Televisa Is/Isn't Ideal Suitor for Univision

[SOURCE: Wall Street Journal, AUTHOR: Miriam Jordan miriam.jordan@wsj.com]
American media giants Viacom, Time Warner, Walt Disney and News Corp may all be interested in buying Univision, but the best fit for US broadcaster may be Mexico's Televisa, which produces the shows that ensure top ratings for Univision, a rival Spanish-language broadcaster. "They have $1 billion in cash, and nothing else to buy in Mexico," says Philip Remek, an analyst at Guzman & Co. Hamstrung by Mexican antitrust regulations, the operator of radio, satellite, Internet and publishing businesses has diversified recently into a new discount airline and gambling, such as off-track betting, in Mexico. But it prefers to capitalize on its traditional strength: media. Televisa is run by one of Latin America's most powerful and ambitious sons, 37-year-old Emilio Azcarraga Jean, who has been at the forefront of Mexican companies tapping growth opportunities overseas. But until Mr. Azcarraga obtains U.S. citizenship -- conceivable in the future thanks to his marriage to a Mexican-American and the birth of an American son last year -- Televisa would have to join forces with an equity investor or media company to circumvent a 25% cap on ownership of U.S. broadcasters by foreigners. The opportunity to acquire Univision and become a major player in the U.S. media market now has Televisa moving into high gear. U.S. Hispanics, whose disposable income is commensurate with Mexico's gross domestic product, are an alluring market. Currently, the company's U.S. interests are limited to some Spanish-language magazine titles, a joint-venture cable channel called TuTV and its 11% stake in Univision. In 2004, Televisa derived less than 10% of its annual $2.63 billion in revenue from Univision royalties and other U.S. business. With Univision now formally on the block, Televisa looks like one of the few sure bidders, given the high price that Univision and its chairman, 75-year-old A. Jerrold Perenchio, are aiming for -- about $40 a share.
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