The long-pending lawsuit by Televisa to try to void its programming contract with Univision began this week in a federal courtroom in Los Angeles. Univision denies any breach of the contract, which it wants to keep in place through 2017. Shows from Mexico’s Televisa fill about 80% of Univision’s primetime schedule.
In opening arguments on Tuesday, Televisa lawyer Marshall Grossman told the jury that Univision had failed to pay Televisa more than $100 million owed in program royalties and then tried to block Televisa’s auditors from having access to Univision’s books. He said Televisa came to the conclusion that it could no longer trust Univision.
In response, Univision attorney John Keker claimed that Televisa was trying to make mountains out of “accounting molehills.” Univision denies that any of the accounting disputes amounts to a material breach of the long-term contract.
Televisa CEO Emilio Azcarraga Jean has been seeking for years to expand his Mexican media empire into the United States. But he was outbid when Univision was taken private in 2007 for $13.7 billion by a group of private equity firms. Some observers had speculated that the lawsuit over program fees was a tactic to try to drive away other bidders. If so, it didn’t work. So, Televisa sold its 11% stake in Univision in the buyout and Azcarraga Jean has continued to seek ways to get out of the Univision contract and launch his own US television operation. Foreign ownership restrictions would likely not be a problem. His wife and children are US citizens and the mogul could likely become a US citizen and still keep his TV properties in Mexico.
Testimony in the case is expected to take at least three weeks. The witness list obtained by RBR/TVBR shows that Azcarraga Jean will take the stand, as will former Univision CEO Jerry Perenchio, current Univision President Ray Rodriguez, current Univision CFO Andrew Hobson and Entravision CEO Walter Ulloa. Entravision owns Univision’s largest affiliate group and Ulloa is going to testify specifically about payments relating to KORO-TV Corpus Christi, TX. Mac Tichenor, who sold Hispanic Broadcasting Corp., now Univision Radio, to Univision is also on the long witness list.
RBR/TVBR observation: After four postponements, we had expected the parties to come to some sort of settlement. Instead, the jury was selected and the trial is actually underway. Testimony is expected to stretch out over at least three weeks, so we wonder whether there are still any settlement talks taking place which could end this before the case goes to the jury.