Univision CEO: Comcast-Time Warner Cable Deal Could Be Bad for Hispanics
UPDATED: Randy Falco says he hopes for tough regulatory restrictions as part of the deal's approval process as his company predicts it will break even on the soccer World Cup this year.
Univision Communications CEO Randy Falco on Monday said that the planned Comcast-Time Warner Cable merger could be bad news for Hispanic TV viewers.
During an earnings conference call for the Spanish-language media giant, he said he was hoping for "potentially much tougher restrictions" on Comcast than regulators placed on the cable giant after the NBCUniversal acquisition "to protect Comcast competitors such as Univision who are serving minority communities in particular."
The merger "could be bad for competition and most importantly bad for Hispanic audiences," he argued. He said that after the merger Comcast would serve markets with 91 percent of all Hispanic households in the U.S. and be the top pay TV distributor in 19 of the top 20 Hispanic markets, giving it "staggering influence" over Hispanic audiences.
"The risk of this merger really is not a hypothetical [one], especially for providers like us who offer networks and services that compete with NBC, Telemundo and even NBC Sports," Falco concluded.
He highlighted that Comcast doesn't carry soccer-centric sports channel Univision Deportes Network, while other big pay TV operators do. "So either Comcast doesn't understand that soccer is a passion point for Hispanics or they don’t support competitors who have competing services," the Univision CEO said. "My fear is that the latter is the case and this type of anti-competitive conduct would continue. So we are just hoping that the right questions are asked by the people that are reviewing this and that the right protections are put in place, particularly for Univision."
In response to Falco's concerns, John Demming, executive director of corporate and financial communications at Comcast stated:
"Comcast is proud to be the nation’s largest provider of Latino and multicultural television packages, with a distribution platform that delivers more than 60 Latino networks in both Spanish and English. We have a proven track record with Hispanic customers offering the greatest programming choices in linear, digital, and on-demand platforms. New independent networks (El Rey and Baby First Americas), the Xfinity Latino Entertainment Channel – the first-of-its-kind interactive channel – and the celebrated Xfinity Freeview Latino event are a few examples to demonstrate how Hispanic inclusion extends beyond our robust procurement, workforce, and community investment practices.
"We face vibrant competition from companies with national and global footprints – like AT&T, Verizon, DirecTV, DISH, Netflix, Amazon – all to the benefit of consumers. This transaction will not lead to any reduction in competition or consumer choice in any market because Comcast and Time Warner Cable serve separate and distinct geographic areas – we don’t compete for customers anywhere. We will not have undue power in negotiating with programming networks, and we have a great record of working with programmers from the largest to the smallest."
"Comcast has had an extraordinary, long-standing commitment to Hispanic programming and through the transaction with Time Warner Cable, we are committed to bringing high-quality Hispanic content to millions of additional Americans," he concluded.
Falco went on to say: "The fact is that there is not one other media or telecommunications company that has the level of vertical integration of Comcast – I'm talking about video, broadband and content – not Google, not AT&T, not Facebook, not the satellite providers. And when it comes to video and broadband, they are by far and away the largest provider in the country." On the fourth-quarter 2013 earnings call, Falco had said about the proposed merger: "When the number one and the number two cable operators merge, it is a cause of concern that requires significant scrutiny."
Before the market open, Univision reported lower first-quarter earnings as higher operating expenses and a provision for income taxes, compared to a year-ago tax benefit, more than outweighed higher revenue. The company posted earnings of $6.2 million, compared with $9.0 million in the year-ago period.
However, adjusted operating income before depreciation and amortization, a measure of profitability that excludes some non-operating factors and that Univision focuses on, rose to $251.4 million, up 12.1 percent. Operating earnings also rose from $164.2 million to $195.3 million. First-quarter revenue rose 10.5 percent to $621.1 million. TV revenue increased 10 percent, and digital revenue jumped 83.2 percent, but radio revenue dropped 2 percent.
Operating income before depreciation and amortization rose 7.3 percent in the TV segment, 17.3 percent in radio and 552.9 percent in digital, according to Univision. "A few of the quarter's significant achievements include Univision finishing number three in the February sweeps, significant year-over-year audience growth at UniMas, UnivisionDeportes Network maintaining its position as the fastest-growing cable network among adults 18-49, and our digital platforms experiencing a 23 percent increase in impressions," said Falco.
He added: "We are optimistic about the opportunities that lie ahead in 2014 and are confident that our multiplatform offerings will continue to resonate with marketers and drive a strong upfront in May."
Falco said the first quarter has set Univision on a strong path for growth in 2014. He touted the upcoming soccer World Cup, saying the firm's networks will count down the 100 days to its start with special programming on the cup's history and the like.
Univision also said that it expects to break even on the World Cup over the course of the year with revenue coming in during the second and third quarters.
The company also said it expects continuing retransmission consent fee revenue, pegging it at around 5 cents per subscriber per month. Falco said it was too early to predict how the upfront will turn out.