Spanish Broadcasting System (SBSA ), No. 2 in revenues among Spanish-language radio outfits, may have buyers dialing its number -- now that Univision's proposed purchase of Hispanic Broadcasting (HSP ) is expected to get a government thumbs-up soon. SBSA and Hispanic were quietly talking merger last year -- before Univision came along to buy Hispanic in June, 2002. SBSA tried to block the deal but failed. And two years ago, Telemundo, also big in Spanish radio, wanted Miami-based SBSA -- until NBC (GE ) snatched Telemundo away.

Now, with Univision-Hispanic set to be No. 1, Telemundo and Viacom (VIA ) are expected to go after SBSA to compete with the combo powerhouse, says David Joyce of investment bank Guzman. NBC won't let Telemundo fall behind, and surely Viacom will want its Infinity Broadcasting unit, which operates 185 stations, to prevail in the fast-growing Spanish market, he adds. SBSA owns 23 radio stations in big cities -- including Los Angeles, New York, Miami, and Chicago -- that reach about 51% of the Hispanic population, notes Joyce.

To go after SBSA, suitors will have to win over CEO Raúl Alarcón Jr., who has 86% voting control. Joyce thinks Alarcón may go for a deal at 20 a share. Based on cash flow, the stock, which has run up from 5 in early March to 8.23 on Sept. 10, is worth 13, figures Joyce. Kit Spring of securities outfit Stifel Nicolaus, which did banking for SBSA, rates the stock a buy. Spring sees cash flow of $46 million in 2003 and $59 million in 2004, and forecasts earnings of 9 cents a share in 2003 and 19 cents in 2004, vs. a loss in 2002. SBSA declined comment.

Unless otherwise noted, neither the sources cited in Inside Wall Street nor their firms hold positions in the stocks under discussion. Similarly, they have no investment banking or other financial relationships with them.

By Gene G. Marcial

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