Univision opens new doors

Top Spanish-language net gains clout

Joe Uva runs the new privately held Univision from a small corner office in Midtown near Grand Central Station decorated in a style that might be described as millennial Office Depot.

Openness, he says, isn’t just a management style — it’s core to convincing a skeptical English-speaking world of the growing economic and political clout of the nation’s dominant Spanish-language broadcaster.

It’s a dramatic change in style at a critical time for Univision, which faces a number of hurdles, including expanding its ad base to mainstream sponsors, ongoing litigation from one of its prime producers and finding what its place should be in the immigration debate.

“This company had a policy of silence when it came to what’s going on here,” says Uva, an Italian American who, like predecessor Jerrold Perenchio, doesn’t speak Spanish. “People weren’t available for interviews. I don’t think Jerry would have had this discussion.”

Uva has been on the job two months, taking the reins after a $12.3 billion buyout by a private-equity consortium including Haim Saban, who had tried for years to get reclusive mogul Perenchio to sell him his stake of the company.

Thrust into the job on the eve of the annual upfronts, Uva took control of Univision’s presentation and made it both shorter and glitzier. He brought on celebrities, including Jennifer Lopez and David Beckham by videolink, and focused on the emotional connection viewers have to the network.

Last year, Nielsen Media Research began measuring Univision from the same sample as English-language networks, establishing it, to the chagrin of the CW, as the nation’s fifth network. Indeed, this summer Univision often beats at least one of the Big Four among adults 18-34 and occasionally in the broader 18-49 demo. Its national newscast, “Noticiero Univision,” is dominant in Los Angeles and regularly wins in Miami, Houston and San Francisco.

It’s starting to throw its weight around politically, too. Yet for all its emerging clout, the network has always struggled to attain value for its audience. Only 133 of the nation’s top 300 network advertisers buy time on Univision. In 2006, Univision had a 5% share of national audience, but captured only 2.5% of the $42 billion TV ad market.

And then there’s the fact that its main program supplier, Mexico’s Televisa, is suing Univision in federal court for allegedly violating the terms of their program licensing agreement, which provides a pipeline of popular telenovelas through 2017.

That relationship deteriorated after a dispute between Televisa CEO Emilio Azcarraga Jean and Perenchio, and resentment continues to simmer after the Saban-led group outbid Televisa, which wanted to acquire Univision to expand further into the U.S.

The situation remains delicate, and Uva won’t comment except to call Televisa “an extremely important programming partner that will continue to be well into the future.”

While most observers believe Televisa has a weak legal case, execs close to the company predict it will use the expiring program agreement as leverage to acquire Univision when the private equity owners look to cash out.

Univision was founded by Azcarraga’s grandfather but stripped from Televisa control in the ’80s with the introduction of new FCC rules limiting foreign ownership.

Azcarraga sees the U.S. Hispanic market and Mexico as one market and he feels it’s his destiny to rule that market by owning or controlling Univision, even if that takes years — or American citizenship — to achieve.

Televisa veep Alfonso de Angoitia says it’s too early to say what type of relationship Azcarraga will want with Uva and his team. “What is clear up to now is that he will be more ‘hands on’ and also more appreciative of the importance of the relationship,” he says.

On this and other sensitive issues, the new Univision will rely on Saban, who is expected to contribute both business and programming acumen to the company and serve as its chief emissary to Hollywood. He signed on to a consortium including Providence Equity Partners, Madison Dearborn Partners, Texas Pacific Group and Thomas H. Lee Partners, who view the company as a long-term hedge on the predominant demographic explosion predicted over the next few decades.

The private equity involved sees Univision as a longer-term investment with a seven- to 10-year time horizon rather than the typical three to five.

“If you look at projected population growth over the next 10 to 20 years, Hispanics make up 100% of the growth; everyone else is flat,” says Providence partner Al Dobron, who joined Univision’s board.

Uva’s first task is to convince Madison Avenue that Univision has become advertiser-friendly. And even more, that advertisers should pay a premium for Univision viewers, who tend to be more flattered than inconvenienced by the relatively small amount of advertising that targets them in their native tongue.

As former head of the U.S. arm of OMD, the biggest ad buyer in the world, as well as 18 years in sales at Turner Entertainment, Uva is perhaps uniquely suited to make this case.

“We felt we needed someone at the top who was particularly expert at forging connections with advertisers,” Dobron says.An even more radical proposal, first articulated by Saban, is to demand $1 per month in carriage fees from cable and satellite operators, a fee that would make Univision the most expensive TV network in the nation short of ESPN.

“We think the value for our services is worth a buck a sub,” Uva says. “We think our connection to the audience creates value for the cable operators like no other broadcast property does.”

Achieving such a fee would add as much as a $1 billion to Univision’s bottom line and help it service the heavily debt-financed acquisition, increasing the likelihood the investors will be able to realize a profit on the deal.

But Uva says the company must look beyond Televisa and start producing more content it can own and leverage on other platforms.

He’s ordered a Spanish-language version of “Desperate Housewives,” the ABC show that is popular among Hispanics. This would run as a weekly series, not as a daily strip like Univision’s most successful novelas like “La Fea Mas Bella” and “Destilando Amor.”

Aside from Saturday staple “Sabado Gigante” and its local and national newscasts, Univision’s record of producing its own programs is spotty. Its highest-rated 8 p.m. and 9 p.m. hours are dominated by Televisa novelas, and ratings drop off sharply at 10 p.m. when the net turns to weekly programming.

Yet Uva says the door is open to producers, and that he would like to see a bigger Spanish-language creative community develop in the U.S.

“They’ve been such a closed shop; there aren’t too many creative people who have worked with them, but Saban seems like he’s going to open that up,” says Jeff Vargas, founder of SiTV and partner in Los Angeles-based Maya Entertainment.

But the U.S. market suffers from a lack of talent comfortable working in Spanish, and it’s difficult competing against Televisa, a low-cost supplier that already has the brand loyalty of Mexican immigrants as well as those from El Salvador, Guatemala, Ecuador and Peru.

Telemundo set up its own production centers in Miami, Mexico and Columbia, but that took years of difficult competition against Univision’s Televisa-produced novelas.

“Telemundo has tried to produce its own programming in strip format and has had successes and failures,” says Hispanic media consultant Julio Rumbaut. “It’s got to find the Spanish Steven Bochco.”

Michael O’Boyle in Mexico City contributed to this report.

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