June 13, 2014
By Roger Yu
Univision Communications, the largest Hispanic media company in the U.S., may be up for sale.
Its private equity owners have held acquisition talks with several media companies, including CBS Corp. and Time Warner and want more than $20 billion for it, according to the Wall Street Journal, citing "people familiar with the matter."
Univision, which operates Univision Network, UniMas, Univision Deportes Network, 62 TV stations, 68 radio stations and Spanish-language digital properties, has been looking to issue shares publicly, possibly next year. But a sale to a larger media company would give its owners -- including Saban Capital's Haim Saban, Madison Dearborn Partners, Providence Equity Partners, TPG and Thomas H. Lee Partners -- a way to cash out after they bought it in 2007 for $13.7 billion.
With TV advertising spending still on the upswing, the New York-based company's revenue rose 10.5% to $621.1 million for the first quarter that ended on March 31.
Univision's owners also considered selling to Mexican media company Grupo Televisa, the WSJ report said. The Federal Communications Commission allows foreign companies to own U.S. broadcast networks, but any purchase involving a stake that exceeds 25% must be reviewed on a case-by-case basis.
In 2010, Televisa invested $1.2 billion in Univision for a 5% stake and a content licensing deal to distribute Spanish-language soap opera dramas in the U.S. That Televisa is interested in raising its stake has been speculated for years since the Mexican company also received rights to convert debt into an additional 30% stake.
As programming costs and the fees programmers demand for content rise, media companies are looking to consolidate to capture savings and efficiency derived from running larger operations.
Earlier this month, reports surfaced that Time Warner is interested in paying $2 billion to buy Vice Media and integrate operations with its HLN cable news network.
If Univision is acquired by a larger media programmer, it would also theoretically boost its bargaining power in content licensing and distribution terms against pay-TV operators that are seeking to acquire competitors.
Earlier this year, AT&T agreed to buy DirecTV for $48.5 billion. Comcast has a deal to buy Time Warner Cable for $45 billion.
In April, Univision CEO Randy Falco warned against the potential dangers of creating giant cable companies that can disrupt programmers. The Comcast deal "could be bad for competition and most importantly bad for Hispanic audiences," he said.
Comcast owns Univision's chief competitor, Telemundo, and the post-merger Comcast would be the top pay-TV service provider in 19 of the top 20 Hispanic markets in the U.S., he noted.
"The risk of this merger really is not hypothetical, especially for providers like us who offer networks and services that compete with NBC, Telemundo and even NBC Sports," he said.
Source: USA Today