Banking on Univision: Paying Down the Debt

What the Spanish-Language Network Is Doing Right

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NEW YORK (AdAge.com) -- When five private equity companies won the bidding to buy Univision Communications for $12.1 billion in March 2007, no one imagined the financial turmoil that lay ahead.

Univision
Now, Univision is worth about $5.4 billion, a 55% decline in less than three years, according to an estimate from Fitch Ratings.

The financial-credit-rating firm recently released a report predicting that companies such as Univision that financed highly-leveraged deals at the top of the market will be competing to refinance, in tough credit markets, more than $800 billion in debt maturing over the next five years.

Despite a deteriorating economy that has made it harder to pay down debt from cash flow or selling non-core assets, Univision is doing a lot of things right, according to Fitch.

The Spanish-language media company's litigation with its main program supplier, Mexican media giant Grupo Televisa, has ended, preserving a crucial programming agreement that runs until 2017. Univision cut deals with cable and satellite companies this year to collect over $125 million in annual re-transmission fees, has slashed costs, and is likely to save more than $100 million a year as interest rates decline.

But with $8 billion due in 2014, Univision will have a tough time extending or refinancing debt if there isn't a programming agreement with Televisa stretching beyond 2017 in place, said Fitch Senior Director Jamie Rizzo. "That's the biggest roadblock. But they've got a lot of runway."

"Univision is in a position of financial strength given our expected year-over-year growth in upfront sales and new revenue streams," said a Univision spokesperson. "We have strong relationships with all of our programming partners including Televisa, which we look forward to continuing until 2017 and beyond."

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