Univision Deal Said to Be Close to U.S. Approval

The Justice Department appeared poised to approve Univision Communications Inc.’s planned $2-billion acquisition of Hispanic Broadcasting Corp. after setting aside a key potential obstacle, according to sources close to the deal.

Justice Department antitrust officials have decided that Spanish-language TV and Spanish-language radio stations don’t compete for the same audience and advertising dollars, the sources said.

But sources close to the situation stressed that the regulatory review is not complete. Antitrust officials are still examining Univision’s ownership role in another Spanish-language media firm.

Still, the finding could expedite clearance of the deal, legal experts said. Univision executives told analysts last week that they expected the transaction to close in the first quarter of next year.

Univision and Hispanic Broadcasting officials declined to comment on the review Sunday. A Justice Department spokesperson did not return calls for comment.

Los Angeles-based Univision runs the nation’s biggest Spanish-language TV network. Dallas-based Hispanic Broadcasting owns 55 radio stations in the United States, making it the biggest Spanish-language radio broadcaster.

A Justice Department finding that Spanish-language TV and Spanish-language radio constituted a single market probably would have nixed the deal. The concern would have been that the combined company would have too large a share of the Spanish-language audience and advertising dollars.

Rivals estimate the combined company would capture more than two-thirds of all Spanish-language ad dollars in the top 10 U.S. markets.

But Univision contends that it is part of the overall media market and jockeys for advertising dollars alongside such giants as Viacom Inc. and Walt Disney Co., each of which owns television networks, radio stations and other assets.

Federal approval would allow Univision to become an even bigger Spanish-language behemoth. The company, which controls more than 70% of the U.S. Spanish-language TV market, has expanded into Internet ventures and the music business.

The deal also would be considered a victory for Clear Channel Communications, the nation’s biggest radio broadcaster. Clear Channel would trade its 26% stake in Hispanic Broadcasting for an 8% share of fast-growing Univision.

Ironically, Clear Channel, in seeking federal approval to purchase radio stations in other cases, has contended that radio and television do compete against each other, saying its stations “face vigorous competition for advertising revenues from all media.”

But the Justice Department’s decision in the Univision review keeps with its long-held view that radio and television compete for different kinds of advertising, and thus are distinct markets.

In reviewing Spanish-language media, “it is easier to make the case that there’s an objectionable consolidation,” said Vincent Pepper, a Washington communications attorney who has followed the review. “For people who want to reach the Spanish-speaking audience, there is a more-defined market. But I’m not surprised” by the Justice Department decision, he said. “I don’t think they have an appetite for taking this one on.”

Even with the decision, sources said, the regulatory review is continuing. One key issue that remains is Univision’s 31% ownership of Santa Monica-based Entravision Communications, which owns 38 Spanish-language radio stations that compete with Hispanic Broadcasting’s outlets in several markets, including Los Angeles.

Univision probably will have to sell several radio stations, most likely those in Los Angeles and Dallas, to win the approval of the Federal Communications Commission, according to analysts.

Univision executives have said the company would convert its voting stock in Entravision into nonvoting shares if it wins regulatory approval.

The proposed merger, announced in June, calls for Univision to exchange 0.85 share for each of Hispanic Broadcasting’s shares.

On Friday, Univision shares fell 61 cents to $25.79. The shares are down 30% over the last year. Hispanic Broadcasting shares closed down 40 cents at $21.60, off about 10% this year. Both stocks trade on the New York Stock Exchange.