Federal antitrust regulators on Wednesday agreed to Univision Communication Inc.'s $2-billion purchase of Hispanic Broadcasting Corp. -- as long as Univision follows through on plans to curtail its influence in a related TV and radio company.
The approval, which had been expected, removes a major hurdle that has held up Univision's plan to grow into a television, radio and record label behemoth commanding two-thirds of advertising dollars spent on Spanish-language media in the United States.
Univision executives and Justice Department officials declined to comment Wednesday.
Antitrust regulators have been concerned that Univision's 27% ownership of Entravision Communications Corp. -- a Santa Monica-based company with 55 radio stations, 35 television stations and more than 11,000 billboards -- would stifle competition for ad dollars in markets such as San Jose and Las Vegas, where Entravision outlets compete with those owned by Hispanic Broadcasting.
"Regulators thought that was far too much influence," said David W. Miller, a media analyst with the investment banking firm Sanders Morris Harris.
Univision addressed regulators' concerns by agreeing to reduce the company's stake in Entravision to 10% within six years, and to give up its two seats on Entravision's board. Univision also agreed to convert its shares to a new class of nonvoting preferred stock.
Justice officials Wednesday also made it clear that Univision, which is controlled by Los Angeles billionaire A. Jerrold Perenchio, is prohibited from using its ownership stake "to exert any influence over Entravision in the conduct of Entravision's radio business." However, the Justice Department allowed Univision to maintain its right to block the sale of Entravision or any of its stations that are affiliated with Univision.
The Federal Communications Commission this month questioned whether maintaining such veto rights "would give Univision excessive influence over decisions taken in the ordinary course of Entravision's business." A spokeswoman said the FCC was reviewing the matter.
Univision's shares rose 60 cents Wednesday to $26.35, and Entravision's shares fell 34 cents to $5.56, both on the New York Stock Exchange.