THE MEDIA : Azcarraga Owns Huge, Secretive Empire

The usual question in these matters applies. When someone dares to start a new magazine or newspaper in the United States, the query that blandly rolls off the experts’ lips is: “How deep are his pockets?”

The pockets of Emilio Azcarraga, the man who is backing the new sports daily tentatively called “the National,” are as deep as they come.

But Azcarraga’s holdings are so intricately tangled in a web of companies and sub-companies that estimating how deep, or pinpointing where they are, is impossible. And it already has run him afoul of the American government.

Put simply, Azcarraga controls “the world’s largest TV network,” said Federal Communications Commission investigator Norman Goldstein.

The best comparison, Goldstein said, might be CBS, NBC and ABC networks combined--plus several movie and television studios and their distribution companies.

Despite that, Azcarraga is largely unknown to most in the American media.

The core operation is Televisa, which is “the largest producer and exporter of Spanish-language television programming in the world, selling to Portugal, Brazil, Italy, the BBC, France and the United States, as well as to all Spanish-speaking countries,” according to a federal law judge’s ruling against the company in 1986. Today, Azcarraga even sells programs in China.

Father Launched Empire

It is an empire, said USC Professor Felix Gutierrez, built on two generations of secrecy and foresight.

That empire began when Emilio Azcarraga Sr. built a nationwide radio network in Mexico in the 1920s. During the 1940s, Azcarraga Sr. built Churubusco Studios, producer of some of the country’s best movies.

When television arrived in the 1950s, Azcarraga was quick to enter it as well, and then merged it with stations owned by two other prominent families. Emilio Jr. added another station in 1973 and changed the name of the company to Televisa.

In the 1960s, Azcarraga Sr. saw the United States as a market for his Mexican-produced television, just as he saw markets throughout the Spanish-speaking world.

And even though U.S. law forbids foreign nationals to own more than 20% of TV stations here, Azcarraga attempted to follow a plan of controlling all aspects of a business just as he did at home, a trend son Emilio Jr. continued and expanded after his father’s death in 1972.

By the mid-1980s, the Azcarraga-owned TV network in America included 12 stations and stretched from California to Connecticut--though publicly it appeared Americans were in charge.

And in 1986, after a three-year investigation, the federal government declared that despite appearances Azcarraga was the actual owner of the stations, controlling them through a heavily veiled web of subsidiaries, common directors and common managers and loans.

Ordered to Divest

(The practice effectively reversed what Mexicans call presta nombres, or name lenders, which describes Mexicans acting as public officers for companies really controlled by Americans.)

The FCC required Azcarraga to divest the stations.

But according to critics, the deal Azcarraga cut to sell them to Hallmark Cards Corp. for close to $300 million hardly cost him his influence. Under the terms of the sale, Azcarraga retained the rights to sell the stations most of their programming, handle their ad sales and receive more than a third of their revenue, according to documents obtained by The Times.

A year later, Hallmark, reportedly chafing under the terms of the deal, spent close to $300 million more to buy Univision, the Azcarraga-controlled company that supplied the programming to the American stations. Even then, however, Televisa, Azcarraga’s company in Mexico, still supplies much of the programming to Univision.

Azcarraga’s U.S. interests also do not end with broadcasting. He apparently is involved in real estate as well.

In particular, Azcarraga and his family have been closely linked over the years to a little-known but surprisingly vast real estate conglomerate in Los Angeles called Raleigh Enterprises, owned by Azcarraga’s friend George Rosenthal.

Raleigh owns or has owned, among other things, the Sunset and Westwood Marquis hotels, the Playboy building on Sunset Strip, shopping centers, housing tracts, a charter jet service, office complexes and the Raleigh movie studio in Hollywood.

According to documents Rosenthal himself filed in a divorce proceeding, an Azcarraga-owned company called Laura Investment Inc. paid both the $90,000 option and the $1.5-million down payment for the building that would become the Westwood Marquis Hotel on Hilgard Avenue.

Rosenthal in an interview three years ago categorically denied having any business partnerships, joint ventures, financial interests or cross-ownership arrangements with Azcarraga.

“Azcarraga is just a dear friend,” he said at the time.

But he acknowledged that “for years . . . people have tried to make a big deal” out of the connection between his company and Azcarraga’s.

“That’s one of the reasons we maintain a low profile,” Rosenthal said in the interview. “Because the more you holler, the more smoke people see, and people think that where there’s smoke there’s fire.”

Common in Mexico

In the case of his proposed new national sports newspaper, Azcarraga’s role is not hidden, although Azcarraga could not be reached for comment directly.

And in any case, keeping a low profile is not uncommon for foreign businessmen, particularly from Mexico, who over the years have faced laws prohibiting conversions of pesos into dollars. Violators of such laws were called “sacadolares,” or “dollar removers.”

Even without such restrictions, the concept of secrecy is integral to Mexican business, so much so that most Mexican companies end their names with the acronym S.A.

It is the equivalent of Inc. or Corp. in English.

But the literal translation in Spanish is sociedad anonima, or anonymous society.

Times staff writer Laurie Becklund contributed to this story.