After what the Miami-headquartered company calls its “careful consideration and a thorough review of the circumstances” surrounding the sale of its Mega TV operation to Voz Media, the transaction — agreed upon by both parties on February 9, 2023 — has been terminated by Spanish Broadcasting System (SBS).
The agreements were scrapped on Wednesday (9/20), five days after the deal, valued at $64 million, was scheduled to close.
SBS President/COO Albert Rodriguez tells RBR+TVBR that the company is refraining from commenting on the matter.
However, it is clear that EVP/General Counsel Richard Lara will be focusing his efforts on what’s next for Mega TV.
SBS outlines the abandonment of the Mega TV sale to Voz Media, led by Orlando Salazar, in a “Material Change Report” filed with the Securities & Exchange Commission.
In it, SBS explains that on August 21, the company founded 40 years ago by Raúl Alarcón Jr. served Voz with a written notice of material breach of the agreements.
Furthermore, Voz failed to timely respond to the Notice of Breach or otherwise cure the breach, SBS claims.
Then came the closing date of September 15. “Voz did not close the transaction, despite the contractual obligation to do so.”
This triggered the notice of termination of the transaction agreements, leaving SBS to reevaluate — and reinitiate — the sale of the television and real estate assets associated with Mega TV.
“We anticipate that this process will be completed in a timely and efficient manner, with the aim of identifying a suitable buyer who aligns with our objectives,” SBS said in the notice.
A NEW PATH FOR SALAZAR
On February 13, the news that Salazar and his Voz Media would be acquiring the Mega TV operation, put the U.S. Hispanic media consumer on notice that a Spanish-language equivalent to Newsmax was coming — if all went according to plan.
The $64 million deal included $28 million associated with real estate, and SBS agreeing to a lease-back arrangement for its Pablo Raúl Alarcón Media Center off of the Palmetto Expressway in Miami. The TV stations SBS agreed to part with include WSBS-22 in Key West (using digital channel 3); WSBS-CD 19 in Miami for $19 million; and $10 million MegaTV’s Puerto Rico trio of WTCV-18 in San Juan, WVEO-18 (digital channel 17) in Aguadilla, and WVOZ-18 (digital channel 36) in Ponce. The distribution agreement for the nationally distributed MegaTV channel found on DirecTV Channel 405 was also believed to be included in the asset purchase agreement.
Finally, $7 million in prepaid advertising to promote what was proposed to become “VOZ TV” for a four-year period starting September 15 was included in the deal terms.
Immediately after the agreements were filed for FCC regulatory approval, Salazar opened up about his plan for Mega TV, and why he believes the time is ripe to take the content on his website and place it in front of the cameras, in a RBR+TVBR InFOCUS Podcast.
Meanwhile, SBS agreed to acquire KROI-FM in Houston from Urban One, a spin-off transaction tied to that company’s purchase of Cox Media Group’s radio stations in the market. That transaction is valued at $7.5 million.
That deal, along with expenses associated with building out both WSUN-FM in Tampa-St. Petersburg and WPYO-FM in Orlando, fueled a Q2 2023 net loss of $8.55 million, widening from $2.58 million. Mega TV was already considered a discontinued operation.
Now that this is not the case, a possible restatement of Mega TV’s Q1 and/or Q2 2023 financials could transpire as Lara and the rest of the SBS corporate team seek legal resolution of a deal that came with promise, but is ultimately unfulfilled.
