Today in Los Angeles a judge will begin hearing a unique divorce case, in which Mexico’s Grupo Televisa seeks to void its long-term content marriage to Univision. The outcome could determine whether the current owners of Univision paid 13.7 billion bucks for a network that could suddenly see most of its primetime programming vanish.
This legal battle has been pending for some time. Televisa sued Univision three years ago, claiming it had been shortchanged on royalty payments for some of its shows which constitute a big chunk of Univision’s primetime schedule – shortchanged by $100 million Televisa claimed. Since then Televisa has expanded its claims to contend that Univision has been so underhanded in its dealings that the programming rights contract should be voided now, rather than continue to run through December 2017.
While all this was going on, of course, Univision was sold by Jerry Perenchio and the former public stockholders to a group of private equity buyers, including Haim Saban, for $13.7 billion, including about $10 billion in debt. Televisa, headed by Emilio Azcarraga Jean, was part of another bidding group that was outbid for Univision – and he was not pleased. He turned down an invitation to roll over Televisa’s stake in the previous company and join the new owners. Since then he has been maneuvering to get out of the long-term Univision contract and/or to find other ways to get into the US Hispanic television market on his own terms.
Should Televisa win the case, Azcarraga would have no shortage of attractive options: Cut a new deal with Univision for a lot more money; Strike a deal with Univision’s chief competitor, NBC Universal’s Telemundo; or Launch his own US television network.
RBR/TVBR observation: This has been a long battle and we don’t expect a quick and simple trial. Testimony is expected to take several weeks as the two sides debate the original meaning of the programming deal struck back in 1992 and each side blames the other for how tensions have increased in the intervening years. Bad blood, big egos and mega-bucks will all be in play. Maybe someone will turn it into a telenovela.
