Univision Entertaining Sale Offers

Hispanic TV Broadcaster Could Fetch More Than $10 Billion

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NEW YORK (AdAge.com) -- Univision Communications has retained UBS Investment Bank to explore a possible sale of the company or examine other strategic alternatives for the dominant Hispanic media company.

Univision could fetch more than its $10 billion market capitalization, according to industry estimates. Los Angeles-based Univision Communications owns Univision Network, the most popular Spanish-language broadcast TV network; TeleFutura, another broadcast network; and Galavision, a cable entity. It also houses a major radio group and a music unit.

The company’s stock jumped by 12% or $3.76 to $34.30 just ahead of the market’s close. The news of the possible sale was first reported in this morning’s New York Times.

CBS: Obvious suitor
One of the most obvious suitors is the newly formed CBS Corp., though the company is prevented from purchasing additional broadcast stations because of the Federal Communications Commissions’ 40% limit on station ownership in one market. A CBS spokesman declined to comment. CBS is currently in the midst of selling its theme park division for around $1.1 billion.

Other reports have suggested that the Walt Disney Co., News Corp. and Time Warner could make a play for the company. Merrill Lynch analyst Jessica Reif Cohen told the Associated Press that the most likely purchaser is Televisa Group in partnership with a private equity firm. Televisa supplies much of Univision’s programming.

Until now, the biggest Hispanic media deal has been NBC's acquisition of the No. 2 Spanish-language broadcaster Telemundo for $2.7 billion in 2001. Telemundo's market share continues to be about 20% of the Spanish-language TV market.

The announcement underscores what a tumultuous start the broadcast TV market is having this year. CBS Corp. and Time Warner last month opted to merge their respective broadcast networks, UPN and the WB, into a single entity, called the CW.

Rapidly expanding demographic
Any suitor for Univision would be able to take advantage of the rapidly expanding Hispanic population and the burgeoning advertising market, which is estimated at $3.4 billion. Total projected Hispanic TV households was 11.2 million in 2005. The number of Hispanic households is expected to account for 20% of all U.S. households by 2025.

Another candidate to buy at least part of Univision is Televisa, a Mexican TV and magazine empire headed by Emilio Azcarraga Jean, who has been spending more than half his time in the U.S. for the last couple years in an effort to qualify for U.S. citizenship. Televisa already owns an 11% stake in Univision, and has an exclusive programming deal with the company through 2017 that supplies Univision with the telenovelas that are its highest-rated programs. Univision and Televisa are also locked in a legal battleâ€"not for the first timeâ€"over alleged breaches of that contract.

Univision Communications’ 75-year-old chairman A. Jerrold Perenchio owns 11.5% of Univision but has voting control with 56.4% of the votes. The other major shareholder is Venezuelan media giant Venevision with a 13% stake.

A Univision statement this afternoon warned that the board’s decision to explore its options would not necessarily result in any change for the company. “There can be no assurance that the exploration of strategic alternatives will result in a transaction. The company does not intend to disclose developments with respect to the exploration of strategic alternatives unless its board of directors has approved a specific transaction."

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