Telemundo eyes mates

U.S. net seeks strategic partners, may sell

Looking for a long-term cure for its sagging ratings, the No. 2 U.S. Spanish-language TV network, Telemundo, is searching for strategic partners and may even consider selling the company in the near future, sources say.

Telemundo Group officials confirmed that a strategic partnership could be in the works, and sources say Sony is a prime candidate for such an alliance. Telemundo denied that it is actively seeking a suitor, although insiders say the company has retained investment bank Lazard Freres to explore its options.

“Telemundo is not for sale,” Don Tringali, Telemundo’s network exec VP told Daily Variety. “We are in discussion with various parties for strategic programming alliances.”

However, Tringali did acknowledge, “We are a public company. We have to respond to initiatives.”

Telemundo, which owns eight full power stations in major markets such as New York, Los Angeles, Chicago, San Francisco, Miami, Houston and San Antonio, has been trading steadily at about the $24 mark for the last several weeks.

Sources say Telemundo officials have been seeking closer to $40 a share for the company.

“There are certainly investors clamoring,” said one analyst in New York. “There is much upside left.”

Sources close to the Hialeah, Florida-based Spanish language network say several companies have already taken a close look at Telemundo’s books and are considering a possible purchase or alliance. Among those interested are Sony and Ronald Perelman’s MacAndrews & Forbes, sources say, although neither would comment.

It’s unclear how serious Perelman’s interest is given that he just exited the TV business when he sold New World Communications Group to News Corp. last January.

Because of foreign ownership restrictions, Sony could only own 25% of Telemundo, and sources say other partners would be involved if the Japanese-owned company took that route. Even if Sony doesn’t buy into the company, sources say the studio is considering an alliance to provide Spanish-language programming to the network.

But Sony’s and Perelman’s interest could ultimately be in the network’s eight large-market stations. Sony is one of a couple of major studios currently without a station distribution arm.

If such a purchase were ever completed, the web just might be converted to English-language programming.

Telemundo may be seeking a suitor because the company has been losing money for the past two years, and it filed for Chapter 11 bankruptcy in 1993. Even so, the value of the stations remains high, especially following the recent Supreme Court must-carry ruling.

Televisa crossroads

The company is also approaching a crossroads with current programming supplier Televisa, which has a long-term alliance with Telemundo’s top rival in the U.S., Univision. Televisa supplies programming to Telemundo’s Puerto Rico-based station, WKAQ, which accounts for at least 20% of the company’s revenue.

Univision could pressure financial partner Televisa to sever its ties with Telemundo when that contract expires in the near future, leaving WKAQ without a major source of programming.

One Telemundo exec called it “a sensitive issue.”

Meanwhile, Telemundo continues to move forward with a plan to revamp its programming lineup. The company is holding a sales and affiliate conference later this month in La Costa, Calif., to announce the specifics of a new programming strategy.

Univision has an 80% share of the U.S. Hispanic broadcast market versus Telemundo’s 20% share.

The main strategy change, according to Telemundo officials, will be to counterprogram Univision, instead of going head to head in primetime against its competitor’s popular telenovelas. Telemundo plans to offer primetime talk and variety shows.

Last month, Telemundo replaced its programming chief, Harry Abraham Castillo, with Manuel Martinez, general manager of Telemundo’s New York station, WNJU. Martinez was named acting head of programming.

Telemundo’s largest shareholders — Bastion Capital Fund LP in Los Angeles, which owns 18% of Telemundo’s shares, and venture capitalist Leon Black, who owns 15% of the company — did not return phone calls seeking comment.

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