MediaCo Holding, which owns radio stations WQHT (Hot 97) and WBLS in New York, said it acquired Estrella Media’s Spanish-language video, audio and digital content operations.
MediaCo said former Telemundo executive Jacqueline Hernández was named interim CEO and will run the company with its new assets, which include the Estrella TV network, free ad-supported streaming television (FAST) channels Estrella TV, Estrella News, Cine Estrella TV and Estrella Games plus the Estrella TV app.
“This leverages the strengths of two great companies to build something new,” said veteran television executive 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.”
As part of the deal, Estrella Broadcasting is receiving a warrant to purchase up to $28.2 million shares of MediaCo Class A common stock, $60 million of newly-issued MediaCo Series B preferred stock paying 6% annually, a $30 million second-lien five-year note paying 6% and about $30 million in cash.
“This combination of tested media brands and talented teams will fuel growth of content and distribution for the benefit of our multicultural audiences,” Hernández said. “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.”
Estrella will continue to own and operate its local radio and television stations, with MediaCo.providing programming.
“This is a natural next step in the evolution of Estrella Media’s content operations to better serve our important U.S. Hispanic audience,” Estrella Media CEO Peter Markham said. “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.”
WhiteHawk Capital Partners provided a $45 million first-lien term loan facility to MediaCo in connection with the transaction, $35 million of which was drawn at closing.
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.
