Viacom’s Ex-Finance Chief to Buy Majority Stake in Univision

(Bloomberg) -- Former Viacom Inc. Chief Financial Officer Wade Davis agreed to buy a majority stake in Univision Communications Inc., a deal that follows years of failed attempts to sell the Spanish-language broadcaster or take it public.

Davis’s firm, ForgeLight, and his backers at Searchlight Capital Partners plan to acquire 64% of the media giant, with Davis becoming chief executive officer. Mexico’s Grupo Televisa SAB, the company’s longtime partner, will retain its 36% stake in Univision.

Though deal terms weren’t disclosed, the buyers are contributing about $800 million for their stake, giving the company an equity valuation below $1.5 billion, people familiar with the matter said.

The debt-laden U.S. broadcaster announced in July that it was looking for a buyer, as its private equity owners sought an exit after more than a decade of holding the investment.

The company has suffered from declining viewership, cord cutting and a fragmentation of the TV industry caused by streaming services. The influx of Spanish-speaking immigrants also slowed in the past decade.

But there’s still a huge market for Spanish-language programming in the U.S., Davis said Tuesday in an interview.

“Language is incredibly relevant to them from an identity standpoint, from a cultural standpoint,” he said. “And I do think in totality, this audience prefers watching content in Spanish.”

Univision was advised by Morgan Stanley, LionTree Advisors and Moelis & Co., while Bank of America Corp. worked with Searchlight. Guggenheim Securities advised ForgeLight. Goldman Sachs Group Inc. acted as financial adviser to Searchlight and ForgeLight, and Allen & Co. worked with Televisa.

At least three bidders had initially expressed interest in buying Univision. Hemisphere Media Group Inc. dropped out of the sale process in January. Churchill Capital Corp. II, serial dealmaker Michael Klein’s blank-check company, had also considered bidding for Univision, Bloomberg News reported.

Private Equity Giants

When Univision was taken private in a $12.3 billion transaction in 2007, it was backed by some of the world’s biggest buyout firms. Private equity firms Madison Dearborn Partners, TPG, Providence Equity Partners, Saban Capital Group and Thomas H. Lee Partners teamed up to do the deal.

But the company struggled financially as TV viewers migrated to online streaming services. Univision reported $7.4 billion of debt as of June 30.

Along the way, the company scrapped a plan for an initial public offering and previous attempts to find buyers faltered.

It also clashed with pay-TV companies. For nearly nine months starting in 2018, Dish Network Corp., the satellite-television provider, refused to carry Univision’s networks, depriving the company of lucrative subscriber fees.

Davis said Tuesday he would focus on reducing Univision’s debt load and draw on his experience at Viacom, where he helped oversee targeted advertising products and the acquisition of Pluto TV, an ad-supported streaming service.

Univision has now secured distribution deals with all of its major pay-TV distributors “for multiple years going forward,” Davis said, removing the threat of future blackouts.

While Univision has a streaming service called Univision Now, Davis said the company could expand in that area.

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

As he prepares to become CEO, Davis also is learning another skill: Spanish.

He aims to be able to speak it before the deal closes.

©2020 Bloomberg L.P.

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