The deal calls for Televisa to contribute its media, content and production assets and a handful of networks to a new entity to be known as Televisa-Univision. Televisa’s assets are valued at $4.8 billion. The new company will be led by Univision CEO Wade Davis, who headed the investor group that acquired Univision in early 2020.
“This transformative combination brings together the leading network serving U.S. Spanish-language audiences with the leading media platform in Mexico powered by the most powerful Spanish-language content engine in the world,” said Davis. “Televisa-Univision will emerge as the leading global Spanish-language multi-media company, uniquely positioned to capture the significant market opportunity for Spanish speakers worldwide.”
Televisa will be the largest shareholder in Televisa-Univision with a 45% stake; at present the company owns about 36% of Univision. Univision will pay Televisa $3 billion in cash, another $750 million in Univision shares and $750 million in preferred Univision shares that promise an annual dividend of 5.5%. The deal will be financed by a $1 billion equity investment from SoftBank Latin American Fund, with participation from Google and Raine Group and $2.1 billion in debt commitments arranged by J.P. Morgan. The deal is expected to close later this year.
Alfonso de Angoitia, at present Televisa co-CEO, will serve as executive chairman of the Televisa-Univision board. Marcelo Claure, CEO of SoftBank International, will become vice chairman.
Televisa is one of the largest producers of content in the world. Last year it produced some 86,000 hours entertainment, news, sports and unscripted shows. The union with Univision allows the two to combine forces to launch a Spanish-language streaming service to serve the U.S., Mexico and the rest of the Spanish-speaking world.
“We have been deeply involved with Univision for more than two decades, and we have never enjoyed a better relationship with our partners,” said de Angoita and Televisa co-CEO Bernardo Gómez. “We are creating a company which is a leader across multi-media categories, unified over the largest territories and with the scale and focus to deliver the most compelling content experience to Spanish-language consumers around the world. We are confident that this strategic transaction will maximize the potential of our Content segment, while allowing us to strengthen our balance sheet and focus on growth opportunities at our Telecom business.”
Outside of the Televisa-Univision umbrella, Televisa will retain ownership of izzi Telecom, Sky and other businesses and the real estate associated with the production facilities, the broadcasting licenses and transmission infrastructure in Mexico.
Televisa is such an institution in Mexico that the deal came with some obligations by the broadcaster to preserve the Mexican operation of its news content.
“News content production for Mexico will be outsourced from a company owned by The Azcárraga family to guarantee that news content remains in Mexican hands and is produced in Mexico. Televisa-Univision will retain all assets, IP and library related to Televisa’s News division,” the press release stated.
Televisa has been an equity and content partner of Univision for more than 40 years. The companies have discussed merging on and off in the past although the FCC’s foreign ownership rules prevent an outright takeover of Univision’s TV stations by Televisa.
Univision was sold last year by a group of private investors led by Haim Saban, to a new group of investors headed by Davis’ ForgeLight banner and SearchLight Capital, in a transaction valued at about $8 billion-$9 billion.
Univision once was the undisputed leader of of Spanish-language TV in the U.S. But over the past decade NBCUniversal-owned Telemundo came on strong with resources for high-profile programming such as World Cup and Olympics rights. Telemundo also was early to experiment with U.S.-produced programs for bilingual and U.S.-born Hispanic audiences. Univision, on the other hand, relied for years on the success of novelas produced for the Mexican market by Televisa.
With the merger, Televisa and Univision both expect to achieve “efficient content costs” and savings that will allow the company to deliver earnings before interest, taxes, depreciation and amortization at a very healthy 45% margin. Much of those savings come from producing content in Mexico.
Televisa and Univision and a long history. The precursor to Univision was founded in 1961 as a single TV station in San Antonio, Texas, by Emilio Azcárraga Vidaurreta, grandfather of current Grupo Televisa chief Emilio Azcárraga Jean.
But the relationship has not always been smooth. The bad blood between both companies culminated in Televisa’s breach of contract lawsuit against Univision landing them both in a Los Angeles court in 2009. The battle over royalties ended with both parties reaching a settlement just before then Grupo Televisa chairman Emilio Azcarraga Jean was poised to take the stand.
In 2017, Univision appointed its former head of news Isaac Lee to become Chief Content Officer of both companies and oversee entertainment operations.
By July 2018, Lee was gone after another shake-up at Univision where TV vet Vincent Sadusky took over the CEO reins from Randy Falco. The company began to restructure and sell off the English-language digital businesses that Lee had championed.
Struggling with sector -wide challenges facing their core broadcasting businesses, both Univision and Televisa have seen shakeups in their executive ranks. At Univision, Falco announced his plans to leave in March 2018 just four months after he signed a two-year contract extension. In late 2017, Azcarraga Jean stepped down after 20 years at the helm of the Mexican media empire his grandfather co-founded, although he remains executive chairman of the board. A failed bid for an IPO forced Univision to reorganize, laying off some 200 employees amid plans to sell some of its digital assets.
The merger is expected to better position both companies in a new world dominated by global streaming services.
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