MIAMI — The nation’s largest minority-certified Hispanic multimedia and entertainment company has filed a lawsuit against a Texas entrepreneur who agreed to expand his website to broadcast television through the acquisition of Mega TV, only to fail to meet its payment obligations, resulting in the deal’s dissolution.
Spanish Broadcasting System (SBS) on October 10 filed a lawsuit in Miami-Dade County Circuit Court related to the contemplated sale of its Mega TV television network and other related assets to the Orlando Salazar-led Voz Media.
As RBR+TVBR reported, Voz on February 9 agreed to buy Mega TV from SBS for $64 million. However, on August 21 SBS sent a letter to Voz declaring a material breach of the parties’ agreement due to Voz’s failure to timely close on the transaction. After Voz failed to cure its breach, SBS terminated the agreement on September 20.
In the complaint, SBS alleges that Voz breached the parties’ agreement by, among other things, failing to timely close. SBS also alleges that various individuals – namely Salazar; his wife, Janet McClaren Salazar; Pablo Kleinman; and Ryan Morfin – all conspired to
defraud SBS in connection with the failed transaction, the company asserts.
In particular, McClaren Salazar and her family’s “multibillion dollar business and powerful political connections” were cited in the lawsuit. “Morfin, for example, repeatedly advised SBS’s Chief Financial Officer that Salazar had unfettered access to McClaren Salazar’s ‘billion-dollar JP Morgan cash accounts,” SBS argues. Yet, the funds were not present for the deal to close.
SBS takes it a step further, providing the court with the accusation that at no point did Salazar or Voz intend to close the transaction at the agreed purchase price. A counter-offer emerged, with SBS revealing in court documents that, “after months of unjustifiable and continuing delays,” Voz Media “outrageously attempted to use Mega TV’s weakened condition as leverage to reduce the purchase price from $64 million to $38 million.”
SBS says it seeks to recover monetary damages as well as its attorneys’ fees and costs.
Representing SBS is a Pryor Cashman team led by veteran James Sammataro, who submitted to the court a 190-page filing.
The news that Salazar and his Voz Media planned to purchase SBS’s 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.
On February 10, a $3.8 million deposit was wired to SBS. It came from not Voz, but from “JMS Conveyance,” presumably an acronym from McClaren Salazar.
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 the SBS corporate team seeks legal resolution of a deal that came with promise, but is ultimately unfulfilled.
“Through their scheme, [the] defendants have damaged SBS’s sterling reputation developed over 40 years as one of the last remaining Hispanic-owned broadcasters serving
Hispanic audiences throughout the United States,” SBS concludes.
