Univision, Televisa Settle TV-Programming Dispute

Trial Ends After Companies Amend Long-Term Agreement

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NEW YORK (AdAge.com) -- After negotiating through the night, Univision Communications and Mexican media giant Grupo Televisa ended their courtroom dispute over TV programming today and said they will amend a long-term agreement that grants Univision exclusive rights to air Televisa's shows in the U.S. until 2017.

Emilio Azc√°rraga Jean Credit: AP
An agreement signed this morning gives Televisa substantially more money and Univision, the leading U.S. Spanish-language broadcaster, the security of continuing the agreement that supplies about 40% of its programming and most of its hit shows. It also puts an end to a trial that started earlier this month. The jury was dismissed just minutes before CEO Emilio Azcarraga Jean, the third generation of Azcarragas to run Televisa, was due to start testifying as the company's final witness.

"Univision's oxygen supply will be continued until 2017," said Marshall Grossman, an attorney at Bingham McCutchen, the law firm representing Televisa.

Could have been disastrous
In the trial, which started Jan. 6 in a Los Angeles District Court, Televisa was seeking to terminate the 25-year program agreement by proving that Univision had "materially breached" the contract by underpaying programming royalties determined by advertising revenue. For Univision, losing its top-rated Televisa telenovelas and other shows would have been disastrous, and it was unclear what, if any, backup plan the broadcaster had beyond filing an appeal if Televisa won the court case.

Under the new version of the agreement, Mr. Grossman said Televisa will get $65 million worth of commercial advertising for free on Univision stations each year. In addition, Univision will pay Televisa a total of $25 million, including $21.5 million Univision has already paid under protest, he said. And the number of programs based on which royalties to Televisa are calculated will be "clarified and expanded," he said.

Univision declined to comment beyond the joint announcement that the litigation has been settled and the agreement amended.

Until now, Univision has been paying Televisa about $130 million a year for programs, based on advertising sales, and dismissed Televisa's claims that it is owed more, although the broadcaster had been making additional payments under protest before the trial.

Digital rights still at issue
The settlement doesn't mean that years of legal skirmishes, including postponing the trial four times, are finally over. The two broadcasters are still sparring over another key issue: internet rights to Televisa's programming in the U.S.

Televisa says it should have the right to target U.S. Hispanics with online programming. Univision claims the long-term programming agreement covers all broadcast media, even though digital media didn't exist when it was signed in 1992. Right now, only a version of Televisa's website, esmas.com, that strips out all the video material can be seen in the U.S.

The internet issue is scheduled to be decided in March, without a jury, by the same judge, Philip Gutierrez, who presided over the trial. Since the two sides managed to reach a settlement halfway through the trial, it's likely the digital-rights issue could be settled out of court before March.

The fight between the two broadcasters has been especially bitter because Univision passed over Televisa's bid to buy Univision in 2007 and sold to a private-equity group instead.

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