Televisa and Univision Strengthen Ties

21 December 2001

Mexican broadcaster Grupo Televisa has forged a new deal with leading US Hispanic television group Univision Communications, bringing to a close months of bickering between the two.

Televisa will invest $375 million in its US counterpart, strengthening its equity stake from 6% to 15%. The Mexican group – whose chairman, Emilio Azcarraga Jean, becomes vice-chairman of Univision under the deal – will also sell its record label Fonovisa to its partner.

In addition, Televisa ups the proportion of Univision’s ad revenue it receives from 9% to 12% – previously a major sticking point between the two. Hurt by slowing ad income at home, Televisa complained that its share of advertising revenues was too small given that it supplies around 40% of the US group’s programming. Contractually unable to negotiate with anyone else in the US, the Mexican broadcaster was also eager to increase its equity stake and the licensing fee it is paid.

Univision denied Televisa’s requests, and turned to Colombian and Venezuelan broadcast groups to find programming for its new network Telefutura, due to launch in January. However, eager to secure the Mexican firm’s popular soap operas, Univision relented, and has now gained exclusive rights to put Televisa’s widely watched content on Telefutura.

The American broadcaster’s desire to guarantee access to such fare may reflect heightened anxiety about competition following the takeover of number two Hispanic network Telemundo by NBC [WAMN: 12-Oct-01]. The merger also led to speculation that Univision itself would be a target for acquisition, though the new agreement with Televisa, say analysts, shows it prefers an independent growth strategy.

In a separate deal, Venezuelan firm Venevision increased its stake in Univision from 18% to 19%, in return for programming for Telefutura.

News source: Wall Street Journal