Biggest Mexican Broadcast Firm Will Go Public

Mexico’s dominant television broadcaster, owned for decades by three families, is planning to go public in a big way over the next two months, selling a one-third interest on four international stock markets, including the New York Stock Exchange.

Televisa--which has a virtual monopoly on Mexican broadcast television and strong positions in other entertainment businesses--plans two issues to raise $500 million or more for existing shareholders, principally the powerful Azcarraga family, according to sources close to the deal. Besides the NYSE, stock will be sold on the Mexican, Tokyo and London stock exchanges.

“This will be the most interesting Mexican issue since the telephone company,” said Hermann Von Bertrab, a San Diego-based analyst who follows Mexican stocks. Telefonos de Mexico, whose securities have long traded over the counter in the United States, generated frantic investor interest when additional shares were offered this year.

“This is potentially a very good investment,” Von Bertrab said of Televisa, whose U.S. unit, Univisa, is based in Los Angeles. “They control the Mexican market and charge what they want to advertisers. They have also aimed at expanding into the international market.”

Because of securities regulations, company officials would not comment on the offerings. However, information from analysts who have seen presentations about the offering and sources close to Televisa indicated that major shareholders will be selling 30% or more of the company’s stock.

Televisa’s owners will test the market late this month by offering shares in Videovisa, a video production and distribution company that includes Mexico’s largest chain of video stores. Azcarraga family members and associates own Videovisa as well.

Underwritten by Goldman Sachs and Grupo Bursatil Mexicano, the Videovisa offering is expected to raise about $80 million, according to informed sources.

The Televisa offering, underwritten by Bear Stearns and the Mexican brokerage Acciones y Valores, could bring in $300 million to $500 million in late November. Early this year, auditors estimated the company’s total worth at $2 billion.

The sales are thought to be an effort to recover an estimated $100 million that major shareholders lost on the now-defunct American sports newspaper, the National, and the estimated $350 million they paid to buy out Romulo O’Farrill--a member of one of the network’s founding families--and other smaller shareholders earlier this year.

Shareholders are believed to be looking for liquidity in order to take advantage of investment opportunities they expect to materialize under the North American free-trade agreement being negotiated by the United States, Mexico and Canada.

Televisa Chairman Emilio Azcarraga has made no secret of his intention to expand his U.S. operations, either through Univisa or other personal investments.

Traditionally, Mexican businessmen invite their sisters to participate in major business deals. One of Azcarraga’s sisters owns about 30% of Televisa. The other recently sold her Mexico City cable television franchise back to the corporation for an undisclosed amount.

Azcarraga owns about 20% of the company, his son 10% and his nephew 15%. Miguel Aleman Magnani, vice president of corporate image and a member of the third Televisa founding family, owns 10%. The remainder--about 15%--is divided among other family members and longtime employees.

Azcarraga has lobbied for liberalization of U.S. restrictions on television station ownership as part of the free-trade pact.

For 25 years, Televisa owned the Spanish International Network, which supplied programming to 12 Spanish-language stations in the United States. Televisa executives were partners.

Under pressure from the Federal Communication Commission, which accused Azcarraga of controlling the stations through proxies, the corporation sold the Univision network and eight of the stations to Hallmark Cards Inc. for $600 million in the mid-1980s.

Analyst Bertrab said a telecommunications opening as a result of free trade would favor Televisa, because the company is financially stronger than either U.S. Spanish-language networks--Telemundo or Univision.

Since the sale, Televisa and company executives have remained active in the United States. Televisa buys air time from KWHY-Channel 22 in Los Angeles and a station in Houston.

Azcarraga is the single largest corporate sponsor of “Mexico: 30 Centuries of Splendor,” now at the Los Angeles County Museum of Art.

Televisa At a Glance

Chairman: Emilio Azcarraga

Assets: $2 billion

Subsidiaries: 287, including four television channels, six radio stations, three record companies, video rental store chain, movie studio, billboard company, two soccer teams, country’s largest cable franchise

Employees: 15,000

Share of Mexican ad billings: 70%

Production: 24,000 hours a year

U.S. subsidiaries: Univisa; Spanish International Network (sold to Hallmark for $300 million); Spanish International Communication Corp. (sold to Hallmark for $301 million)

Sources: Televisa, published reports