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Televisa Is Not Done Yet

The battle for Univision Communications Inc. isn’t quite over yet, after a top executive at rival Grupo Televisa told analysts last week that he might consider re-entering the fray for the Spanish-language broadcasting giant.

On a conference call discussing its second-quarter financial results, Televisa executive vice president Alfonso de Angoitia Noriega said that he would not rule out making another offer for Univision.

“We haven’t ruled that out. It is one of the alternatives that Televisa has,” de Angoitia said on the conference call.


Analysts have estimated that a Televisa bid would have to be at least $38 per share.

Televisa had bid $35.75 per share for Univision in June, only to be bested by a $36.25 per share bid (worth $13.7 billion) from a group of private equity investors (Providence Equity Group, Texas Pacific Group, Madison Dearborn Partners and Thomas H. Lee Partners) and media mogul Haim Saban.

Earlier this month, Televisa said it would not contribute its shares (about 11% of Univision) to the partners, and would be interested in selling its Univision stake. Televisa also said if its Univision stake dips below 13.6 million shares (it currently has about 39 million Univision shares) it would be free to create its own U.S.-based Spanish language network to rival Univision.

Offering more for Univision won’t be that easy. Several of Televisa’s partners backed out of the bidding because they believed the first offer was too high. Miller Tabak & Co. media analyst David Joyce believes a higher offer would be too much for remaining partners Bain Capital and Microsoft Corp. chairman Bill Gates’s private investment vehicle Cascade Investments to bear.

Under the Providence Equity deal, Univision would also have to pay a $300 million breakup fee if it accepts another offer.

“I don’t think their current bidding partners who are left would want to step up to the plate and pay an extra $1 per share just for the break-up fee for their negotiating tactics and for their dragging their feet,” Joyce said.

Joyce doubted that Televisa would make another bid. But he said by leaving the door open, the Mexican programming giant could renegotiate key parts of its existing content deal with Univision’s new owners.

“There’s still a pretty good possibility that they’ll come to terms on a number of items with the Providence Equity and Haim Saban group,” Joyce said. “They want higher royalties for what they’re already producing, they still want to get value for their shares and it would be much easier for them to stick with the infrastructure they’ve got in place rather than do something really oddball like pairing up with Ion Media Networks which still has NBC and therefore Telemundo involved in there.”

Televisa has chafed at its existing content deal with Univision — a 25-year pact that expires in 2017 — going as far as suing Univision for breach of contract in order to nullify the agreement. That litigation has been put on hold until February, Joyce said, which could mean that the new owners could reach a compromise.

According to a report in The New York Times last week, Televisa chairman Emilio Azcarraga Jean, de Angoitia and executive vice president Bernardo Gomez were seen at the Allen & Co. annual media retreat in Sun Valley, Idaho, meeting with Providence Equity founder Jonathan Nelson. According to the Times, Azcarraga may have been negotiating a way for Televisa to continue its investment in Univision.


On the conference call, de Angoitia confirmed that Televisa was at the Allen conference and had discussions with the Providence Equity group. But he added that past discussions with the Providence group have involved Televisa selling its Univision stake.

“We have told them that we are willing to entertain the possibility of selling this stock to them now,” de Angoitia said.

While creating its own U.S.-based network would be costly, Joyce said that Televisa has other options – it plans to begin offering much of its programming – including its popular telenovelas – in the U.S. via the Internet beginning Dec. 19.

Although Univision disputes that claim, Televisa sued the broadcaster in Los Angeles Superior Court July 19 to affirm its rights to distribute its programming over the Internet in the U.S.