Televisa Could Look to Raise Stake in Univision Over Time

8:49 AM PST 12/06/2011 by Georg Szalai
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“We are firm believers in the value of Univision,” an executive of the Mexican broadcaster tells a UBS investor conference.

NEW YORK - Mexican broadcast giant Grupo Televisa believes in the value of Univision Communications and would look to increase its stake in the U.S. Spanish-language media giant over time, an executive said here on Tuesday.

Through equity, Televisa currently owns six percent, and it has the right to convert debt into another 30 percent stake, investor relations officer Carlos Madrazo told the UBS Global Media and Communications Conference. Televisa also has an option down the line to buy another four percent, which he said the firm would “probably” exercise even though price will play a role.

Asked if the company could increase its stake beyond that, Madrazo said that depending on when and how current private equity owners of Univision want to exit their stakes, Televisa may or may not have an opportunity to add to its stake further. “We are firm believers in the value of Univision,” he said. “We would probably look to increase our presence in this market going forward.”

There are certain limits to Televisa’s outright ownership stake in Univision though. U.S. law currently doesn’t allow foreign companies to own more than a 25 percent stake in a U.S. broadcaster.

Madrazo on Tuesday also called Univision “one of the two most important sources of value creation for Televisa going forward.” After all, “as Univision grows, so will the royalties from Univision” that flow to Televisa, he explained.

Discussing Univision’s outlook, the Televisa executive said he expects the company would be able to convert its strong ratings into “incremental revenue” as more advertisers target Hispanics and pay up to do so over time.

Asked about Univision’s loss of future soccer World Cup rights to NBCUniversal’s Telemundo, Madrazo said that the reported $600 million that Telemundo is paying seems high. If Univision does not pay that much because it sees less potential to make the cost up via revenue, “I’m very happy that they didn’t bid the same amount,” he said, adding that it is difficult to make money with sports in the U.S.
 
Madrazo was also asked about a dispute between Televisa and Mexican billionaire Carlos Slim’s companies, which this year stopped buying advertising on Televisa amid a price disagreement and antitrust complaints the two sides have filed against each other. Slim’s Telefonos de Mexico competes with Televisa’s cable operation for telephone and broadband customers.

Madrazo said that Televisa would welcome back Slim’s companies as they contributed 1.4 percent of total 2010 revenue and 4 percent of broadcast revenue with about $70 million.
 

Email": Georg.Szalai@thr.com

Twitter: @georgszalai

 

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