Chancellor Media to Buy Half of Mexico’s Largest Radio Group

Chancellor Media Corp., the nation’s second-largest radio company, is acquiring its first foothold in Mexico with the purchase of a 50% stake in its largest radio broadcaster, Grupo Radio Centro, for $237 million.

The deal announced Friday came two days after Chancellor’s leading shareholder, investment firm Hicks, Muse, Tate & Furst Inc., had said it will combine Chancellor with LIN Television Corp. in a $1.67-billion transaction to build a U.S. radio and television empire.

Chancellor plans to pay $81.5 million in cash to the Aguirre family trust, which controls Radio Centro, plus $39 million in cash to the company, and will issue shares worth $116.5 million for the rest of the stake.

For Dallas-based Hicks Muse, the purchase would mark its first entry into Mexico, following purchases in Argentina, Chile and Venezuela. The deal follows a pattern in which Hicks Muse provides the financial muscle and local operators the know-how to expand in the region.

Because of Mexican laws governing foreign investment, Chancellor will hold its stake through trusts. The Aguirre family will keep control of Radio Centro, and Adrian Aguirre will remain president and chief executive.

The purchase of Radio Centro, a nationwide broadcaster with about a 38% share of Mexico City’s radio market, should boost Chancellor’s revenue and combine the two companies’ efforts to muscle in on the booming Latino market in the U.S.

Chancellor said in June it planned to pay $25 million for a 20% stake in Z Spanish Media Corp., which operates 22 radio stations in California, Texas and other states geared to the Hispanic market.

Radio Centro, which is affiliated with 90 stations in 57 Mexican cities, said earlier this year it was also eyeing points of entry into the U.S. Latino market.