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Grupo Radio Centro, S.A.B. de C.V. Message Board

  • belgarathca belgarathca Mar 3, 2004 4:41 PM Flag

    $21M award propesterous

    The arbitration proceedings related to a programming services agreement with Infored signed in 1998. Total operating income from 1998-2004 for the entire company is give or take $100M. Now according to the 10-K, the Monitor programme made up 30% of revenue, and we can make the loose assumption that it represented 30% of profits (although it would appear that Monitor was a low-margin programme for RC and probably represented 20% profits)

    So this is about $20-30M operatign income coming from the programme, and RC paid I think 14M upfront as part of the contract in 1998. I really dont see where the arbitrator found damages of $20M

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    • Doesn't seem to matter. If Mexican courts work anything like US courts, arbitration rulings are damn near final.

      --
      Dihi

      • 1 Reply to dihi228
      • Hmm arbitration took place at the International Chamber of Commerce and seems to have provided for a right of appeal since RC has manifested its intent to atatck the decision.

        I just don't see how the damages can be so damn high, if this were a civil suit with a jury I would assume that this is a just another case of unwarranted punitive damages, but this was awarded by arbitrators.

        It seems that the allegations against RC are 1) Failure to make payments under the agreement, and 2) hiring other anchors for the programme without consulting InfoRed beforehand

        I think that for all intents and purposes the second claim is irrelevant (cant see this fetching more than 1M) SO basically the case is about RC not paying its dues to InfoRed; does that mean that more revenues were attributable to the programme than has been reported over the past 6 years? To clarify, the way the agreement worked, RC had to pay monthly production fees based on the revenues derived from Monitor, this $21M award would mean that RC would have lied on the quantum of revenues derived from the programme.

        As I theorized earlier, $21M would represent the quasi totality of the income attributable to Monitor since 1998. I just cant reconcile these numbers with the claims made against RC.

        Only light in the horizon is that one of teh 3 arbitrators sitting on teh case had a dissenting view.

        Anyone have any insights?