Univision Reports 14% Gain in Quarterly Profit

Spanish-language media giant Univision Communications Inc. said Monday that its fourth-quarter profit grew 14% as its television networks attracted more major advertisers.

The Century City-based company, controlled by billionaire A. Jerrold Perenchio, also issued its first public statement about a recent dispute with two large shareholders over management decisions.

Last month, Univision’s Latin American partners -- Mexico City-based Grupo Televisa and Venezuela’s Venevision -- objected to the way Univision had named an in-house candidate, Ray Rodriguez, as its president and chief operating officer without conducting a formal search.

Then Televisa, which supplies more than a third of Univision’s programming, criticized Perenchio, the network’s 74-year-old chairman and chief executive, for failing to identify his own successor. On Monday, Univision Senior Executive Vice President Andrew Hobson read a statement from Perenchio, who shuns the media and did not participate in the conference call with Wall Street analysts.

“I’m 74 but feel like I’m 47, and I fully intend to remain chief executive officer for many more years,” Hobson quoted Perenchio as saying. He also said a board committee would address succession planning and make recommendations to directors at their next meeting.

The statement pointed out that although Perenchio owned 11.5% of Univision shares, he controlled 56.4% of the voting stock -- giving him wide latitude in the company’s decision making.

Perenchio, a former talent agent and business partner of Norman Lear, acquired Univision in 1992 with Televisa and Venevision as minority partners. Univision has since become an $8.5-billion juggernaut capturing three-quarters of the audience for Spanish-language TV in the United States.

Venevision owns 13.3% of Univision and Televisa owns 10.9%, including outstanding warrants.

“Like any successful marriage or partnership, there are occasions when the partners disagree,” Hobson quoted Perenchio as saying. “Our recent disagreement I liken to some rain on a very strong and weatherproof roof.”

Analyst Philip Remek at Miami-based Guzman & Co. said that despite the tensions, the companies had a financial interest to stay together. Under their ownership agreement, Univision has exclusive use in the U.S. through 2017 of Televisa’s popular telenovelas.

“I don’t think either company is going to do anything to jeopardize their long-term relationship,” Remek said. “It’s really a golden goose that they have set up. But Univision could have handled the whole thing in a more diplomatic fashion.”

Analysts in the conference call were more interested in Univision’s numbers for the quarter that ended Dec. 31.

Univision’s net income increased to $67.2 million, or 19 cents a share, from $58.9 million, or 17 cents, a year earlier. Revenue climbed 13% to $461.3 million from $408.1 million.

Earnings fell just shy of the consensus estimate of 20 cents a share by analysts surveyed by Thomson First Call. Still, analysts were impressed that Univision had bounced back after a sluggish quarter in its quick-turnaround ad sales, commonly called the “scatter” market.

“The scatter market has pretty much recovered,” said David Miller, a media analyst at Sanders Morris Harris. “This just goes to show that national advertisers are recognizing the purchasing power of the Hispanic marketplace.”

For 2004, Univision’s net income was $255.9 million, or 72 cents a share, up from $155.4 million, or 55 cents, in 2003.

Univision said it picked up two big-name advertisers: Ameriquest Mortgage Co. and Countrywide Mortgage -- an encouraging sign because financial service firms have been slower to advertise in Spanish.

Rodriguez, the network’s new president, told analysts that the company was gaining ratings ground on the major English-language networks, particularly among the demographic group of 18-to-34-year-olds.

“We’re at a point where we can capitalize on the opportunities and reap tremendous potential benefits for our audience, advertisers and shareholders,” Rodriguez said.

Univision released its earnings after the markets closed. Its shares fell 9 cents to $26.39 on the New York Stock Exchange. In after-hours trading, shares rose 60 cents to $26.99.