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Televisa Presses Forward With Suit Against Univision

Media Giant Also Says Recession Will Be Less Severe in Mexico's Ad Market Than in U.S.

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NEW YORK ( -- Mexican media giant Grupo Televisa is getting ready to go to trial next month against Univision Communications over alleged breaches in a long-running agreement to supply programming to the Spanish-language U.S. broadcaster.

"We're not in negotiations with Univision to reach a settlement, or make an investment in the company," said Michel Boyance, Televisa's investor relations officer, at the 36th Annual Global Media and Communications Conference, hosted by investment bank UBS.

The jury trial, scheduled to start Jan. 6 in a Los Angeles court, is expected to last three or four weeks, he said.

If Televisa, which he said supplies programming that generates 35% to 40% of Univision's TV broadcasting revenue, is victorious in court, the company could try to demand higher prices from Univision or seek another buyer for its shows. Mr. Boyance said Televisa has not decided what it would do, although he noted that Univision has said it would appeal if it lost.

Although Televisa collects about $500 million a year in overseas revenue from sales of TV programs and magazines, most of the company's business is in Mexico. Mr. Boyance said Televisa expects the current recession to be more severe than the last economic downturn in 2001, but not to have as much impact on the ad industry in Mexico as it will in the U.S. market.

"In Mexico most advertisers are consumer-related companies that sell food, beverages, telecommunications," he said. "Those companies represent about two-thirds of our TV advertising revenues."

In Mexico, car advertising makes up very little of TV broadcasting ad sales compared to double digits in the U.S., and financial services advertising is only about 4% of Mexican TV ad revenue.

For broadcasters seeking easier ways to make money in a recession, starting their own lottery may not be a great idea. Televisa obtained a concession from the Mexican government two years ago to open 65 bingo parlors in Mexico and operate a nationwide lottery.

But Televisa underestimated the strength of the country's two existing lotteries, both owned by the government, when the media giant started its own lottery in February 2007 with tickets selling for as little as five cents.

"It's been difficult for us to take away market share," Mr. Boyance said. "We're trying to get better distribution and a better ad campaign."

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