By Adam R Jacobson
RBR + TVBR
DORAL, FLA. — Bring out the tequila and chilaquiles!
The FCC on Tuesday (1/3) gave Univision Communications and Mexican media goliath Grupo Televisa a huge New Year’s gift by agreeing that the public interest would be served by permitting foreign ownership of Univision beyond the federally mandated limit of 25%.
With Univision and Televisa unopposed in its petition and the Commission and The National Hispanic Foundation for the Arts, The National Hispanic Media Coalition, and the National Association of Latino Independent Producers all filing comments in support of the Hispanic media companies, the FCC has given the green light for foreign investors to own up to 49% of Univision’s equity and 49% of its voting interests — including up to 40% of its equity and voting interest to be held by Televisa and its affiliates.
The ruling is a huge victory for Univision, which has experienced significant share erosion in the last three years as NBCUniversal’s longtime rival Telemundo has seen gains in its prime-time lineup.
According to one longtime Hispanic media professional, an infusion of funds from Televisa will likely lead to increased spending — and that would help Univision to create more programming that is expressly of interest to U.S. audience. Univision is bound by contracts with Televisa to air, unedited, prime-time telenovelas and other programming produced for Mexican audiences and imported to other nations where Spanish-speaking viewers are.
The petition’s timing is directly tied to Univision’s long-awaited initial public offering, which has been discussed for months but has not been seen due to difficult IPO conditions for all companies.
In its Declaratory Ruling, the FCC’s Media Bureau noted that it has ruled on only one petition for declaratory ruling regarding foreign ownership in the broadcast context since the 2013 Broadcast Clarification Order. That ruling centered on Pandora Media‘s acquisition of KXMZ-FM in Box Elder, S. Dakota. As the FCC approved Pandora’s request to exceed the 25% foreign ownership limit, it ruled that Univision could also do so.
Univision’s aggregate foreign equity investment is approximately 15.6%, of which 10% is held by Televisa. The aggregate foreign voting interest in Univision is 19.9%, of which 14.4% is held by Televisa.
Meanwhile, a group of six private equity investment firms possess majority ownership of Univision. Five of the groups formed a consortium in 1997 to acquire the company — a transaction designed to prep the company for a profit-generating sale that has yet to transpire.
This ownership of Univision is broken out as follows:
- TPG Global LLC holds 27.3% of the voting interest and 20.6% of Univision equity.
- Madison Dearborn Partners holds 20.5% of the voting interest and 18.9% of Univision equity
- Providence Equity Partners holds 19.5% of the voting interest and 19% of the equity
- Saban Capital Group holds 10.3% of the voting interest and 7.1% of the equity
- Thomas H. Lee Partners holds no voting interest but possesses 19% of the equity
- Glade Brook Capital Partners in 2014 obtained 3.2% of Univision’s voting interest and 2.2% of its equity
Univision suffered a bruising third quarter as an initial public offering will now come in fiscal 2017. The company in April 2016 said it hoped an IPO would happen by the end of 2016.
Total revenue for Q3 dipped 8.3%, from $801.5 million to $734.8 million.
The Q3 revenue results came following a surprise market exit for Univision Radio. In November, Univision announced that it is selling KAMA-AM 750, KQBU-AM 920 & KBNA-FM 97.5 “Qué Buena” to 97.5 Holdings LLC — a U.S. subsidiary of Mexico radio giant Grupo Radio Centro — for $2 million.
One week later, between 200 and 250 people were let go as part of a restructuring tied to the company’s poor Q3 earnings performance.
In a statement, Univision’s Chief News, Entertainment & Digital Officer, Isaac Lee, said, “We operate in a fast-changing and dynamic industry, and we regularly make adjustments to ensure we are nimble and best positioned to continue investing in Univision’s growth. As part of a broader effort to streamline operations, we eliminated a number of positions in various areas of the company,” he said.
Lee was quick to note that Univision will be adding new positions to support “strategic growth areas” over the next several months.