Televisa, Univision Deal Ushers in New Era


Rife with betrayal, relationships gone bad and court battles, the decades-long relationship between Mexican broadcaster Grupo Televisa and U.S. Spanish-language media firm Univision Communications has played out with all the melodrama found in their hit telenovelas.

But a deal unveiled Tuesday between the largest Spanish-language media firm in the world and the largest in the U.S. seems to put the legal wrangling solidly behind them, align their interests and signal a new era of collaboration.

Televisa will make its comeback as a Univision investor, paying $130 million to buy a 5 percent stake. Univision will issue new shares in the deal, which will slightly dilute the stakes of its current investors.

As part of an overall $1.2 billion investment, Televisa also will get the option to raise its stake to 10 percent after three years and hold debt that is convertible into an additional 30 percent stake in Univision. Current U.S. media-ownership rules, however, allow a foreign company to own only as much as 25 percent in a U.S. broadcaster.

Indebted Univision will get more financial freedom and extended and expanded programming rights, and Televisa gets higher royalty fees and a strengthened position in the U.S., the world's second-largest Hispanic market.

Markets seemed to love the happy turn, bidding up Televisa shares more than on any day in almost two years.

"I think there's a change [of attitude] and this reflects that," Santander analyst Gregorio Tomassi said from Mexico City. "It's a very intelligent deal."

The new program-license agreement that Univision gets from its largest content supplier will include Internet and mobile U.S. rights in addition to broadcast rights. The deal also will cover key Mexican soccer rights starting next year. It will run through at least 2020, or 2025 if certain conditions are met; their previous deal was set to expire in 2017.

The companies have been embroiled in long-running litigation over digital rights. Sources said Tuesday's deal effectively takes those issues off the table.

Under the expanded content arrangement, Televisa will get additional license-fee payments estimated at about $50 million in the first year.

Televisa also will contribute its 50 percent interest, valued at $55 million, in the two firms' cable network programming joint venture TuTV.

The investment is unusual in that it includes an equity and debt portion. And significantly, three Televisa representatives will join an expanded 20-member board of Univision.

Continue to next page →