Michael Wolff: Why Univision's $135M Gawker Buy Is a Desperation Play for Millennials
The Spanish-language broadcaster's flawed strategy to chase bilingual young audiences with the doomed Fusion TV network has given way to a new obsession with English-only sites like The Onion and The Root as part of a frantic effort to build toward a face-saving IPO.
There may be an aspect of political correctness that has kept most everyone from publicly asking the glaring and bewildering question as to why Univision, the leading U.S. Spanish-language broadcaster, would be pursuing media that has no relationship to the Spanish language or to Spanish-speaking people. Putting aside that the very point about Spanish-language media is that it is in Spanish, what's wrong with its purchase Aug. 18 of various Gawker Media properties for $135 million? Why should Univision be culturally restricted?
It's true that its initial venture into non-Spanish-language content has been something of a unique disaster. This is Fusion, an English-language digital-cable combination launched in partnership with ABC/Disney, that was supposed to be a bridge from Univision's $3 billion a year Spanish-language audience to a richer, younger, bilingual world. But bilingual, Fusion's managers found, turns out not to be a common interest group — if you speak English as well as Spanish, you have no dearth of media choices and likely no more commonality than other English speakers, according to the many Spanish-language broadcasting executives with whom I discussed Fusion in late August.
The concept then morphed — in an effort to save what many at Univision were writing off as an obvious business mistake — from Hispanic millennials into multicultural millennials. The premise here is that the millennial audience (or the future millennial audience, which presumably will have a different generational moniker) will be mostly nonwhite — i.e., some potentially attractive demographic blend of black, Hispanic and Asian, with many identifying as more than one of the above — and that it will embrace programming that involves progressive social issues and pro-immigration policies.
In fact, Fusion, reportedly paying at least one of its journalists $500,000 a year, turned out to organically attract hardly any audience at all, and was, somewhat abashedly, caught buying virtually all of its digital traffic.
Doubling down, Univision then bought The Root, described as an "English-language American online magazine of African-American culture" (note the levels of cultural nuance). And then, straining even this highly strained audience logic, Univision acquired a controlling interest in satirical publication The Onion. This past spring, ABC, which had been sold on the now-abandoned idea of reaching a bilingual upscale audience, said no thanks, taking back its money and its English-language distribution power. Univision, tripling down — with the general view at Fusion, according to one insider, being "F— ABC, we are who we are" — bought out its partner.
There was a hemorrhage of staff following the loss of the Disney investment and a stream of bleak reports — a management quagmire, a content vacuum, an identity crisis and a complete lack of interest on the part of most people at Univision actually working in Spanish-language media at English-language Fusion.
But now, quadrupling down, Fusion Media Group has added the Gawker properties (including subject-specific verticals Jezebel, Gizmodo, Kotaku, Deadspin and Lifehacker but not the eponymous Gawker, the gossip site whose $140 million judgment against it in Hulk Hogan's lawsuit for invasion of privacy drove the company into bankruptcy and a sale), ever more firmly hewing to the line of logic taking Univision from its Spanish-language raison d'etre.
That line goes back to 2007, when under-the-radar investor and mogul Jerry Perenchio, by some estimates the richest man in Hollywood and by general agreement among the most savvy, sold Univision to a group of private equity investors led by Haim Saban for more than $14 billion. This was before the financial meltdown and before the Spanish-language market, with a restructuring of Comcast/NBC-owned Telemundo, became vastly more competitive. It also was before the sudden advent and fracturing of the market with Spanish-language cable offerings. In other words, Perenchio sold — and Saban and his group bought — Univision at the very top of the market.
It was a fast slide down from there. If not among the worst private equity deals ever made, at nine years in and with an IPO stymied for the past two years, it's likely a very painful one. Among the other parties to the deal — with, in addition to Saban, TPG Capital, Providence Equity Partners, Madison Dearborn Partners and Thomas H. Lee Partners — is the world's largest Spanish-language media company, Mexico-based Televisa, and its controlling shareholder the Azcarraga family. Televisa long has had an ownership role at Univision (and once was kicked out of its ownership position after accusations that it had exceeded the allowable limits of foreign ownership in a U.S. broadcast company), not least of all because Univision is one of the biggest buyers of Televisa's telenovela programming. More recently, the once absolutely reliable telenovela format (habituating audiences with daily episodes) has become significantly less reliable (in part because of Telemundo's more aggressive programming strategies). What's more, Televisa was suffering in its own market and increasingly looking to the U.S. and a dollar-denominated business for growth.
In other words, everybody in the Univision deal needed a savior.
That savior turned out to be Isaac Lee, a 45-year-old former investigative journalist and digital entrepreneur from Colombia with a raffish past as a bodyguard to a Colombian cabinet minister. Lee, according to one former Fusion staffer, is "insanely charismatic … he has mind control" and is something of a cult figure at the network. Lee became the head of news at Univision in 2010 and the singular author of Univision's non-Spanish-language businesses. By sheer force of personality and extraordinary salesmanship, according to insiders, he convinced both Univision CEO Randy Falco and Disney's former TV chief Anne Sweeney of the bilingual new-generation opportunity.
He also convinced Televisa that the future of Spanish-language media in the U.S. had to be understood in some post-Spanish-language fashion.
If Fusion had failed in most basic ways, and if the concept of the bilingual audience also sputtered out, it was Lee who, revising the theory, began to advocate an even more messianic vision. In this view, accompanied by a steady flow of press releases and an acquisition strategy based on a set of Venn diagrams laid over Univision's traditional audience, Latin culture would come to dominate the emerging new Hispanic, black and Asian multiculture. Add to that Lee's stress on the digital imperative — or anyway, the media belief that Wall Street expected a digital imperative — which Spanish-language media largely was excluded from (there's little Spanish-language digital advertising in the U.S.). And add, too, Lee's ability to stoke Televisa's longtime dreams of North America, in which Emilio Azcarraga — reportedly enthralled by Lee — often talks of acquiring U.S. citizenship, a la Rupert Murdoch, in order to be able to own a U.S. broadcast network, which in turn stoked the dreams of Univision's current and desperate stakeholders.
In other words, how and with what spit and polish and "story" do you dress Univision up and make it seem like it's something more than just an overvalued Spanish-language media play, and the Spanish-language market something more than hopelessly "mature," so you can sell the company to the public market, or to the Azcarraga family, or to some other suckers, and get out of Dodge with a return that isn't totally humiliating?
The current answer to that question, with accompanying press releases about the multicultural future — although, in this instance, one with a pretty standard-issue white-America demographic — is Gawker.
This story first appeared in the Sept. 9 issue of The Hollywood Reporter magazine. To receive the magazine, click here to subscribe.