The deal calls for Televisa to contribute its media, content and production assets and a handful of networks to a new entity to be known as Televisa-Univision. Televisa’s assets are valued at $4.8 billion. The new company will be led by Univision CEO Wade Davis, who headed the investor group that acquired Univision in early 2020.
“This transformative combination brings together the leading network serving U.S. Spanish-language audiences with the leading media platform in Mexico powered by the most powerful Spanish-language content engine in the world,” said Davis. “Televisa-Univision will emerge as the leading global Spanish-language multi-media company, uniquely positioned to capture the significant market opportunity for Spanish speakers worldwide.”
Televisa will be the largest shareholder in Televisa-Univision with a 45% stake. Univision will pay Televisa $3 billion in cash, another $750 million in Univision shares and $750 million in preferred Univision shares that promise an annual dividend of 5.5%. The deal will be financed by a $1 billion equity investment from SoftBank Latin American Fund, with participation from Google and Raine Group and $2.1 billion in debt commitments arranged by J.P. Morgan. The deal is expected to close later this year.
Alfonso de Angoitia, at present Televisa co-CEO, will serve as executive chairman of the Televisa-Univision board. Marcelo Claure, CEO of SoftBank International, will become vice chairman.
“We have been deeply involved with Univision for more than two decades, and we have never enjoyed a better relationship with our partners,” said de Angoita and Televisa co-CEO Bernardo Gómez. “We are creating a company which is a leader across multi-media categories, unified over the largest territories and with the scale and focus to deliver the most compelling content experience to Spanish-language consumers around the world. We are confident that this strategic transaction will maximize the potential of our Content segment, while allowing us to strengthen our balance sheet and focus on growth opportunities at our Telecom business.”
Outside of the Televisa-Univision umbrella, Televisa will retain ownership of izzi Telecom, Sky and other businesses and the real estate associated with the production facilities, the broadcasting licenses and transmission infrastructure in Mexico.
Televisa is such an institution in Mexico that the deal came with some obligations by the broadcaster to preserve the Mexican operation of its news content.
“News content production for Mexico will be outsourced from a company owned by The Azcárraga family to guarantee that news content remains in Mexican hands and is produced in Mexico. Televisa-Univision will retain all assets, IP and library related to Televisa’s News division,” the press release stated.
Televisa has been an equity and content partner of Univision for more than 40 years. The companies have discussed merging on and off in the past although the FCC’s foreign ownership rules prevent an outright takeover of Univision’s TV stations by Televisa.
Univision was sold last year by a group of private investors led by Haim Saban, to a new group of investors headed by Davis’ ForgeLight banner and SearchLight Capital, in a transaction valued at about $8 billion-$9 billion.
Univision once was the undisputed leader of of Spanish-language TV in the U.S. But over the past decade NBCUniversal-owned Telemundo came on strong with resources for high-profile programming such as World Cup and Olympics rights. Telemundo also was early to experiment with U.S.-produced programs for bilingual and U.S.-born Hispanic audiences. Univision, on the other hand, relied for years on the success of novelas produced for the Mexican market by Televisa.
With the merger, Televisa and Univision both expect to achieve “efficient content costs” and savings that will allow the company to deliver earnings before interest, taxes, depreciation and amortization at a very healthy 45% margin. Much of those savings come from producing content in Mexico.
More to come