Univision and Televisa have agreed on a merger agreement, a long-awaited agreement that will create a Spanish-language TV giant with great reach in Mexico and the USA.
The agreement requires Televisa to contribute its media, content and production assets and a handful of networks to a new entity known as Televisa-Univision. Televisa’s assets are valued at $ 4.8 billion. The new company will be led by Univision CEO Wade Davis, who led the investor group that acquired Univision in early 2020.
“This transformative combination brings together the leading network serving American Spanish audiences with the leading Mexican media platform powered by the most powerful Spanish-language content in the world,” Davis said. “Televisa-Univision will be the leading global Spanish multimedia company uniquely positioned to take advantage of the important market opportunity for Spanish speakers worldwide.”
Televisa will be the largest shareholder in Televisa-Univision with a 45% stake; currently the company owns approximately 36% of Univision. Univision pays Televisa $ 3 billion in cash, another $ 750 million in Univision shares and $ 750 million in preferred Univision shares, which promise an annual dividend of 5.5%. The transaction is funded by a $ 1 billion investment by SoftBank Latin American Fund, with the participation of Google and Raine Group and $ 2.1 billion in debt commitments arranged by JP Morgan. The deal is expected to close later this year.
Alfonso de Angoitia, currently co-CEO of Televisa, will serve as executive chairman of the Televisa-Univision board. Marcelo Claure, CEO of SoftBank International, becomes vice chairman.
Televisa is one of the largest producers of content in the world. Last year, it delivered about 86,000 hours of entertainment, news, sports and unwritten performances. The union with Univision enables the two to combine forces to launch a Spanish language service to serve the US, Mexico and the rest of the Spanish-speaking world.
“We have been deeply involved with Univision for over two decades, and we have never enjoyed a better relationship with our partners,” said Berno Gómez, co-CEO of de Angoita. ‘We create a company that is a leader in multimedia categories, united across the largest areas and with the scope and focus to deliver the most compelling content experience to Spanish consumers around the world. We are confident that this strategic transaction will maximize the potential of our content segment, while strengthening our balance sheet and focusing on growth opportunities in our Telecom business. ”
In addition to the Televisa-Univision umbrella, Televisa retains ownership of izzi Telecom, Sky and other businesses and the real estate associated with the production facilities, broadcasting licenses and transmission infrastructure in Mexico.
Televisa is such an institution in Mexico that the broadcaster has an obligation to preserve the Mexican news content.
‘The production of news content for Mexico will be outsourced from a company owned by the Azcárraga family, to ensure that news content remains in Mexican hands and is produced in Mexico. “Televisa-Univision retains all assets, IP and library related to Televisa’s News division,” reads the press release.
Televisa has been an equity and content partner of Univision for over 40 years. The companies have talked about mergers in the past, although the FCC’s rules on foreign ownership prevent a direct takeover of Televisa by Univision’s TV stations.
Univision was sold last year by a group of private investors led by Haim Saban to a new group of investors led by Davis’ ForgeLight banner and SearchLight Capital in a deal worth about $ 8 billion – $ 9 billion.
Univision was once the undisputed leader of Spanish TV in the US. But over the past decade, NBCUniversal-owned Telemundo has been heavily equipped with resources for high-profile programs such as World Cup and Olympic rights. Telemundo was also experimenting early on with American programs for bilingual and American-born Spanish audiences. Univision, on the other hand, relied for years on the success of novels produced by Televisa for the Mexican market.
With the merger, Televisa and Univision both expect to achieve “effective content costs” and savings that will enable the company to deliver earnings before interest, tax, depreciation and amortization at a very healthy margin of 45%. Many of the savings come from producing content in Mexico.
Televisa and Univision and a long history. The forerunner of Univision was founded in 1961 as a single TV station in San Antonio, Texas, by Emilio Azcárraga Vidaurreta, grandfather of the current Grupo Televisa head, Emilio Azcárraga Jean.
But the relationship was not always smooth. The bad blood between the two companies resulted in the breach of Televisa’s contract lawsuit against Univision and both ended up in a court in Los Angeles in 2009. The battle over royalties ended with both parties reaching a settlement just in time, Grupo Televisa chairman Emilio Azcarraga Jean was ready to take the stand.
In 2017, Univision appointed its former head of news, Isaac Lee, to become chief content officer of both companies and oversee entertainment operations.
By July 2018, Lee was gone after another uproar at Univision where TV vet Vincent Sadusky took over the reins from Randy Falco. The company began restructuring and selling the English-language digital businesses that Lee advocated.
Univision and Televisa have struggled with sector-wide challenges facing their core broadcasting operations, and they have seen upheavals in their executive ranks. At Univision, Falco announced its plans to leave in March 2018, just four months after signing a two-year contract extension. At the end of 2017, Azcarraga Jean retires after 20 years at the helm of the Mexican media empire that co-founded his grandfather, although he is still executive chairman of the board. A failed bid for an IPO forced Univision to reorganize and laid off 200 employees amid plans to sell some of the digital assets.
The merger is expected to better position both companies in a new world dominated by global streaming services.
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