Grupo Televisa to invest $1.2 billion in Spanish-language media rival Univision

Grupo Televisa to invest $1.2B in Univision

NEW YORK — Mexico’s Grupo Televisa SAB said Tuesday it will invest $1.2 billion in New York-based Univision Communications in exchange for a minority stake, expanding cooperation between the Spanish-language media heavyweights.

The deal brings an end to long-standing legal disputes between the companies, recently over privately held Univision’s rights to distribute Televisa’s programs online and to phones. It also helps Televisa, known for popular soap operas, strengthen its foothold in the U.S., an important market as the company works to widen its reach beyond Mexico.

Televisa will contribute its 50 percent stake in its TuTV joint venture with New York-based Univision. In exchange, it will get a 5 percent stake in Univision, as well as debentures convertible into another 30 percent stake in the future. It will also have the option to buy another 5 percent stake in Univision, bringing the total to a possible 40 percent stake. That would, however, require a change in U.S. law to allow a foreign company to own more than 25 percent of a U.S. broadcaster.

As part of the deal, Univision will now have exclusive U.S. rights to distribute Televisa’s programs online, for cell phones and for video-on-demand services.

The companies signed a 25-year contract in 1992 that gave Univision the exclusive U.S. broadcast rights to shows made by Grupo Televisa. The latest agreement extends that license deal to 2020 from 2017, and “at least” 2025 if certain conditions are met, the companies said. In exchange, Televisa will receive higher royalty payments from Univision.

The companies said three Televisa representatives will join Univision’s board, which will increase to 20 members.

The deal “fully aligns the interests of Univision and Televisa for the long-term,” said Haim Saban, chairman of Univision, in a statement.

Grupo Televisa tried to buy a stake in Univision in 2007, but lost out to investor group Broadcasting Media Partners Inc., which includes Saban, the billionaire entertainment mogul.

In an interview, Saban called the Spanish-speaking market in the U.S. a “demographic tsunami.” According to census figures, there were 48.4 million people of Hispanic origin living in the U.S. as of July 2009, making up 16 percent of the country’s total population. They were also the nation’s largest and fastest-growing minority group.

“We have a tremendous amount of growth ahead of us,” said Joe Uva, CEO of Univision. “Advertisers need to be where babies are being born, where families are expanding.”

Last month, Univision hit a ratings milestone when it became the most popular network among U.S. viewers aged 18 to 49 in the first week of September, according to Nielsen. It was the first time a Spanish-language TV station beat out English-language ones in this important demographic.

U.S.-traded shares of Televisa rose $2.60, or 13.8 percent, to $21.50 in trading Tuesday.