Some TV in Univision asset sales


Univision's new private equity owners haven't announced any asset sales yet, but in the company's quarterly conference call CFO Andrew Hobson indicated that the process is well underway to sell the half-billion bucks in non-core assets that the company has indicated it plans to divest. For the first time, Univision indicated in its quarterly SEC filing that some TV assets will also be divested. Asked about that by an analyst, Hobson said the company had identified a couple of low-power and a couple of full-power stations which are non-core and are going to be sold off. He said the impact on TV division revenues will be de minimis.

One analyst wanted to know how Univision can expect to get a half billion while shedding only 15 million or so in EBITDA. Hobson explained that the big reason is Univision Music, which the company expects to sell to a major record label which will be able to realize substantial cost efficiencies. The CFO didn't discuss a price, but the New York Post reported Friday that bids are expected to be in the range of 225-325 million. Also, some of the radio stations on the divestiture list are sticks, so worth more for their potential than any multiple of cash flow.
SmartMedia observation: A little housecleaning seems perfectly logical for a new owner. Getting out of the music business is clearly a smart move, since that has been a real drag on the company's profitability – and a lot more trouble than it could ever be worth. We had wondered whether big bidders would show up for the auction, but, despite their own difficulties with declining sales, the major record companies apparently all see Latin music as one growth area in a business that currently is lacking in such. Most of the rest of the 500 million in expected proceeds will be coming from radio, where Univision is expected to divest stations in markets where it has no TV O&Os. In most of those markets, the local Univision and TeleFutura affiliates are owned by Entravision, so it is first on everyone's list of likely buyers. It is harder to predict just which TV stations Univision management has decided are non-core. There are a few in markets, such as Washington, DC and Cleveland, which have growing Hispanic populations, but which will never be among the largest Hispanic markets. Perhaps Univision has decided that it would make more sense to have affiliates, rather than O&Os, in some of those type markets.