MIAMI — It’s been a difficult September for Spanish Broadcasting System, the Hispanic-focused media company led by Raúl Alarcón Jr.
First, Hurricane Irma put SBS’s South Florida stations to the test. Then, Hurricane Maria stormed through Puerto Rico, creating havoc and destruction. As of Friday morning, two SBS FM stations are the only ones able to broadcast.
In the middle of all of this came a notice from OTC Markets that SBS’s market capitalization no longer meets its minimum standards.
On Sept. 15, with power still knocked out for much of Miami-Dade County’s southern half and access to the Florida Keys, where SBS operates WMFM-FM 107.9 in Key West as a simulcast partner of WXDJ-FM “El Zol 106.7,” minimal, SBS received written notice from OTC Markets advising that its market capitalization had dipped below $5 million for more than 30 consecutive calendar days, and that it no longer met the standards for continued qualification for the OTCQX Best Market (U.S. Tier).
What’s the fix? SBS has a “cure period” of 180 days to regain compliance, and the minimum criteria must be met for 10 consecutive trading days.
The 180-calendar day grace period expires March 14, 2018.
What happens if SBS fails to bring its market capitalization up to OTCQX’s minimum standards?
SBS has the option to move its Class A common stock from OTCQX to the OTCQB Venture Market. If SBS management declines, then SBS’s Class A shares will shift to the OTC Pink market.
The OTCQX Best Market is for “established investor-focused U.S. and global companies,” OTC Markets explains. To qualify, a company must meet high financial standards, follow best practice corporate governance, demonstrate compliance with U.S. securities laws, and have a professional third-party sponsor introduction. “The companies found on OTCQX are distinguished by the integrity of their operations and diligence with which they convey their qualifications,” OTC Markets says.
The OTCQB Venture Market may not be the best fit for long-established SBS. OTC Markets defines this trading venue as a home “for entrepreneurial and development stage U.S. and international companies that are unable to qualify for OTCQX. To be eligible, companies must be current in their reporting and undergo an annual verification and management certification process.”
Thus, OTC Pink could be in SBS’s future. What does that mean? Volatility.
“The Pink Open Market offers trading in a wide spectrum of securities through any broker,” OTC Markets says. “With no minimum financial standards, this market includes foreign companies that limit their disclosure, penny stocks and shells, as well as distressed, delinquent, and dark companies not willing or able to provide adequate information to investors. As Pink requires the least in terms of company disclosure, investors are strongly advised to proceed with caution and thoroughly research companies before making any investment decisions.”
Should SBS stock shift to OTC Pink, it would be in good company: iHeartMedia is trading its “stub” of publicly traded shares on OTC Pink.
Trading has all but halted for “SBSAA” shares since 9:45am Tuesday, as Puerto Rico prepared for Hurricane Maria. Today, nearly all of the U.S. territory remains without power, while crews move to install temporary cellular phone service towers as concerns over the longevity of generator power now surface.
SOLITARY VOCES IN PUERTO RICO
For SBS, Class B Spanish Hot Talker and Latin Pop WMEG-FM 106.9 “La Mega”, licensed to Guayama, and Class B Latin Rhythmic WODA-FM 94.7 “La Nueva”, licensed to Bayamon, are not only the lone stations owned by the company on the air in Puerto Rico, but at last report the only FMs to be broadcasting across the island.
Company executives tell RBR+TVBR that both WMEG and WODA have been powered by generators, engaging as best as possible through social media.
SBS’s silent stations include Class B Classic Tropical WZNT-FM 93.7 “Z93,” one of the most popular stations in Puerto Rico for older listeners, and Class B Spanish AC WRXD-FM 96.5 “Estereotempo.”
None of SBS/Puerto Rico’s streaming audio was functional as of 10am Eastern Friday.
Additionally, a scan of streaming audio for all Puerto Rico stations late Thursday yielded just two AMs — one aired what appeared to be pre-recorded programming, while the second was airing classic salsa music.
Meanwhile, the fate of Puerto Rico’s TV stations is not certain. WAPA-4, owned by Hemisphere Media Group, had been offering a live stream but it is geotargeted only to Puerto Rico.
NBCUniversal-owned Telemundo Puerto Rico has been offering continuous post-storm coverage with limited graphics and a single camera shot over its WKAQ-2. It is live streaming and on Thursday evening was using Facebook Live to bring its coverage to viewers.
At Univision Puerto Rico, significant damage to both WKAQ-AM 580 and FM 104.7 was seen, as reported by the Miami Herald. The facility is also home to Univision O&O WLII-11. As of 7am WKAQ-AM was offering its programming in full via a Facebook Live stream; alternate studios are being used. Twitter updates are also being offered.
However, with much of the island either on generator power or in the dark, internet-delivered audio and video updates are largely to the benefit of Puerto Ricans in such locales as Florida and New York, who crave information from their homeland.
Back in San Juan, it is SBS that’s delivering it to those in need — via two FM signals still on the air.
SPECIAL DELIVERY
There’s another kind of delivery that’s about to unfold in Puerto Rico, and this one involves the top leaders at SBS.
The company is flying a senior management group comprised of Alarcón, CFO Joe Garcia, COO Albert Rodriguez, EVP/Programming & Multiplatform Coordinator Jesus Salas, and SVP/Operations Alex Alemán to Puerto Rico to assist in the recovery.
Additionally, it has linked up with the San Juan-based Royal Caribbean Adventure of the Seas in bringing a shipment of as much as 100,000 pounds of food and supplies raised by SBS and its radio and TV audiences through a fundraising effort already underway. The cruise ship will depart Port Everglades in Fort Lauderdale to San Juan, where the port has been deemed operational, following the relief effort’s conclusion tomorrow (9/23) at midnight.
SBS’s two New York FMs, WSKQ-FM “Mega 97.9,” and WPAT-FM 93.1 “Amor,” are engaged in their own Puerto Rico relief efforts.
