Spanish-language giants Televisa and Univision join forces

After years of acrimony, the hemisphere’s two largest Spanish-language media companies have decided they need each other after all.

Tuesday, Grupo Televisa of Mexico City said that it had provided Univision $1.2 billion in exchange for a 5% stake and notes that eventually could convert into an ownership interest of as much as 40% in the New York-based Latino media giant. Televisa also agreed to provide its highly popular telenovelas to Univision exclusively at least through 2020 — and perhaps beyond 2025.

“This formalizes a mutually dependent relationship that these two companies have had for 50 years, and should take them into the next generation,” USC journalism professor Felix Gutierrez said.

The deal gives Televisa’s chairman, Emilio Azcarraga Jean, what he has long wanted: a stake in the television company that his father and grandfather helped build, access to the fast-growing U.S. Spanish-language market and higher royalties for Televisa shows.

Televisa, which has owned stakes in Univision at different times in the past, attempted to buy the company in 2006 but was outmaneuvered by a group of private investors, including Los Angeles billionaire Haim Saban.

Saban and private equity firms Texas Pacific Group, Providence Equity, Madison Dearborn Partners and Thomas H. Lee Partners took control of Univision in 2007 in a leveraged buyout that left Univision burdened with $10 billion in debt just as the advertising market collapsed.

Televisa’s investment gives Univision an infusion of cash that it can use to expand and meet its loan payments. It also could allow Univision to refinance its sizeable debt.

“We haven’t quite decided how we are going to invest this money, which clearly fortifies our balance sheet,” said Saban. “This is one of those rare instances in which a deal is accretive to both sides of the table. It is a match made in heaven.”

Televisa gave Univision its 50% stake in their joint venture TuTV, a collection of TV channels, which gives Univision full control and management. The pact also resolves rights issues that had prevented both Televisa and Univision from exploiting Televisa’s shows in the U.S. on the Internet and mobile devices.

U.S. rules prevent foreign companies from owning more than 25% of a broadcasting company, an obstacle that has limited Televisa’s ambitions. Should those rules be relaxed one day, its deal with Univision gives Televisa the option of increasing its 5% stake to as much as 40%.

meg.james@latimes.com