Mexican pay-TV and broadcasting behemoth,
Grupo Televisa S.A.B.
), is likely to gain significantly from its ownership stake in the
U.S. broadcaster Univision Communications Inc. Privately held
Univision is the largest Spanish-language broadcaster in the U.S.
Televisa presently carries a Zacks Rank #3 (Hold).
Currently, a considerable share of Televisa's income is
generated from its U.S. operations, which includes the sale of
content, website and cable TV. Televisa allows Univision to access
its content and then rebroadcast it on TV and the Internet for a
royalty. The U.S. Hispanic TV market is highly lucrative and is
growing at a remarkable pace. In the first quarter of 2014,
Televisa's royalty from Univision was a record-high $64.8 million,
up 13.1% year over year.
In 2007, Univision was acquired by a consortium led by
billionaire Haim Saban for a total consideration of $13.7 billion.
Other investors were Madison Dearborn Partners, Providence Equity
Partners, TPG and THL Partners.
In early 2012, Televisa effectively purchased 35% stake in
Univision for $1.2 billion. As per the agreement, Televisa paid
$130 million in cash for a 5% stake and lends convertible debt for
the remaining 30% stake. The contract also allowed Televisa the
right to buy an additional 5% stake over the next five years, which
will increase its potential ownership in Univision to 40%.
Currently, Televisa effectively holds a 38% (after converting
debt into equity) stake in Univison. This leaves scope for another
2% stake buy over the next three years. The existing U.S.
regulation denies any foreign company to control more than 25%
stake in any U.S. broadcaster. However, the Federal Communications
Commission has the right to allow exemption for selected
At present, the owners of Univision are exploring strategic
options to sell the company and may also consider an initial public
offering (IPO) in the next year. Univision's owners have held talks
Time Warner Inc.
) regarding this. However, nothing concrete has emerged so far.
According to industry rumors, management is expecting more than
$20 billion from the Univision sale. Consequently, Televisa is
positioned to gain significantly from the sale.
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