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Dems assail Univision-HBC

Foes fire broadside at combo, criticize FCC

WASHINGTON — With Spanish-lingo broadcaster Univision Communication’s merger with Hispanic Broadcasting Corp. all but a done deal, opponents are arguing that Republicans at the Federal Communications Commission are up to the same secretive tricks they have employed all year.

The merger, which has already been approved by the Justice Dept. and has received the blessing of three Republican FCC commissioners, would create the single largest Hispanic TV/radio group. Justice is requiring Univision to reduce its holding in radio and television station owner Entravision, and it is unclear if the FCC will add other conditions.

Whatever restrictions exist, however, opponents argue that Univision would still command at least a 70% market share and could quickly squeeze out the already limited competition.

Categorical dissent

In protest, insiders expect FCC commissioner Jonathan Adelstein to write a scathing dissent to the merger. For months, Adelstein has urged — to no avail — the GOP majority at the agency to hold public hearings and investigate the possibility of creating a separate Spanish-language media category when it comes to making decisions about how many TV and radio stations one company can own.

In a conference call with analysts to discuss second-quarter results Thursday, Univision executive vice president Andrew Hobson cautioned that FCC approval of the deal is still pending (the two Democratic commission members have not yet cast their votes) but said the company hopes to receive approval shortly.

The beltway lobbying blitz began months ago. Radio group the Spanish Broadcasting System bought ads in Washington and New York publications claiming the merger would create a Hispanic media monopoly and could cause ad rates to soar. Univision responded in kind, taking out its own ads denouncing the claims as pure hype.

Suspicious timing

The timing of the FCC vote, one week after Congress left town for its August recess, has raised suspicions about Republican efforts to minimize the public outcry over a decision that has divided the Hispanic community and has several powerful Democratic lawmakers fuming. FCC chairman Michael Powell is already facing a storm of criticism for loosening decades-old media ownership rules in early June and refusing to reveal details of the new regs to lawmakers or the public before issuing them.

“It’s been the same lock-down, state-secret policy of not making decisions public,” one FCC source remarked, referring to the merger.

Rep. Bob Menendez (D-N.J.), the chairman of the House Democratic Caucus, has passionately opposed morphing the two companies, arguing that to do so would hand too much power to a non-Hispanic Univision exec with close ties to the Bush administration.

In the last two election cycles, Univision topper Jerry Perenchio, an Italian-American, and his wife have doled out nearly $1 million in donations to the Republican National Committee and the National Republican Senatorial Committee to help elect GOP lawmakers at all levels of government.

Minority concerns

Before leaving town, several Capitol Hill Dems tried to take action in advance of the FCC’s expected approval. Democratic Sens. Hillary Clinton (N.Y.), Edward Kennedy (Mass.) and Mark Pryor (Ark.) introduced a bill that would force the FCC and Congress to analyze the effect of media concentration on Americans who rely on minority-language broadcasts for their news, information and entertainment.

While the bill could not prevent the Univision deal from going through, it would address serious concerns about minority media concentration. Specifically, the legislation would require the FCC to submit a report to Congress by Jan. 1 on the “ownership and control” of broadcast television and radio stations serving language minorities.

While no panacea, Federico Subervi, a consultant on Latino media issues, believes the Clinton-Kennedy legislation is a step in the right direction.

Support groups

As part of its campaign to quell criticism on the eve of the approval, Univision issued a press release Wednesday listing 85 national and regional Hispanic organizations that have endorsed the acquisition. They included the League of United Latin American Citizens, the National Council of La Raza, the National Hispanic Media Coalition and National Puerto Rican Coalition.

Subervi believes most Hispanic groups oppose the merger, but are scared to speak out, afraid Univision may choose not to cover their group’s activities in the future.

“There’s a real concern about being blackballed, that your group’s issues won’t be covered, that your voice won’t be heard. Just like it happens with the Dixie Chicks, it’s the self-censorship that’s really dangerous.”

Street’s assessment

Meanwhile, Univision on Thursday reported revenues down a slight 1% to $320.2 million for the quarter ended June 30, compared with a year ago, while profits surged 88%.

Univision attributed the revenue decline to the tough comparison: The second quarter of 2002 got a big kick — to the tune of $65 million — from the World Cup soccer tourney, which wrapped June 30 of last year and was a Spanish-lingo exclusive to Univision.

Indeed, at the core TV division, which represents 90% of sales, revenue fell 4% to $287.9 million from $300.8 million a year ago.

The music division registered a 53% increase in sales to $29.1 million.

Quarterly net income, however, surged 88% to $41.6 million from $22.2 million in the second quarter of 2002.

During the quarter, Univision’s second broadcast net, TeleFutura, reached operating breakeven before depreciation and amortization, Hobson said.

Looking ahead to the third quarter, Univision said it expects net revenue to increase into a mid-teens percentage over last year’s $220.2 million, not taking into account the pending radio deal.