The Estrella Media-MediaCo content operations will be led by interim CEO Jacqueline Hernández.
MediaCo Holding Inc., which operates urban radio stations HOT 97 and WBLS in New York City, has acquired Estrella Media's content, digital, and commercial operations. Those assets consist of the EstrellaTV network, its linear and digital video content business, four free ad-supported streaming television channels - EstrellaTV, Estrella News, Cine EstrellaTV, Estrella Games - and the EstrellaTV app. Commercial operations include the sales and distribution operations.
Rumors of a potential sale had been circulating for months, amid layoffs and the scrapping of new shows and talent announced in January, before their launch date.
With this acquisition, MediaCo aims to boost its position as a stronger radio content provider for both Spanish and Urban music across terrestrial radio and audio streaming platforms. It expects to extend its reach by tapping into into the established audiences of Estrella's leading Regional Mexican radio stations like Que Buena Los Angeles, home of the nationally syndicated morning radio show Don Cheto Al Aire, La Raza in Houston and Dallas, and El Norte in Houston.
The deal, which closed on April 17, 2024, allows Estrella Media to continue owning and operating its seven local TV stations and eight radio stations, while MediaCo provides the programming. MediaCo also gains an option to potentially acquire those local stations at a later time, pending regulatory approval.
Jacqueline Hernández, a former Telemundo COO and NBC executive, and a member of Estrella Media's board of directors since December 2019 (the same year MediaCo Holdings, Inc. was created), will lead the combined company as Interim CEO.
"We envision building a unique media company that caters to diverse U.S. audiences, delivering value to both consumers and marketers alike," stated Hernández. "This tested brand and talent combination will fuel multicultural content and distribution growth for our audiences."
The companies have yet to announce staffing, programming and transition plans. But at least one top executive - Enrique Guillén, Estrella Media's chief content officer - left prior to the closing of the deal.
Local Media Officer Steve Mandala and Chief Digital and Streaming Officer René Santaella will be presenting at the New Fronts in New York City on May 1, under the new ownership. That presentation will focus on Estrella TV digital content, now under the MediaCo umbrella.
"This is a natural next step in the evolution of Estrella Media’s content operations to better serve our important U.S. Hispanic audience," said Peter Markham, CEO of Estrella Media. "This transaction helps secure a bright and growing future for MediaCo to become the preeminent media company serving the multicultural audiences who drive ad spend ROI and brand growth."
Estrella Media, the Burbank, California-based company founded by José and Lenard Liberman in 1987 as Liberman Broadcasting, later known as LBI Media, navigated a series of problems, including a sexual harassment scandal, and financial woes that led to a $530 billion-dollar debt it was unable to overcome. LBI Media filed for bankruptcy in 2018, with co-founder and CEO Lenard Liberman, exiting following the company's reorganization. First lien lender HPS Investment Partners, LLC took full control of LBI Media, rebranding the company to Estrella Media and placing Markham at the helm in early 2020.
The rebranded company brought in experienced executives to boost its TV and digital footprint, hiring former Sony and Disney executive René Santaella to overhaul the company’s digital division later that year, who helped launch a 24/7 digital news channel. It also tapped former Univision sales chief Steve Mandala in 2021. A year later, it added former NBCU Telemundo exec Enrique Guillén to oversee the U.S. domestic and global content strategy for television, streaming, audio and digital.
The company pushed forward with a stronger focus on original entertainment programming and digital initiatives and cutting back its news output, outsourcing news production to Mexico and executing layoffs.
As part of the transaction, executed through an Asset Purchase Agreement, Estrella Broadcasting, Inc. received a warrant for 28.2M newly issued shares of MediaCo Class A common stock, $60M in Series B preferred stock, a $30M second lien term note, and approximately$30M cash. There's an option to later acquire local Estrella stations for 7M more MediaCo Class A common shares.
