Can Argentine media giant La Nación breathe new life into the longtime Hispanic newspaper chain?
[Eduardo Lomanto, president of the group that now owns 90 percent of impreMedia]
When La Opinión and El Diario La Prensa, the biggest Spanish-language dailies in the United States, merged to form impreMedia at the end of 2003, its founders envisioned creating the premier Hispanic newspaper company in the country. In order to do so, the new company pursued a strategy of “deliberate but quick acquisitions in major markets,” recalls Monica Lozano, then publisher and CEO of La Opinión and one of the architects of the project.
Yet the buying spree, which included acquisition of Chicago’s La Raza, San Francisco’s El Mensajero and Texas’ struggling newspaper chain Rumbo, generated a heavy debt load—one that, combined with the impact of the economic recession, would end up putting impreMedia in financial straits. The company’s yearly revenue fell from $86 million in 2006 to an estimated $60 million by the end of this year.
Named CEO of impreMedia in 2010, Lozano, granddaughter of La Opinión founder Ignacio E. Lozano Sr., started searching for “the right investor” the following year.
“I was looking for someone who understood the business, was willing to invest real capital towards our growth strategy, would recognize the value of our brand, our long and deeply profound relationship with Hispanic market,” explains Lozano.
That investor turned out to be La Nación, and a deal was announced in March. La Nación’s newly created subsidiary, US Hispanic Media Inc. (USHM), acquired 90 percent of impreMedia. GE Capital and Goldman Sachs, the senior debt holders, kept the remaining 10 percent. That means the Lozano family, which had owned La Opinión for more than 85 years, no longer owns any stake. “My commitment to the company continues intact,” assures Lozano. “It’s about a personal sense of ownership, not whether you’re a shareholder or not.”
Lozano was kept on board as impreMedia’s CEO. Eduardo Lomanto, director of SA La Nación and president of USHM, oversees the overall vision and strategic decisions of the newly acquired company, and Francisco Seghezzo, former corporate planning director of SA La Nación, was named chief operating officer in charge of day-to-day operations.
One of the most traditional and well-respected newspapers in Latin America, the conservative La Nación had been looking to expand its portfolio to include assets in the United States.
“We had detected opportunities in the U.S. Hispanic market a long time ago,” says Lomanto. “When we learned impreMedia was looking for a buyer, we started the acquisition process.”
Of course, the challenges are enormous. “We’re still living in an economy that has yet to reactivate and we have to deal with an advertising market that has suffered its own economic setbacks,” Lomanto says. “We’re also witnessing a dramatic shift in the media paradigm, but we think we can succeed. We believe the Hispanic market will have greater growth than the rest.”
The USHM strategy
In May, Seghezzo, La Nación’s emissary, arrived at impreMedia’s New York headquarters and found a company that had cut staff, points of sale and circulation, ultimately hurting its reach and access to more advertiser dollars.
“The high debt load and the operating leverage of a high-risk business forced the company to make some adjustments that damaged some aspects of the business,” Seghezzo says.
At its height in 2007, La Opinión had a Monday-to-Friday average daily circulation of 125,000 and El Diario La Prensa 53,000. Today, La Opinión has only 70,000 in circulation, while El Diario La Prensa has a daily average of 40,000. The weeklies fared better. Their circulation has remained steady with the exception of Rumbo, which in 2010 was slashed from 100,000 to 50,000 a week.
“The good news,” says Seghezzo, “is that after the acquisition, the debt disappeared. Even though we’re in a declining industry, we think there’s still a wide margin to work with, especially in local or niche products targeting specific population segments.”
The acquisition wasn’t a crazy idea, even as many U.S. newspapers are suffering, because the Hispanic press is faring better than English-language media, according to a Pew Hispanic report. In 2010, Hispanic broadcast networks grew the size of their audiences, the number of newspapers remained stable, and papers lost fewer readers than the English press did, the report says.
But USHM will still have to run a tight ship. In June, the new owners eliminated some corporate management positions and divided the company into three units. The West unit now oversees La Opinión, La Opinión Contigo, El Mensajero and Rumbo. East will handle El Diario, La Raza, La Prensa and Vista magazine, while Digital will be responsible for all of the company’s digital businesses.
USHM is also betting heavy on digital—an area that has room for exponential growth, and where the Argentine company has a track record of success. ImpreMedia’s online properties currently have 2 million monthly visitors. The goal is to duplicate that traffic and generate more page views per visitor. To accomplish that, Seghezzo brought in Ivan Adaime from La Nación to overhaul the department. A redesign of the company’s websites is under way.
Both Lomanto and Seghezzo say there are no plans to bring more staff from Argentina and they plan to work with the current editorial team. “We value the local know-how and experience of the current team,” says Lomanto. “The challenge is to find the right balance between our talent and successful experience in print and digital strategies, and impreMedia’s knowledge of the local market.”
What the future holds
The USHM leadership says it aims to become a leading print and digital media company in the U.S., not only attracting Hispanic consumers, but also offering advertisers a medium through which to effectively reach this valuable target audience.
In the short term, Seghezzo says, the company will strengthen existing products to have a stronger value proposition for advertisers, focus on its digital properties and improve cash flow. In the mid-term, the plan is to attract more people to their products by increasing circulation of their dailies by at least 50 percent in the next two to three years.
Additionally, the company plans to develop new projects, including magazines. Long term, Seghezzo says they’ll keep a close eye on new trends to stay ahead of the curve, and will likely channel more news and ads through mobile technology, which is very influential among Latinos.
“Our biggest challenge is to build loyal audiences,” states Seghezzo. “We’re not saying it’ll be easy, but we’re very optimistic we can succeed.”