Televisa looks on bright side
Losing bid for Univision may be a winning move for Mexican TV giant
Televisa is selling its 9% stake in Univision, which, added to current reserves, will give it $3 billion in free cash to launch business ventures that, some pundits argue, could leave it better positioned for the future than Univision.
"Televisa has a lot of options right now," says Philip Remek, senior equity analyst at Guzman & Co. "And it's better off without the millstone of Univision around its neck. This is a good time to cash out."
Azcarraga's long-term goal is to create a Spanish-language Viacom, a multinational media conglom feeding the niche and new-media markets of the Spanish-speaking world -- something that others, from Telefonica in Spain to erstwhile Univision partner Cisneros, also are trying to do.
Televisa had long envisioned a bigger stake in Univision as key to that plan. But while it says it hasn't ruled out making another bid for Univision or continuing talks with the winning consortium, neither is now likely.
Indeed, Univision's acquiring group, led by Providence Equity and media mogul Haim Saban, tried to lure Televisa into joining it with the offer of a 19% stake in the new company structure.
But Televisa rebuffed that offer and, according to a proxy statement filed by Univision in late July, the window for Televisa to roll over its shares into the new company has expired.
The acquiring group would have to make a new offer to the Univision board to offer Televisa a bigger stake.
Proxy filing also revealed details of the auction debacle, which did not speak well for Azcarraga's company. An arrogant Televisa burnt its bridges with Providence/Saban early on and formed its own group of rival bidders, but then lost support of almost all its backers.
Perenchio was aching to sell to anybody but Azcarraga, who is half his age. Duo had long been at loggerheads over management of Univision.
Televisa, left with only Bain Capital as a willing partner, is unlikely to come up with the cash to offer a higher bid for Univision. Azcarraga also would be loath to pay the required $300 million breakup fee to Saban's group.
Saban's group is paying $13.7 billion in a highly leveraged buyout and analysts say paying any more would be a bad idea. While Univision's growth is above the industry average, those returns are expected to flag in the coming years.
In the end, Televisa could be better positioned without a clunky broadcasting asset in the U.S.
Whatever happens in the new-media shakeout, content will remain king -- and Televisa has plenty of that.
A global Televisa will take years to build, but the Mexican web is already moving in that direction.
It recently launched a network in Spain with local partners including Arbol, Spain's leading producer of drama series.
The group is planning on jointly producing series filmed in Mexico with Spanish-language scripts for the U.S. market -- think along the lines of "CSI: Mexico City" -- which might capture the tastes of U.S. Hispanics who don't dig telenovelas.
More joint ventures could be around the corner with Mexican producer Argos and Colombia's RCN, as well as with U.S. companies, such as ABC, with whom Televisa said in April it was producing an English-language telenovela.
Televisa soon could have enough content for its own cable channels Stateside as well as offering a streaming library of telenovela content and new sitcoms and series.
Then there is music and publishing. Televisa is ramping up its music division and could make further acquisitions in the U.S.
In July, Televisa sued Univision to insure it can offer over the Internet the same Televisa content that Univision currently broadcasts. That suit joins a previous lawsuit seeking to break the webs' long-term programming agreement, which ends in 2017.
The outcome of the suits will be crucial.
Web will continue to reap modest but regular returns from its programming pact with Univision, and, in a not too distant future, Televisa could also be profiting from new holds in the U.S., Latin American and Spanish markets.
