Emilio Azcarraga, topper of Mexico’s No. 1 broadcaster, Televisa, has ankled as vice chairman of U.S. partner Univision Communications, revealing increasing bad blood between the nets spurred by a royalty disagreement.
Televisa has filed a lawsuit against Univision in the U.S. seeking $1.5 million for breach of contract. Televisa also wants an injunction preventing Univision from altering Televisa programming without its consent.
Univision said, “The lawsuit is baseless, and we intend to vigorously defend against it.”
News was revealed in a filing made by Univision to the Securities and Exchange Commission on Tuesday and casts a shadow over Univision’s annual meeting today.
Tension has been growing between the highly profitable nets in recent months, and the lawsuit calls into question the lucrative business relationship that unites them, which sees Televisa provide as much as 80% of the primetime content on Univision’s three channels.
This is not the first time that Televisa has fallen out with Univision and its chairman, Jerrold Perenchio, who co-founded the net with Azcarraga’s father and Venezuelan magnate Gustavo Cisneros. But over the past three months, relations have been rough.
In February, Univision named Ray Rodriguez as prexy-CEO, surprising Azcarraga, who felt Televisa had been excluded from the selection despite its nearly 10% stake in the net.
Televisa is also unhappy with the royalty agreement, inked in 1992 when Univision was a fraction of its current size and due to run until 2017.
Last week, Televisa complained in its first-quarter earnings report that it had been underpaid. Univision royalties for the quarter were $24 million, 3.2% up on last year, while Televisa sources said it should have been closer to 10%. Televisa also took umbrage at Univision’s decision to withhold certain revenue.
Analysts say Univision can ill-afford to alienate Televisa. Univision’s “most significant competitive advantage is exclusive rights to Televisa’s programming,” wrote Merrill Lynch analyst Jessica Reif Cohen.