Discovery Group will urge stockholders to support its plan for change at Spanish Broadcasting

By Lisa Kerner

Charlotte, N.C., April 3 - Spanish Broadcasting System Inc. investors led by Discovery Equity Partners, LP and Discovery Group I, LLC, in an April 2 letter to the company's board or directors, said they will ask fellow stockholders to withhold their votes for the election of directors at the Spanish Broadcasting 2008 annual meeting, showing support for Discovery Group's recommendations to the company.

The letter was included as part of a schedule 13D filed with the Securities and Exchange Commission.

As previously reported, Discovery Group wants Spanish Broadcasting to form a special committee of independent directors to begin the process of evaluating three specific alternatives with the assistance of an investment bank. The alternatives are:

• A going-private transaction that would allow the company's controlling stockholder, Raul Alarcon Jr., to continue to run the company, after tendering for the public equity at a fair value;

• A sale of Spanish Broadcasting to a strategic party, which Discovery Group said would maximize value for all shareholders; or

• Keep the company public but adopt corporate governance practices including equal shareholder voting rights among all classes of stock and splitting the chairman and chief executive officer roles.

Discovery Group said it has been contacted by other Spanish Broadcasting shareholders who are in support of its recommendations.

The investor owns some 3.99 million shares, or 9.7%, of the Chicago-based media and entertainment company.

Discovery Group also demanded access to the company's stockholder lists for the purpose of contacting Spanish Broadcasting stockholders regarding the withholding of their votes at the annual meeting, according to the April 2 letter.

In February, Discovery Group detailed what it considered Spanish Broadcasting's "history of egregious mismanagement" that led to a collapse in the stock price from $20 at the initial public offering in 1999 to less than $2.

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