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Grupo Televisa, Univision Communications in billion-dollar dealOct 06, 2010 (The Miami Herald - McClatchy-Tribune Information Services via COMTEX) -- Coming soon to a smartphone or iPad near you: the sultry antics of popular Mexican telenovelas that have been limited to old-fashioned television screens, thanks to a new deal announced Tuesday by Spanish-language media giants Grupo Televisa and Univision Communications. Under the terms of the deal, Mexico City-based Televisa will invest $1.2 billion in Univision in exchange for a minority ownership stake in the company. The deal brings an end to long-standing legal disputes between the companies, recently over privately held Univision's rights to distribute Televisa's programs online and to phones. "The real take-away from this announcement is that both Univision and Televisa are going to be able to unlock a tremendous amount of value that was locked up in a situation where neither party could take advantage," said Cesar Conde, president of Univision Networks. "Jointly, we're going to be able to go capitalize on this huge opportunity in this fast-growing Spanish-language media space together." According to census figures, there were 48.4 million people of Hispanic origin living in the U.S. as of July 2009, making up 16 percent of the country's total population. Hispanics also were the nation's largest and fastest-growing minority group. Adam Jacobson, a Miami Beach-based Hispanic market media specialist, said the agreement gives Univision a better opportunity to serve an audience that is already comfortable with the latest mobile technology. "If they can move forward and capture that audience in a meaningful way, this deal will pay for itself," Jacobson said. It also helps Televisa strengthen its foothold in the United States, an important market as the company works to widen its reach beyond Mexico. "It's a very logical, rational, unemotional deal that has great value for both companies," said Julio Rumbaut, a Miami-based media company advisor. The deal extends New York-based Univision's rights to broadcast shows made by Televisa -- which were set to expire in 2017 -- to 2025 if certain conditions are met. Televisa will get higher royalty payments from Univision in exchange. Said Jacobson: "They just bought themselves 15 years to develop the next generation of Hispanic programming." The deal also gives Univision the U.S. rights to broadcast Mexican soccer games for which Televisa owns or controls the U.S. rights, beginning with some teams next year and expanding to all teams to which Televisa has the rights in 2012. Jose Cancela, founder of marketing and consulting for Hispanic USA and a former Univision executive, said both companies will benefit. "The winners here are Televisa, who now gets a big hold into a company it has always given a lot of value to but has never been able to recoup that value," he said. "Univision is a winner because they walk away with a contract extension which is critical to them." Televisa is known for its prime-time soap operas called telenovelas. It's a genre Cancela likened to both "steak" and "bread and butter." Univision can choose the programs it will distribute in the United States according to what has been popular in Mexico. "The programming Televisa provides them is like having the ability to have a crystal ball and see what is successful," Cancela said. The contract extension also takes Televisa off the table for other networks that might have been eyeing it for partnership after 2017. As part of the deal, Televisa will contribute its 50 percent stake in its TuTV joint venture with Univision. In exchange, it will get a 5 percent stake in Univision, as well as debt that could be converted into another 30 percent stake in the future. It will also have the option to buy another 5 percent stake in Univision, bringing the total to a possible 40 percent stake. That would, however, require a change in U.S. law to allow a foreign company to own more than 25 percent of a U.S. broadcaster. Last month, Univision hit a ratings milestone when it became the most popular network among U.S. viewers aged 18 to 49 in the first week of September, according to Nielsen. It was the first time a Spanish-language TV station beat out English-language programs in this important demographic. This report was supplemented with information from The Associated Press. To see more of The Miami Herald or to subscribe to the newspaper, go to http://www.herald.com. Copyright (c) 2010, The Miami Herald Distributed by McClatchy-Tribune Information Services. For more information about the content services offered by McClatchy-Tribune Information Services (MCT), visit www.mctinfoservices.com, e-mail [email protected], or call 866-280-5210 (outside the United States, call +1 312-222-4544). |