Opponent says Univision and Entravision still too close
A group which petitioned to deny the merger of Hispanic Broadcasting Corp. (N:HSP) and Univision (N:UVN) claims that Univision isn't doing enough to cut its ties to another Hispanic media company - - Entravision (N:EVC) - - and hasn't yet told the FCC everything there is to know about their relationship. Responding to Univision's latest filing with the FCC (3/17 RBR Daily Epaper #53), the National Hispanic Policy Institute (NHPI) says the FCC needs to hold full-blown hearings on the merger.
While the latest letter from Univision to Barbara Kreisman claimed that Univision has now twice answered all of the FCC's questions regarding Entravision, NHPI claims the opposite is true.
"This is the second time that Univision has refused to be fully forthcoming," NHPI charged. "By failing to provide adequate information, the Commission must now designate the applications for an evidentiary hearing to determine whether or not the proposed merger is in the public interest."
NHPI insists that business relationships between Clear Channel (N:CCU), which is an HBC shareholder, HBC, Univision and Entravision will entangle them so much after the HBC-Univision merger that the companies will avoid competing with each other.
"Based on the cumulative effect of the relationships, both as they exist today and as proposed, between Univision and Entravision on the one hand, and Clear Channel and HBC on the other, can the Commission reasonably conclude that Entravision's radio stations will compete with HBC's radio stations? Can the Commission likewise conclude that Clear Channel's stations will compete with either HBC's or Entravision's radio stations? Looking at the relationship among Clear channel, HBC, Univision and Entravision, the answer is no. If the proposed merger is granted these entities will not compete," attorney Arthur Belendiuk said on behalf of NHPI.
Taking aim at an area that has apparently not been questioned by either the FCC or the Department of Justice's Antitrust Division, NHPI noted that Univision is the national rep for Entravision's TV stations and will continue to rep the Entravision stations even after restructuring its ownership stake (2/28 RBR Daily Epaper #42). "It is unlikely that Entravision will ever try to bite the hand that feeds it," the letter stated, suggesting that Entravision would hesitate to compete head-to-head with HBC-Univision radio stations, for fear of endangering its TV relationship.
The letter also cited the lawsuit that Spanish Broadcasting System (O:SBSA) filed, which accused HBC and Clear Channel of trying to block its IPO and depress its stock price. Although a federal judge has dismissed the suit (2/3 RBR Daily Epaper #23), NHPI says HBC and Clear Channel have never responded to the allegations.
"The evidence suggests that Clear Channel and Univision will use their combined market power to deny Hispanic owned competitors entry into the broadcast business. They will, as they have in the past, work to deny Hispanic owned businesses access to capital markets. They will deny competitors access to radio, television and newspaper advertising. They will keep competitior off of Clear Channel owned billboards and out of Clear Channel operated concert halls," NHPI charged. "In short, the combined Clear Channel/Univision juggernaut will use its market power to deny new entrants a fair opportunity to compete. Such conduct is contrary to the Commission's well-established policy of promoting localism, diversity and competition in the media."
RBR Observation:
We aren't taking sides and don't have a stake in the outcome of this battle. Unlike some of our competitors, we are neither owned by Clear Channel nor dependent on it for airplay data.
But that said, we would point out that the example NHPI cites as evidence of Entravision's radio stations protecting Univision TV stations from competition is faulty. NHPI includes a declaration from Mirta de Armas, Media Manager of Telemundo, stating that the national rep for Entravision's Denver radio stations - - KMXA-AM & KJMN-FM - - refused to accept Telemundo advertising during the November 2001 TV sweeps because Telemundo competes with Univision.
"This stunning declaration shows the extent to which Univision is able to control Entravision. Univision supposedly has nothing to do with Entravision's radio stations, yet Univision can order Entravision not to run a competitor's advertising," NHPI charged.
One problem. Univision doesn't own a TV station in the Denver market. Its networks - - Unvisision and Telefutura - - have affiliates in Denver, but they are owned by Entravision. Thus, Entravision was protecting its own.
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