LBI Media Files for Bankruptcy

LBI Media Inc., the nation’s largest private minority-owned Spanish language TV and radio broadcaster filed for bankruptcy Wednesday, blaming its woes on competition from digital media platforms and a heavy debt load.

According to The Wall Street Journal, the Burbank, Calif.-based company has also faced legal challenges from a group of the company’s second lien bondholders, led by Caspian Capital LP, who sued to stop the broadcaster’s move to restructure its debt via an out-of-court deal with senior lender HPS Investment Partners, according to a filing in U.S. Bankruptcy Court in Wilmington, Del.

“In recent years, the growing Hispanic population in the United States and expansion of LBI’s EstrellaTV network have provided a significant growth opportunity for the company,” said Chief Financial Officer Brian Kei in court documents. Despite these opportunities, LBI faced the same “market pressures” as the rest of the TV and radio industry, including the “diversion of advertising spending to digital media,” Mr. Kei said.

LBI Media was founded in 1987 by Lenard Liberman, chief executive officer of the company, and his father Jose Liberman, both immigrants from Mexico. The company roots go back to the purchase of two unprofitable radio stations, which the Libermans converted to Spanish-language format. After replicating that strategy around the country, LBI now has TV and radio stations in most cities — including Los Angeles, Dallas New York — with big Spanish-language audiences. LBI also produces its own programing and operates a TV studio in Burbank.

Like other radio and TV broadcasters, LBI’s advertising revenues took a big hit during the 2008 financial crisis and never recovered. LBI’s earnings reached a peak of $48 million in 2006 but fell to $19 million by 2012. Last year the company brought in $31 million — well short of the company’s $47 million annual interest burden, according to court filings.