of MediaCo Series B Preferred Stock that will accrue dividends at a rate of 6.0% per annum; a $30 million second lien term note with a five-year term and an interest rate of SOFR + 6.0% per annum; and approximately $30 million in cash. In connection with the exercise of the local radio and television stations option, 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 facility to MediaCo in connection with the transaction, $35 million of which has been drawn at closing. In connection with the transaction, three designees of Estrella Broadcasting were added to the Board of Directors of MediaCo. The transaction was approved by the boards of directors of MediaCo and Estrella Broadcasting.
