Investor pressuring SBS to split


Attiva Capital is a significant shareholder of Spanish Broadcasting System, holding, along with its principal investors, about 9.3% of the publicly traded Class A shares of SBS. It is the latest shareholder to try to pressure the company to make major changes.

No matter how many Class A shares anyone owns, the overwhelming voting power at SBS is held by CEO Raul Alarcon with his Class B super-voting shares. He has resisted many past attempts by outside investors to change how he wants to run the company.

Attiva says in an SEC filing that it is in discussions with other SBS shareholders. It also may hold talks with the management and/or directors of SBS.

What Attiva wants is for SBS to spin-off its Mega TV and Mega Films operation and sell the majority stake to a bigger media company. According to Attiva a larger company would have “the financial resources, the content and distribution network required to make Mega TV & Films a successful franchise in the Hispanic market in US and Latin America.”

More specifically, Attiva is pushing a candidate to be that buyer. “In particular, a potential partnership with Time Warner and/or other media conglomerates should give Mega TV a competitive advantage over Comcast-owned Telemundo and Univision-Televisa. SBS should then use the proceeds to pay down debt, strengthen its balance sheet and eventually return some capital to its shareholders in the not so distant future. SBS should just keep a ‘strategic minority interest’ in Mega TV and Mega Films as it builds a multi-media platform thanks to its ‘core assets’ like radio, interactive music site, entertainment and events division which should be the integral part of SBS operations,” the investor said in its SEC filing.

“We also encourage the Board to improve Corporate Governance by separating the roles of Chairman and CEO and stay true to its motto ‘the largest publicly traded Hispanic-controlled media and entertainment company in the United states’ by running SBS as a public company and not as a ‘Raul Alarcon Company’ as it has advertised in some radio stations,” Attiva also said.

Attiva said it is encouraged that SBS has hired Lazard as its financial advisor. “We remain positive to the idea that recently hired Lazard (the banker) will be successful in convincing the Board and its Chairman and CEO about the right course of action as other investors in the past have not been able to do so. The banker should also convince SBS that it is in its best interest, as a ‘public company,’ to expand its Board by adding a new member that would represent the interest of minority investors (Class A Shareholders), in the same way that ‘Alarcon has championed minority ownership of the media as a guiding principle, in accordance with FCC´s historical commitment to ownership diversity,’ has SBS has expressed,” the filing concluded.

Attiva is a limited partnership incorporated in the British Virgin Islands. It is headed by David Tomasello, a Venezuelan citizen who is also Chairman of Commetasa, a Venezuelan company that does heavy metal work.

RBR-TVBR observation: Other SBS investors, including CBS, have butted heads with Raul Alarcon over the years about his management of the company. There was considerable objection to the whole idea of getting into television, although that is now the fastest-growing part of the company. At the end of the day, Alarcon has absolute voting control of the company. Attiva is likely to learn, as others have in the past, that Alarcon will follow his path for the company regardless of what anyone else wants.

Editor’s note: The conflict with Alarcon was during the period when Mel Karmazin was running CBS, not recently.