The Federal Communications Commission on Wednesday approved the sale of nine Spanish-language TV stations and their affiliated Univision network to a company owned by Hollywood investor A. Jerrold Perenchio, Mexican media baron Emilio Azcarraga and a Venezuela-based communications concern.
The FCC's approval of the $550-million sale of the TV stations owned by Hallmark Cards surprised many observers, who didn't expect the FCC to take action until early next year.
A consortium of minority groups petitioned the FCC to deny transfer of the stations, contending that they would be controlled by the foreign partners. They said the transfer would lead to a loss of jobs for U.S. Latinos, as well as less diversity in programming.
The FCC, in a 31-page report, said it was "unconvinced" about the petitioners' arguments and believed that the parties were fully qualified to operate the stations.
"The FCC decision not only gives us a green light to proceed with the sale," Perenchio said, "but also acknowledges our commitment to producing the best possible programs for Hispanic audiences throughout the United States."
The deal is structured so that Azcarraga would not violate government regulations prohibiting foreign investors from owning more than 25% of a TV license in the United States. A bitter dispute over those rules in 1986 led Azcarraga to sell Spanish International Network, which later became Univision, to Hallmark.
Perenchio is a former Hollywood agent who scored big when he and partner Norman Lear sold Embassy Productions in 1985 to Coca-Cola for $400 million.
According to FCC filings, Perenchio would pay up to $50 million toward the purchase price. Hallmark Cards would take a promissory note of up to $100 million. The balance would be some as-yet undetermined combination of debt and equity provided by Azcarraga and the Venezuelan partners, Gustavo and Ricardo Cisneros, the brothers who own Venevision.
Univision reaches 90% of U.S. Latino households and captures about 55% of the Spanish-language advertising marketplace. Revenue in 1991 topped $200 million.
When the transaction becomes final later this year, it will give Azcarraga's Mexico City-based Grupo Televisa once again a major foothold in the United States, where it is aggressively expanding its media empire. Last July, Azcarraga bought Miami-based American Publishing Group, a major publisher of Spanish-language magazines, for $130 million.
But Univision promises to be a much more rewarding enterprise.
The United States is the largest market for Spanish-language programming outside of Mexico and stands to become a major buyer of Televisa's programs. In Mexico, Televisa captures about 90% of the TV audience and is a major exporter of Spanish-language telenovelas, or soap operas. A Televisa-produced sudser titled "The Rich Also Cry," for example, has long been the most popular TV series in Russia.
Grupo Televisa "always felt they are the premier Spanish-language company in the world," says Elizabeth Baron, a media analyst at S.G. Warburg in New York. "Part of their game plan is to be in the United States in a very controlled way and where the FCC feels comfortable."
The presence of foreign investors as principals in the Univision purchase set off harsh criticism from U.S. Latino activists after the sale was announced in April.
A coalition of 25 Latino organizations objected to the deal on the grounds that it would upset Univision's existing balance of 50% U.S.-produced programming and 50% imported programming.
In his application to the FCC filed last month, Perenchio indicated that he reserved the right to fill the Univision air time with programming from Mexico and Venezuela.
After hearing that the sale was approved Wednesday, the National Hispanic Media Coalition said it will appeal the decision to the U.S. Court of Appeals in Washington.
"We're taken aback with the way it was done," said Esther Renteria, coalition chairwoman.