Spanish-language media giants Univision Communications and Grupo Televisa of Mexico are combining their programming units, a move that underscores the increasingly close collaboration between the two companies — and the magnitude of their ratings challenges.
New York-based Univision long has been the dominant Spanish-language broadcaster in the U.S., but since 2013 its flagship TV network has lost more than 45% of its prime-time audience. The soapy telenovelas produced by Televisa in Mexico City, which Univision heavily depends on, have lost relevance with younger audiences.
Televisa's ratings in Mexico for its telenovelas also have plummeted as it has faced stiff competition from Netflix and YouTube.
The consolidation of production groups in Miami and Mexico City would create a more unified focus, the companies said Tuesday. The move also is designed to save money as Univision prepares for its public offering in the U.S. and is under pressure to increase profits amid declining advertising revenue from its TV and radio units.
Univision executive Isaac Lee will run the combined enterprise as chief content officer for both Univision and Televisa.
The shake-up also carries cultural significance: The Mexican company is entrusting its crown jewel — a $650-million-a-year programming operation — to a Colombian-born executive with close ties to Los Angeles billionaire Haim Saban, the chairman of Univision.
Lee will report to Univision Chief Executive Randy Falco and Televisa's Chairman and Chief Executive Emilio Azcárraga Jean, who is the grandson of Televisa's founder.
The companies said they would keep their news divisions and other business operations separate. Televisa's programming head and a longtime Azcárraga associate, José Antonio Bastón Patiño, will shift into a new role as president of international distribution for Televisa.
"By unifying our production of content for distribution on multiple platforms in Mexico and the United States, we will take advantage of the unique opportunity that Televisa and Univision have to compete more effectively in an increasingly complex and fragmented industry," Azcárraga said in a statement.
The move could foreshadow further collaboration. Televisa owns 10% of Univision but has long planned to increase its stake in the U.S. media company.
The U.S. Federal Communications Commission recently approved a waiver to the 1934 foreign ownership restrictions to specifically allow Televisa to claim as much as 40% of Univision.
Saban had been lobbying the FCC for the waiver for several years, in part, to allow Televisa to buy Univision shares held by private equity firms. The private equity firms are antsy to begin their long-awaited exit from the Spanish-language media company.
Univision has been planning to ramp up its own programming division to create more relevant programming for U.S. audiences. That effort was expected to be costly because Univision historically has outsourced that work to Televisa, which collects license fees when its shows air on Univision in the U.S.
Lee, a former journalist, joined Univision in December 2010 as president of its news division. He has been instrumental in Univision's push into English-language media with its launch of Fusion, originally a joint venture with the Walt Disney Co.'s ABC Television Group. Univision bought out ABC's stake in Fusion last year.
Lee is credited with spearheading the company's digital initiatives, including the acquisition of the Onion, a satirical news site, and last year's $135-million purchase of the Gawker websites, which it renamed Gizmodo Media Group.