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Searchlight Capital, ForgeLight to Buy Majority Stake in Univision

About seven months after putting itself on the block, Univision Holdings, parent of Univision Communications, said Tuesday that a group including private investment firm Searchlight Capital Partners and operating and investment company ForgeLight, headed by formerViacom chief financial officer Wade Davis, have agreed to purchase a majority interest in the Spanish-language broadcaster.

Terms of the deal were not disclosed, but previous reports speculated that the group would pay about $800 million for the majority stake, valuing Univision at under $10 billion. 

According to Univision, Spanish-language programmer Televisa Communications will retain its 36% interest in Univision, with the private equity buyers purchasing a 64% interest in the broadcaster from Madison Dearborn Partners, Providence Equity Partners, TPG, Thomas H. Lee Partners and Saban Capital Group. Davis, founder of ForgeLight, will become CEO of Univision after the deal closes, expected later this year.

As part of the agreement, Televisa’s programming deal with Univision will remain intact and will not expire unless Televisa voluntarily sells down a portion of its ownership stake, at which point the programming deal would remain in effect for 7.5 years.

The deal ends what has been more than a decade-long odyssey for Univision, which went private in 2006 in a leveraged buyout valued at about $13.7 billion.

Univision reportedly turned down an offer in 2017 from Liberty Media’s John Malone that would have valued the company at $13.5-to-$15 billion. In March 2018 the company withdrew a planned initial public offering because of what it said at the time were unfavorable market forces.  That IPO was expected to raise about $1 billion and would have valued the company at about $20 billion.

The withdrawal of the IPO touched off a series of events at the Spanish-language broadcaster, starting with the resignation of CEO Randy Falco and CFO Francisco Lopez-Balboa in March of that year. In the following months, several top executives, including former chief revenue officer Tonia O’Connor and chief content officer Isaac Lee, left the company for other opportunities. Univision shed some assets -- it sold its online unit Gizmodo Group to Great Hill Partners in April -- and endured some layoffs in July 2018.

In May 2018, Univision hired former Media General chief Vincent Sadusky as its CEO,  and the company has enjoyed ratings growth and successfully weathered a nine-month blackout to Dish Network customers last year. In a press release, Sadusky said Univision is a “re-energized and refocused company.”

“Both Searchlight and Wade are wholly supportive of Univision’s core mission to entertain, inform and empower Hispanic America and fully embrace the commitment and special bond we have with our audience,” Sadusky said in the press release. “Our talented operating team has transformed Univision to be strategically, operationally and financially stronger than it has been in years. We have made important moves—strengthened programming, secured many major distribution deals, closed our strongest Upfront in four years, divested non-core assets, and enhanced our news, sports, local and digital offerings. Our partnership with Televisa has never been stronger and continues to create an unstoppable, world-class content machine, as evidenced by Univision being one of only two broadcast groups to grow viewership this season. ...I remain committed to leading the company and supporting a smooth and successful transition over the coming months to ensure Univision is best positioned for the future ahead.”

Univision hired Morgan Stanley, Moelis & Co. and LionTree Advisors in July to explore strategic alternatives, including a sale. The auction reportedly attracted interest from several potential buyers, including Spanish language programmer Hemisphere Communications and Los Angeles based fund Platinum Equity. According to Bloomberg News, Hemisphere dropped out of the running in January. 

Searchlight Capital also has some experience in the TV business. Its founder Eric Zinterhofer was chairman of Charter Communications from 2009 to 2016. Prior to forming Searchlight in 2010, Zinterhofer was a partner at Apollo Global Management, Charter Communications’ largest bondholder when it as winding through bankruptcy in 2009. Apollo swapped that debt for equity in Charter and later sold that stake to cable legend John Malone’s Liberty Media in 2013. 

“Univision has a proven track record of success in reaching and serving the U.S. Hispanic community, who represent 1 in 5 Americans and growing," Zinterhofer said in a press release. "Most recently, Univision and its talented employees have made great strides under the leadership of Vince Sadusky and the stewardship of chairman Haim Saban and the full Sponsor Group. The strong support of Televisa, a premier content producer in the Spanish speaking world, and Wade Davis, a proven executive in areas which include advanced advertising and digital distribution, further enhances our confidence in Univision’s bright future.”

Davis thanked Univision's ownership group for steering the company along its current path, adding that he sees continued growth ahead.

"I am proud to partner with Searchlight and Televisa to lead Univision at such an exciting point in its history," Davis said in a press release. "Univision’s leadership and connection with one of the most important audiences in the U.S. today creates an amazing platform to drive innovation, build market-defining content and create an even deeper relationship with its audience. Vince and the entire Univision team have done an outstanding job of refocusing the company over the past 18 months, which has further enhanced the company’s position as a market leader in Spanish-language media and created this incredible opportunity going forward.”

Morgan Stanley, LionTree Advisors and Moelis & Co. are acting as financial advisors to Univision, and Cravath, Swaine & Moore, Covington & Burling and Sidley Austin are serving as legal counsel to Univision.

BofA Securities is serving as the financial advisor to Searchlight, Paul Weiss Rifkin Wharton & Garrison is acting as its legal counsel.

Guggenheim Securities is serving as financial advisor to ForgeLight, and Willkie Farr & Gallagher and Proskauer Rose are acting as its legal counsel.

Goldman Sachs is serving as financial adviser to Searchlight and ForgeLight as a group.

Allen & Co. is acting as the financial advisor to Televisa, and Wachtell, Lipton, Rosen & Katz and Pillsbury Winthrop Shaw Pittman are serving as its legal counsel.