In a span of eight weeks, Mexican conglom Televisa has made a bold grab for U.S. media power.
In September, Televisa and Lionsgate unveiled theatrical joint venture Pantelion with an ambitious plan to acquire or produce eight to 10 Latino-themed pics a year aimed at the 26 million Hispanics who rep more than a quarter of all frequent moviegoers in the U.S.
And last week Televisa closed a $1.2 billion deal for a 5% stake in U.S. Spanish-language net Univision that will finalize in early 2011, pending regulatory approval.
Univision is owned by a consortium led by Haim Saban’s Saban Capital Group, which acquired it for $13.7 billion in 2007 — outbidding Televisa CEO Emilio Azcarraga Jean.
Last week’s deal propels Televisa beyond simply providing content, into a position where it can create a Spanish-language audiovisual empire comprising broadcast, the Internet and film.
The deal paves the way for that content to reach the U.S. Hispanic market — and comes as Univision recorded the first-ever win for a Spanish-language web in U.S. primetime ratings in the 18-49 demo last month.
Azcarraga Jean took the reins of the family firm at 29, when his father, Emilio Azcarraga “El Tigre” Milmo, passed away in 1997. Like his father, Azcarraga Jean wants to tap into the U.S.’ rapidly growing Spanish-language population.
According to a survey commissioned by Hispanic ad agency Orci, the 2010 Census is expected to find the U.S. Hispanic population has expanded to 50 million, commanding $1 trillion in buying power.
It’s a valuable prize and, at one point, Azcarraga Jean even considered acquiring U.S. citizenship to improve his chances of gaining it — in the same way Australian Rupert Murdoch became an American to further the ambitions of his News Corp.
Indeed, Azcarraga Jean may reconsider that strategy.
Televisa could buy an additional 5% stake in Univision in five years, but U.S. law restricts foreign owners of U.S. broadcasters to a 25% share of the company.
However, 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%.
“The agreement (between Univision and Televisa) is well structured and signifies a new era for Televisa in the share of wealth it can capture in the U.S. market,” says Gregorio Tomassi, a media analyst at Banco Santander in Mexico.
The deal expands the often contentious 25-year programming supply pact that feeds Univision with Televisa’s top-rated telenovelas. It was due to expire in 2017 but will now run to 2020, with the possibility of extending beyond 2025.
That programming pact was the subject of a legal dispute that rumbled on for years over the value of the content.
Televisa’s proven, Mexico-tested shows gave Univision an undeniable edge in the market — one Televisa said merited additional royalties. The two settled in January 2009, when Univision agreed to give Televisa $25 million in royalties and an additional $65 million per annum through 2017 in advertising.
Televisa’s content-sharing agreement with Univision also opens the online floodgates to its vast TV library — including thousands of hours of telenovelas. “We’re excited about the opportunities presented by what were previously locked rights,” says Univision Networks prexy Cesar Conde.
Rights issues previously prevented both companies from exploiting Televisa programming online and on mobile devices.
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.