MundoMax Shuts Down, Gets Sued

RCN’s troubled net, which went dark Nov. 30, at odds with Chicago affiliate
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Colombian media giant RCN’s foray into the world of U.S. Spanish-language television has ended just 18 months after it started, as broadcast network MundoMax ceased operations on Nov. 30.

MundoMax was born from the ashes of predecessor Hispanic-market offering MundoFox, which Fox International Channels launched in August 2012 and closed in late July 2015. The network’s end is the culmination of months of rumors and speculation regarding its financial health and whether or not it could make it to the end of 2016. Such talk heated up in October, when a second round of layoffs occurred.

Then, in early November, rival network Estrella TV announced that it had signed on two MundoMax affiliates — KGMC in Fresno, Calif., owned by Cocola Broadcasting; and a subchannel of WXCW in Fort Myers-Naples, Fla., owned by Sun Broadcasting.

Yet MundoMax management remained silent on the chatter until Nov. 22. That’s when a letter to “colleagues and friends” was distributed by MundoMax president and chief financial officer José Molina that addressed the months of discussions across the Hispanic media and advertising landscape by bluntly confirming that the end was near — very near.

“We are in the final stages of winding down our affiliate network,” Molina said.

MundoMax’s biggest West Coast affiliate, Meruelo Group’s KWHY in Los Angeles, will continue to air Spanish-language programming as an independent station.

MundoMax’s largest East Coast affiliate, Valorem S.A.’s WGEN in Miami, immediately switched to the Azteca América network. It’s a huge boost for Azteca, which previously saw its programming carried on WPMF-CD in Miami and reliant on Comcast for key DMA distribution.

As MundoFox, the network sought to carve out a niche with Spanish-language programming that veered from the telenovela-heavy fare found on the two biggest broadcast networks, Telemundo and Univisión.

Aside from the Family Feud-styled weeknight game show 100 Latinos Dijeron, MundoFox struggled to gain a sizable audience. Advertising then became a more difficult prospect, given the network’s low ratings.

RCN swept in during summer 2015 with high hopes, and aspirations that its tremendous success in Colombia could yield at least a niche leader in the U.S.

That proved to be more difficult than imagined, as a challenging advertising climate coupled with a huge shift in audience to Telemundo led MundoMax to look to Europe for new ways to attract an audience. Among the key programs that MundoMax offered in its final days were Turkish import Suleimán, El Gran Sultán and Greek soap opera Brousko, ebrios de amor.

While WGEN quickly resolved an immediate programming concern with a network transition that was relatively seamless, there could be a rocky road ahead for RCN and its former Chicago affiliate, WOCK-CD.

On Nov. 29, WOCK’s owner, KM LPTV Of Chicago-13, sued MundoMax and RCN’s U.S. subsidiary in U.S. District Court for the Central District of California for breach of contract, breach of covenant of good faith and fair dealing and false promise.

According to the WOCK owner, MundoMax agreed to be the station’s exclusive sales representative for national spot sales during a four-year term that began on Aug. 1, 2012, with MundoFox and continued until July 31, 2016, with MundoMax assuming responsibility for the agreement. Terms had the network paying the station at least $600,000 per year for national advertising sales revenue, with quarterly payments to KM LPTV Of Chicago-13 of $150,000.

The WOCK owner contends that quarterly payments ceased with the transition from MundoFox to MundoMax, and that it is owed a total $450,000, reflecting payments due on Nov. 1, 2015; May 30, 2016; and Aug. 30, 2016, respectively.

However, the claim may not hold up in court. KM LPTV is basing its case on a 2014 amended agreement approved by then-president Ibra Morales that would give WOCK “the difference between the actual national advertising sales revenue booked for such quarter and $150,000,” should the amount of revenue come in below $150,000. MundoMax booked $0 in national advertising sales revenue for the second, third and fourth quarters of the fourth year of the term.

The crux of the argument is whether “the difference” between $0 and $150,000 is indeed $150,000.

Meanwhile, KM LPTV also argues that MundoMax agreed to advance up to $150,000 per year for the second, third, and fourth years of the term to KM LPTV for marketing expenditures. KM LPTV documented and requested $37,500 for both the third and fourth quarters of the fourth year of the term. However, MundoMax failed to advance $75,000 to KM LPTV, it says.

With a jury trial requested by the plaintiff, KM LPTV addressed any questions regarding MundoMax’s obligations following MundoFox’s closure by noting that on or about July 28, 2015, RCN acquired the 50% of the network it didn’t own from Fox International Channels. Thus, MundoMax is liable for the contracts signed by MundoFox “because MundoMax is simply a new name for the same limited liability corporation,” the WOCK parent contended.

Also at issue is the compensation KM LPTV says is owed by MundoMax for airing its programming during the last three quarters of its affiliation agreement and for program promotion during the final two quarters of the pact.

“The reasonable value of broadcasting MundoMax programming on the station and the promotional work for these time periods is at least $525,000,” KM LPTV contended. 

KM LPTV Of Chicago-13 is represented by Belinda Vega and Gerard Fox of Los Angeles-based Gerard Fox Law.

MundoMax did not respond to repeated queries by Multichannel News.

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