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Mexico's Grupo Televisa Invests $1.2 Billion in Univision

Deal Includes Minority Stake in U.S. Broadcaster; Resolves Digital Rights, Royalty Battles

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NEW YORK (AdAge.com) -- Mexico's Grupo Televisa is investing $1.2 billion in Univision Communications in a deal that will lead to a substantial minority stake in the U.S. Spanish-language media group and resolve years of legal battles over issues such as royalty payments and U.S. digital rights for the popular telenovelas and other TV shows Televisa supplies to Univision.

Under the agreement, Televisa's $1.2 billion investment consists of contributing its 50% share in pay TV venture TuTV, in exchange for a 5% stake in Univision and debentures that can be converted to a further 30% share in the company in the future. In addition to that 35% stake, Televisa would have the option to acquire another 5% of Univision if U.S. laws were to change to permit a foreign company to buy more than 25% of a U.S. broadcaster.

Televisa previously owned an 11.4% stake in Univision but sold it after Univision rebuffed Televisa's bid to buy the company in 2007 and instead sold itself to a private-equity group for $13.7 billion.

Apparently friends again after years of suing each other, Televisa has conceded that Univision gets the exclusive U.S. Spanish-language digital rights to Televisa's programming. In July 2009, a Los Angeles court ruled that Televisa didn't have the U.S. digital rights to shows aired by Univision, but didn't explicitly grant Univision the right to put Televisa's shows online in the U.S. That led to a stalemate and behind-the-scenes negotiations.

The long-term programming agreement that provides most of Univision's top-rated shows will also be extended from 2017 to 2020, and possibly 2025 and beyond, easing growing concerns about what would happen if Univision lost viewers' and advertisers' favorite shows in a few years.

And Televisa will get a substantial boost in royalty payments, another issue that has caused years of litigation. In payment for the digital rights and longer programming agreement, Univision's royalty payments to Televisa will go up from 9.35% of TV revenue now to 11.91% through December 2017, and jump to 16.22% after that. Televisa will also get an additional 2% of Univision revenue above the 2009 revenue base of $1.6 billion.

Televisa will also get three seats on Univision's board of directors.

"The U.S. marketplace is of paramount importance to Televisa's strategy of expanding our reach beyond Mexico and maintaining our leadership as the leading media company in the Spanish-speaking world," said Televisa Exec VP Alfonso de Angoitia in a statement.

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