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Entravision facing lawsuit with IPO on horizon

Univision partner owner Entravision Communications Corp. is facing not just one but two lawsuits-as well as Justice Department inquiries-as it prepares to go public. Univision rival Telemundo Network Group LLC last week filed suit against Entravision alleging fraud and breach of contract over Entravision's March 16 purchase of Tijuana, Mexico-based xhas(tv), a Telemundo affiliate serving San Diego. (The charges, filed at the 11th Judicial Circuit Court in Miami, are similar to those in a still pending lawsuit filed in March by entrepreneur Barbara Laurence.) Six days after closing on the deal, xhas seller Television de California told Telemundo that it had not made a final decision about whether to sell the station at all, the lawsuit says. Telemundo says it had "right of first refusal" on the station and had clearly communicated its intention to buy xhas for $30.25 million. Neither Entravision officials nor the company's attorney returned telephone calls seeking comment. However, in a document filed last Tuesday with the Securities & Exchange Commission, Entravision said it will "vigorously defend [itself] against these claims."

The documents also outline plans for Entravision's initial public offering, scheduled for Wednesday, Aug. 2. Entravision wants to raise about $600 million by selling 46 million shares of stock at $13 to $15 per share. After the offering, Univision will own about 26% of Entravision. The filing also discloses that the Justice Department may "disapprove" of Entravision's previously undisclosed plans to buy about 1,200 billboards in New York City from Viacom Inc.'s Infinity Broadcasting Corp. Justice is "reviewing the terms of our acquisition of such assets in order to approve us as a buyer," says Entravision, which already owns nearly 5,000 outdoor faces in New York and one of the city's two Spanish-language daily newspapers.

Also on the antitrust front, Entravision reports that, in mid June, Justice asked for more information about the company's plans to buy radio stations in Sacramento, San Jose and Monterey/Salinas/Santa Cruz, Calif. Both Entravision and Z-Spanish Media Corp., which it is buying, have stations in those markets. Entravision says it has put Z-Spanish's stations into trust to gain Justice approval of that $475 million merger.