Televisa’s vision for Univision

If deal goes through, Azcarraga's multinational vision could become reality

Mexican giant Televisa seems to have the edge in the bidding for U.S. Spanish-language network Univision.

Philip Remek, a senior equity analyst at Guzman & Co., says he doubts the bad blood between Televisa topper Emilio Azcarraga Jean, 37, and Univision chief A. Jerrold Perenchio, 75, would scuttle a sale.

“Perenchio is a businessman, and I see his motivation here largely from an investor’s standpoint. He invested in 1992 and he can sell for a very significant profit,” he says.

Mexico’s No. 1 net would increase its stake in Univision from 11% to the maximum 25% allowable under FCC rules on foreign ownership of media assets.

So unless Perenchio does make it his last act to trip up the Mexican magnate, the deal likely will go through.

The Televisa consortium includes Bill Gates, through his investment company Cascade Investments, Bain Capital, Blackstone, Carlyle and Kohlberg Kravis Roberts.

In that case, one of the first changes Televisa is expected to make is in the management ranks. Perenchio named Ray Rodriguez president of Univision in February without consulting with Azcarraga, who promptly ankled Univision’s board. Perenchio then reshuffled Univision’s management hierarchy and named more than 30 execs to high posts, including Alina Falcon, exec VP and operating manager.

If Televisa takes over, Rodriguez’s and Falcon’s likely would be the first heads to roll. Other department chiefs, despite being protected by multiyear contracts, could follow.

As Univision’s major content provider, Televisa is likely to transfer the production of some Univision inhouse programs to Mexico in order to trim costs.

With a bigger stake in Univision and a new programming agreement that gives it a greater share in profits as well as greater creative control, Televisa would be in a position to fulfill Azcarraga’s vision for his company.

That vision involves transforming from a Mexican web into a multinational with solid footholds in Europe and the U.S. To that end, Televisa recently bought a 40% stake in Spain’s newest terrestrial broadcaster, La Sexta.

Control also would mean growing its ancillary businesses in the U.S., such as DVD sales of its novelas and other programs through Santa Monica-based Xenon Pictures as well as the streaming of its shows over the Web.

Televisa has been looking to co-produce for the U.S. market, including the possibility of series and new formats with its Spanish La Sexta partner Grupo Arbol, the leading producer of series in Spain.

Gates, who met Azcarraga in the late ’90s at investment banker Herb Allen’s annual Sun Valley, Idaho, retreat, bought into Televisa in 2003 and currently holds a 5% stake.

Televisa and its partners are facing a competing bid from another group of equity firms including media mogul Haim Saban, Texas Pacific, Thomas H. Lee Partners, Madison Dearborn and Providence Equity.

But were this consortium to win out, there would still be a legal struggle to hold to Televisa’s programming.

Meanwhile, the largest shareholder in Univision, Venezuela’s Grupo Cisneros, is likely to keep its 13% stake although it could sell its share if the “price is right.”

Univision’s market cap is $10.9 billion, but as one of the hottest media properties available, analysts expect it to fetch between $12 billion and $14 billion.

Bids for Univision are due June 8.

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