Televisa Discusses Deal With Longtime Partner Univision

(Bloomberg) -- Grupo Televisa SAB is in talks to join forces with Univision Communications Inc., according to people familiar with the matter, a deal that could more formally unite the Spanish-language media giants after a long partnership.

With discussions at an early stage, no final decision has been made and talks could fall through, said the people, who asked to not be identified because the matter isn’t public. The two sides are still discussing the structure of a potential transaction and which parts of the businesses could merge.

Televisa said in a statement that the companies are moving forward with talks about combining certain of its content assets with Univision. The two aren’t discussing a merger of the corporations themselves, Televisa said.

A representative for Univision didn’t immediately respond to a request for comment.

Televisa’s U.S.-traded shares rose 1.6% at 10:11 a.m in New York.

A deal could cap a long saga for Univision, which has changed hands and scrapped an initial public offering in recent years. It was previously backed by private equity firms that bet on the rise of Spanish programming, only to watch the broadcaster get squeezed by cord cutting and an industrywide switch to streaming services.

Last year, Univision’s owners unloaded a majority stake in the company to former Viacom Chief Financial Officer Wade Davis and Searchlight Capital. Televisa, Mexico’s top broadcaster, had long held a stake in Univision and remained a minority investor after that deal. It currently holds about 36% of the business.

Univision is the largest provider of Spanish-language radio and television content in the U.S., and a transaction might need approval from the Federal Communications Commission, which has eased rules surrounding foreign ownership of broadcasters.

Televisa and Univision forged ties in 2010 after years of acrimony, striking a deal to share programming. At the time, Televisa bought a 5% equity stake and debt that could be converted into an additional 30% holding. It paid about $1.2 billion.

Since then, both companies have struggled to keep up with evolving viewer tastes as Netflix Inc. and other streaming services built buzz for shows with higher production values than Televisa’s traditional, soapy telenovelas.

Family Control

Televisa remains a dominant force in Spanish-language broadcasting. It exports its programming not only to the U.S. but to much of Latin America and even Russia and China. But it has rarely ventured beyond Mexico in its acquisitions, instead building a media empire in its home country that includes the largest cable business, the biggest satellite TV provider and a collection of popular cable networks.

Televisa is controlled by Chairman Emilio Azcarraga Jean, the grandson of the broadcaster’s founder, through a trust that holds the majority of Mexican-owned voting shares. That gives him the power to elect 11 out of the 20 members of Televisa’s board and veto any decisions on dividends and mergers.

But he technically doesn’t have a majority of all shares, so U.S. regulators will have to determine whether that level of control is acceptable if Televisa is to own a domestic broadcaster. Televisa has a market value of about 109 billion pesos ($5.2 billion).

Alfonso de Angoitia, one of Televisa’s co-CEOs, was recently named chairman of Univision. Emilio Azcarraga and the other co-CEO, Bernardo Gomez, were named to the board.

Univision has its roots in a network of U.S. TV stations built up in the 1960s and 1970s by Azcarraga’s grandfather, Emilio Azcarraga Vidaurreta, who later had to sell the company to local owners under pressure from the FCC. The companies maintained a long programming relationship and flirted numerous times with reuniting, though Televisa lost out to another investor group in a 2006 bidding war. Disputes over royalties also threatened to mar their relationship until they patched things up with the 2010 deal.

Gawker Foray

Univision, meanwhile, has made attempts to expand beyond Spanish-language programming over the years -- with limited success. It bought the former Gawker Media websites for $135 million in a 2016 bankruptcy auction, but the move only created more headaches for the company. Univision sold the media outlets -- along with the Onion satirical website -- to Great Hill Partners in 2019.

In 2017, it rejected a $13 billion-plus offer from Discovery Communications. The following year, the company abandoned its long-dormant IPO plans.

Univision confronted more upheaval before putting itself up for sale again in 2019. Rival Telemundo stepped up competition with the company and snatched away the World Cup rights. And Dish Network Corp. refused to carry Univision’s networks during a dispute.

When he agreed to last year’s takeover, Davis said he would focus on reducing Univision’s debt load and draw on his experience at Viacom, where he helped oversee advertising and the acquisition of the Pluto TV online service. Pushing deeper into streaming has been a key focus of Univision.

“From a competitive standpoint, the marketplace is wide open,” Davis said at the time. “The community does need a service that’s at-scale, differentiated and relevant.”

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