Univision to keep Televisa programming in out of court settlement


Televisa CEO Emilio Azcarraga Jean had been scheduled to take the witness stand yesterday in his company’s lawsuit to try to terminate its programming agreement with Univision. But instead, the companies announced that an out of court settlement had been reached. The television programming deal will still run through 2017, but Televisa will be paid more by Univision. Internet rights, however, are still to be litigated in a separate trial set for March.

In announcing the settlement, the companies said the amended program licensing agreement, running through 2017, includes a simplified royalty calculation, which will result in increased payments to Televisa in exchange for incremental rights for Univision. Specific terms were not disclosed, but then Televisa officials claimed the value was a bit over $600 million.

“We are pleased that today’s settlement concludes this time-consuming litigation. This settlement serves the best business interests of both Televisa and Univision. It assures the public that Univision will continue to have access to consistently top quality Hispanic programming. It enables Televisa to continue utilizing Univision’s extensive television networks as an important distribution channel for its content into the US marketplace. For Univision, it assures that there will be no disruption in some of its most popular and valuable programming, as well as affording Univision an ongoing pipeline of future content developed by Televisa,” the companies said in a joint statement.
Under a separate agreement, Televisa will license to Univision the home games for the three Televisa-owned Mexican soccer teams – America, Necaxa and San Luis – for 2009.

As previously planned, the parties said, the United States Internet rights to Televisa programming will be adjudicated in a federal district court in Los Angeles in March 2009.   

“The stakes were too high for both sides to let an LA jury decide such a crucial question that included such huge corporate issues for Univision and important revenues for Televisa,” Julio Rumbaut, CEO of Miami-based media brokerage and consulting firm Rumbaut & Company, told RBR/TVBR. He noted that the outcome means that the two entities are still pretty much what they were before as far as the US Hispanic television marketplace is concerned: Univision a content aggregator and Televisa a content provider.

Azcarraga Jean had been outbid when Univision was auctioned in 2006, derailing his plans to become a US media mogul as well as in his home country of Mexico. Televisa had sued Univision, claiming that it had been underpaid for program royalties – and it sought to have the program licensing agreement voided, which would have freed Azcarraga Jean to seek a new partner or build his own US network. His hopes of expanding his empire north of the border will now be put on hold for a while. Fortunately, he is still a young man.

RBR/TVBR observation: We had been surprised that the parties didn’t come to a settlement when they sought four postponements of the trial. When the courtroom arguments finally began, we again wondered whether those settlement talks were continuing. Indeed, they were.