Wall Street Dials In to TV-Radio Station Owner

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Why are investors tuning into Entravision Communications Corp.?

Mexico played well in the World Cup, so ratings rocketed. The company bought a digital advertising firm and then the Supreme Court made a ruling last week that favored broadcasters.

Those combined to make the Santa Monica Spanish-language radio and television station owner one of the biggest gainers on the LABJ Stock Index last week. Its share price went up 8.5 percent to $5.98 for the week ended June 25. (See page 64.) The stock rose above $6 the next day for the first time in two months.

The biggest boost came from Entravision’s purchase last week of Pulpo Media, a Berkeley digital advertising firm targeting the Hispanic audience. Entravision paid $15 million upfront and will pay up to $3 million more if Pulpo hits goals.

Analysts last week said the purchase complements Entravision’s 2012 launch of Luminar, a data analytics service focusing on the Hispanic market; Pulpo specializes in online ads.

“Together, both of these allow Entravision to offer advertisers more tools in targeting the Hispanic consumer market,” said analyst Tracy Young of Evercore Group in New York.

Young said this market is finally getting the big data focus long common in the mainstream market.

The purchase of Pulpo marks another step in what Entravison Chief Executive Walter F. Ulloa recently described as an ongoing evolution.

“We are continuing our transformation of Entravision from a pure-play broadcasting company into a global integrated media and technology company targeting Latino consumers,” Ulloa told analysts during the company’s first quarter earnings teleconference call last month.

Meanwhile, Entravision got a short-term boost from Mexico’s success in advancing in the World Cup.

“With increased radio and television audiences tuning in to the games, Entravision can charge higher ad rates for every game that Mexico plays,” Young said.

Shares of Entravision and most other broadcasters also got a jolt from last week’s Supreme Court ruling favoring broadcasters by forcing tech startup Aereo to pay broadcasters retransmission fees for carrying their signals over mini-antennas.

“The Aereo decision helps Entravision, which is supposed to collect $25 million in retransmission fees this year,” said Amy Yong, analyst with Macquarie Capital USA Inc. in New York.

Yong said a potential sale of Univision Communications of New York could also favor Entravision, which is the largest owner of Univision affiliate stations.

Yong said in a research note last week that if Univision is sold, the buyer could in turn buy Entravision. Or, Entravision could consolidate more affiliate stations. Should Univision’s owners turn to the IPO market, Yong said the company could then buy out its affiliates from Entravision.

“Either way, Entravision stands to benefit,” she said.