Rumbo Newspapers Seek New Funding After Major Investor Drops Out

By: Nancy Ayala, Marketing y Medios On Tuesday, Spanish-language newspaper chain Rumbo acknowledged that Madrid-based Recoletos Grupo de Comunicaci?n would no longer fund its publisher, Meximerica Media.

But the Texas-based start-up, which launched in July, is already in negotiations with new investors that will be announced in two to three weeks, said Giovanna Rueda, vice president of marketing and circulation for Meximerica.

For now, Rumbo had to "temporarily" cut 30 support staff from its 165 employees and reduce the paper by "a few pages" for the expected transition to a new owner. "Right now, we have enough funding to continue," Rueda says. "[But] we are trying to be cautious to continue operations."

The start-up reportedly cost more than $16.5 million to launch. Spanish newspaper group Recoletos had an 80 percent stake in Meximerica, which, in turn, controls the remaining 20 percent. Rumbo Publisher Edward Schumacher Matos has been busy courting interested parties this week in the San Antonio headquarters. "There is a lot of interest," he says. He did not disclose company names, but he also said a deal would soon be announced.

Rumbo started from scratch, without support (circulation, printing, office space) from an existing newspaper. It launched in San Antonio and has since started papers in Houston, the Rio Grande Valley, and Austin. Rumbo makes one-purchase, regional buys to car dealerships, supermarkets, airlines, and Western Union among others, Rueda says.

Plans for more newspapers launches remain on the table, even during talks with potential new owners. "All the negotiations so far have shown that this business is lucrative. The idea of expansion will continue to be important," she says.

Rueda emphasized that the dissolution with Recoletos will not have a direct impact on the business model of the Rumbo papers. "We're on budget, we're increasing our advertising sales tremendously, and we have brought journalism to a higher level," she says. What is going on with Recoletos is "unfortunate timing."

"Right now, we have different interested companies, and all of them happen to be [U.S.-based]," she says.