Deal paves way for content to U.S. Hispanics

After years of legal disputes over content deals, Mexican TV giant Televisa and U.S. Spanish-lingo web Univision have kissed and made up.

Televisa said Tuesday it had closed a $1.2 billion deal for a 5% stake in Univision.

“From today onwards, Univision is Televisa and Televisa is Univision,” said Univision Networks prexy Cesar Conde. “We will begin to look at opportunities from both strategic and operational perspectives.”

Deal includes a cash payment to Univision of $130 million, the transfer to Univision of Televisa’s 50% stake in online platform

TuTV for $55 million and an additional assumption of debt that would equate to 30% of the value of the company.

Deal “fully aligns the interests of Univision and Televisa for the long-term,” Univision chairman Haim Saban said in a statement. Accord, which will likely finalize in the first half of 2011 and awaits U.S. antitrust clearance, gives Televisa considerably greater access to the burgeoning Spanish-language market in the U.S. and relieves a debt-burdened Univision.

Pact will extend a 25-year contract signed in 1992 that gives Univision exclusive U.S. broadcast rights to Televisa’s ratings winning telenovelas. The latest agreement extends that license to 2020 and “at least” 2025 if certain conditions are met, the companies said. In exchange, Televisa will receive higher royalty payments from Univision, estimated at $48 million for the first year by the Wall Street Journal.

Televisa could buy an additional 5% stake in the company in five years; however, U.S. law restricts foreign ownership of U.S. broadcasters to a 25% share of the company. While the debt assumption would put equivalent equity at 40% with the additional 5% stake, Televisa’s technical share of ownership would remain at 10%.

Deal will not interfere with the 10-year content-sharing agreement inked in March 2008 between NBC Universal’s Telemundo and Televisa’s Canal 9. It brings Telemundo content to Mexican auds.

Televisa’s new content-sharing agreement with Univision also opens the online floodgates to its vast TV library — including thousands of hours of telenovelas.

Televisa has had an increasing online presence in recent years, investing heavily in TV and film platform Tvolucion.esmas.com and sports platform Televisadeportes.com, a major source of original online coverage for this year’s World Cup soccer tourney in Latin America. This paves the way for the content to reach the growing U.S. Hispanic market.

Deal comes full circle following the launch of Univision in 1961 by a group of investors, including Televisa founder Emilio Azcarraga Milmo. The group was sold to a consortium led by Saban in 2006.

With a growing market share of primarily Spanish-language consumers, Televisa’s proven, Mexico-tested content gave Univision an undeniable edge in the marketplace — one the Mexican web said merited additional royalties in a drawn out lawsuit that lasted until January 2009, when the two settled.

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