Los Angeles Times

Spanish-language media giants Univision and Televisa will merge.

- By Meg James

Univision Communicat­ions and Grupo Televisa plan to merge their entertainm­ent assets to create a powerful new Spanish-language media company with one foot in the United States and the other in Mexico.

The companies jointly announced the move late Tuesday, formalizin­g a process that began quietly after Univision came under new ownership late last year. The historic merger represents a dramatic retrenchme­nt for media scion Emilio Azcárraga Jean, whose family has long been among Mexico’s powerbroke­rs because of its ownership of Televisa and its vast media holdings.

The new entity, which will be known as Televisa-Univision, will be the world’s largest Spanish-language media company.

It will be managed by Univision Chief Executive Wade Davis, a former top Viacom executive who put together the investor group that purchased Univision late last year from a consortium of U.S. private equity firms. The Televisa deal is expected to close later this year.

The union is designed to position Televisa-Univision as a global force in streaming. “Looking at the overall market, there has never been a truly global Spanishlan­guage media company,” Davis said in an interview. “Even Televisa and Univision ... were relegated to their respective [geographic] regions, which is kind of breathtaki­ng when you think about the size of the global Spanish-language audience and marketplac­e.”

By parlaying Televisa’s worldwide name recognitio­n and enormous vault of Spanish-language programmin­g, Univision hopes to turbocharg­e its streaming efforts in the U.S. and Mexico — and abroad.

The deal borrows from the playbook of Walt Disney Co., which two years ago acquired much of Rupert Murdoch’s 21st Century Fox entertainm­ent holdings for $71 billion. Disney bet big to bulk up on programmin­g, and gain the majority stake in the Hulu streaming service, so it could take on Netf lix around the world.

The Televisa-Univision combinatio­n underscore­s pressures facing both companies.

In Mexico, Televisa has struggled to adapt to the streaming era and has lost some of its audience to Netflix. Although it produced more than 86,000 hours of content last year, its signature telenovela­s haven’t connected with young audiences as they did decades ago. Televisa does have valuable rights to sports and special events and produces news, movies, reality shows, children’s shows and educationa­l programmin­g.

Miami-based Univision, which has long relied heavily on Televisa’s low-cost telenovela­s to fill its prime-time schedule, also faces increased competitio­n from Telemundo, which is owned by NBCUnivers­al, as well as English-language channels, YouTube and streaming services.

Univision has long been tethered to Televisa through a long-term programmin­g rights agreement. The pact provided Univision access to inexpensiv­e shows from Mexico, giving the company little incentive to create its own scripted programmin­g. However, lacking the rights to its programmin­g became a liability for Univision in the streaming age.

Televisa, based in Mexico City, will retain 45% interest in the new entity.

“Combining with Univision has always been a dream for us. This has always been the ultimate goal, and we finally accomplish­ed it,” Televisa co-CEO Alfonso de Angoitia said in an interview. “It was the right moment, and the right people to do it with.”

During the 14 years Univision was controlled by Los Angeles billionair­e Haim Saban and other private equity investors, the company battled Televisa over the rights to the programmin­g and squandered its leadership position in the U.S. Spanish-language market after a failed foray into English-language programmin­g.

“The merger facilitate­s an effective move to streaming by combining content, production facilities, substantiv­e operationa­l cost savings and owned distributi­on outlets in the two largest Spanish-speaking markets in the world,” media consultant Julio Rumbaut said. “At the same time, it reinforces the strength of the traditiona­l media assets of both companies.”

Televisa said it would contribute its four broadcast TV channels, 27 pay-TV networks, Videocine movie studio and Blim TV subscripti­on video-on-demand service, as well as the iconic Televisa trademark.

Univision will add its Univision and UniMás broadcast networks, nine Spanish-language cable networks, 61 TV stations and 58 radio stations in the U.S. and Puerto Rico, along with its recently launched streaming service PrendeTV.

Televisa valued its assets at $4.8 billion.

Univision will pay Televisa $3 billion in cash and provide $750 million in Univision common equity and $750 million in Series B preferred equity.

The transactio­n was partially financed by a $1-billion investment series led by the SoftBank Latin America Fund with participat­ion from Google, Raine Group and Davis’ firm, ForgeLight, and $2.1 billion of debt commitment­s arranged by J.P. Morgan.

The combined company, which will be based in the U.S., is expected to produce revenue of about $4 billion a year and $1.6 billion in earnings before interest, taxes, depreciati­on and amortizati­on, De Angoitia said. The new firm will have about 13,000 employees and will continue to rely heavily on its production facilities in Mexico City.

Televisa will retain ownership of Izzi Telecom, Sky and other businesses and real estate associated with the Mexico production facilities. It will also maintain the Mexican government-issued broadcasti­ng licenses and its transmissi­on infrastruc­ture in Mexico.

When the deal is completed, the Azcárraga family will relinquish its controllin­g stake — but the family will gain a significan­t piece of a U.S.-based company. Emilio Azcárraga Jean’s grandfathe­r co-founded Univision 60 years ago with a single TV station in San Antonio, and his father built Televisa into an entertainm­ent and political juggernaut in Mexico.

“This strategic combinatio­n generates significan­t value for shareholde­rs of both companies and will allow us to more efficientl­y reach all Spanish-language audiences with more of our programmin­g,” Azcárraga Jean, executive chairman of the Televisa board of directors, said in a statement. “Together, Televisa-Univision can more aggressive­ly pursue innovation and growth through digital platforms as the industry continues to evolve.”

 ?? Scott Olson Getty Images ?? “COMBINING with Univision has always been a dream for us,” Televisa’s Alfonso de Angoitia said.
Scott Olson Getty Images “COMBINING with Univision has always been a dream for us,” Televisa’s Alfonso de Angoitia said.

Newspapers in English

Newspapers from United States