Univision Board to Consider Sale

After spending 13 years building a sleepy chain of television stations into a Spanish-language juggernaut, Los Angeles billionaire A. Jerrold Perenchio is looking for a way to say adios.

Univision Communications Inc.’s board, led by Chief Executive Perenchio, said Wednesday that it voted to consider putting the company on the block.

The nation’s preeminent Spanish-language media company, owner of three networks, 62 TV stations, 69 radio stations and a music division, could become the subject of a bidding war. If so, analysts say, the price tag could top $13 billion.

That’s more than 20 times the $550 million that Perenchio and his Latin American partners paid in 1992 to buy the struggling network from Hallmark Cards Inc.

Perenchio’s 11% ownership in the Los Angeles company could easily be worth more than $1.5 billion. His initial investment was $33 million.

The 75-year-old Perenchio, a former Hollywood talent agent and boxing promoter turned media mogul, figured the time was right for a sale, said two sources close to him.

Univision’s finances have never been stronger, with advertising revenues from its radio and TV divisions on the rise.

A recent shift by TV ratings firm Nielsen Media Research to begin including Spanish-language TV shows in its rankings has underscored Univision’s clout: It is the nation’s fifth-largest network, behind CBS, ABC, Fox and NBC.

With this year’s World Cup, the most popular sporting event for Latino viewers, Univision -- which has Spanish-language television rights in the U.S. -- will gain an even stronger grip on its loyal audience.

Now more than 41 million strong, Latinos have become the nation’s largest minority group, making Univision’s airwaves more valuable as marketers clamor for their dollars. Spanish has become such a big part of the nation’s culture that the Super Bowl on Sunday featured a bilingual commercial for the Toyota Camry.

The potential sale, first reported by the New York Times, is likely to interest some of the biggest names in media, including Rupert Murdoch, who controls News Corp.; Sumner Redstone, chairman of Viacom Inc. and CBS Corp.; Robert Iger, the new chief executive of Walt Disney Co.; and Richard Parsons, chairman of Time Warner Inc.

“If there is a bidding war, it could get quite expensive,” said Philip Remek, media analyst for Miami-based Guzman & Co. “Some of these older media moguls have been working all their lives to build their companies. And they are looking at the long-term growth potential -- five, 10, 15 years down the road.”

The Latino audience offers that growth, Remek said, and Univision delivers more than three times the viewership of its nearest competitor, General Electric Co.’s Telemundo.

“With one purchase, you could take a dominant position in that market,” Remek said.

In addition to its flagship Univision network, the company operates a second broadcast outlet, TeleFutura, and cable channel Galavision.

In a conference call with analysts Wednesday, Murdoch said his company would take a look, although he cautioned, “At some of the prices being thrown around, we have no intentions.”

On Wednesday, Univision shares jumped $3.66, or 12%, to a 52-week high of $34.20.

Lately, there has been an uptick in media acquisitions after a months-long drought. In January, Disney announced that it would buy Pixar Animation Studios for more $7.4 billion, and just last week, Viacom finalized its purchase of DreamWorks SKG.

Besides media conglomerates, other potential Univision suitors are private equity firms and wealthy investors.

“I’ve been brushing up on my Spanish and watching telenovelas for the last four years waiting for this moment,” said Haim Saban, who has been investing in media assets since he and News Corp. sold their joint cable venture, Fox Family Worldwide Inc., to Disney in 2001.

Also in the running for a stake will be Grupo Televisa, Mexico’s largest media company and a minority shareholder in Univision. Televisa provides the popular telenovelas and Mexican soccer matches that made Univision a programming powerhouse.

Televisa’s Emilio Azcarraga Jean, whose grandfather started the Univision network in 1961, has been searching for a way to reclaim his family’s legacy and to become a bigger player in the lucrative U.S. media market. Mexico City-based Televisa already owns about 11% of Univision. But U.S. law forbids foreign citizens from owning more than 25% of a U.S. broadcasting company. That was the reason Televisa was forced to sell the network nearly two decades ago.

Televisa declined to comment.

Univision’s other large shareholder, Venevision, controlled by Venezuela’s Gustavo Cisneros, joined in authorizing investment bank UBS to seek bids. The company declined to say whether it would increase its 13% stake.

Some companies that have expressed interest could face regulatory hurdles. In the past, CBS Corp. CEO Leslie Moonves has said Univision is an attractive asset. But CBS owns television stations in markets that serve 39% of the U.S. audience -- the upper limit set by the Federal Communications Commission. That means CBS could not add more television stations. Likewise, Murdoch’s News Corp. is bumping up against that cap.

“The key question for any bidder is how to resolve the FCC ownership interest restrictions,” said Leland Westerfield, broadcasting analyst for Harris Nesbitt.

Wall Street’s financial wizards say CBS or News Corp. could sell or swap stations or find some other creative way to structure a deal.

Redstone, who recently spun off CBS from Viacom, has long had his eye on Univision. Some analysts speculated that Redstone could convert his controlling shares in CBS to common stock, which could allow him to buy Univision with his original company, Viacom.

Disney and Time Warner are the only other media conglomerates that could buy Univision without running afoul of the FCC restrictions. However, Disney’s planned acquisition of Pixar might put Univision out of reach. And Time Warner is under pressure by investor Carl Icahn to sell off assets.

Representatives of Disney and Time Warner declined to comment.

Possibly the only media company not tempted would be GE’s NBC Universal, which bought Telemundo in 2001 for $2.7 billion. Antitrust rules prohibit it from buying its rival.

Times staff writer Sallie Hofmeister contributed to this report.

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(BEGIN TEXT OF INFOBOX)

On the air, in Spanish

1961: The first Spanish-language UHF television station, KWEX-TV, begins broadcasting in San Antonio. It is the first TV station in the U.S. acquired by Mexican media baron Emilio Azcarraga Vidaurreta, the first piece of what would become the Univision network.

1962: Twenty-four-hour Spanish-language radio programming is introduced on KGBT in Harlingen, Texas, by Tichenor Media System, which later becomes Hispanic Broadcasting Corp. and is now Univision Radio.

1977: Spanish International Network, or SIN, connects its affiliates via satellite, becoming the first Spanish-language broadcast television network in the U.S.

1979: The company’s Galavision network is launched as the first Spanish-language cable network in the country.

1987: SIN is renamed Univision Network, broadcasting 24 hours a day.

1992: A. Jerrold Perenchio, Mexico’s Grupo Televisa and Venezuela’s Venevision form a partnership to acquire Univision from Hallmark Cards Inc. for about $550 million.

1996: Univision Communications Inc. begins trading under ticker symbol UVN on the New York Stock Exchange.

2000: Univision Online is launched. In less than a year, Univision.com surpasses all other providers as the No. 1 Spanish-language website for U.S. Latinos.

2001: Univision Music Group is created, fulfilling a longtime goal to enter the music recording and publishing business.

2001: Univision acquires USA Broadcasting, part of USA Networks, from Barry Diller.

2002: TeleFutura, Univision Communications’ second Spanish-language broadcast TV network, launches on the former USA Broadcasting stations.

2003: Univision Radio is created through the acquisition of Hispanic Broadcasting Corp., the leading Spanish-language radio broadcasting company. It owns or operates 69 stations now.

2005: In late December, Nielsen Media Research begins including Spanish-language programs in its national rankings. The ratings demonstrate that Univision is the fifth-largest network in the U.S., reaching 98% of U.S. Latino households through 62 TV stations.

Wednesday: Univision board votes to explore strategic options, including putting itself up for sale.

Source: Univision Communications

Los Angeles Times