MEXICO CITY — Three years after NBC and TV Azteca exchanged wedding vows — a marriage then touted as a symbol of the new North American Free Trade Agreement (NAFTA) — the two webs are headed for divorce court.
Azteca announced Wednesday it would sue NBC for failure to meet the terms of the option-to-buy it signed with Mexico’s No. 2 net in May 1994.
By filing suit with the Intl. Chamber of Commerce in Paris — the arbitration body agreed upon in the 1994 deal — Azteca hopes to stop the Peacock Web from exercising its option to buy up to 10% of the Mexican broadcaster.
Azteca sources said they were notified by NBC on April 4 of its wish to exercise its option, which expires Tuesday.
NBC wants to buy a 1% stake in the company, which would be enough to give it the right to force Azteca into making a public offering within five years — at which time NBC has the right to buy another 10%.
The Mexican broadcaster has become an attractive proposition due to audience and ad gains at the expense of Televisa: Its all-day share leapt from 14% to 25% over the 12 months through February 1997, according to agency Ibope.
An Azteca source says the broadcaster made sales of $235 million last year, and a Mexico-based analyst estimates Azteca’s TV ad pie share will climb from 1996’s 24% to as much as 30% this year.
Azteca claims its success owes little to NBC and alleges that the U.S. net failed to provide the level of support in sales, programming, production, technology and systems that it committed to in exchange for its option-to-buy.
But NBC spokesman George Jamison told Daily Variety that the Peacock Web gave ample support, and added that Azteca was behind in a $7 million payment to NBC for services rendered (at a discount).
“We firmly believe our assistance to Azteca has contributed significantly to their success. We’re confident our position will be upheld in Paris,” Jamison added.
Sources said that, beyond the initial 1% stake, NBC is demanding an additional 1% as a pre-arranged bonus for performance levels attained by Azteca. NBC believes it also is entitled to a $22.5 million compensation for warrants to the 9% of stock it does not wish to buy.