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Hispanic-media firm sees no immediate takers 2/10/2006 07:00:00 PM Eastern

Univision Explores Sale

Spanish-language TV and radio company Univision Communications has hired investment banker UBS to help it “explore strategic alternatives,” most likely to sell the company. An auction could allow one of the buyers overnight to become the most powerful force in Hispanic media, dominating the fastest-growing segment of the U.S. population.

But with some price tag estimates of $13 billion, a deal would be a big bet on a company that has plenty of problems. For all the hype about advertisers’ increasingly trying to reach Hispanics, Univision has had many of the same problems selling advertising as plain-old English-language TV- and radio-station owners. For a year, it has struggled to meet revenue expectations, and demand is so limited that, even in good times, the network manages to sell just half of its available inventory.

Further, the network is dependent on programming from Emilio Azcarraga, CEO of Mexican broadcaster Televisa, whose company owns 26% of Univision and is battling the U.S. network in court to break a long-term supply agreement. Any buyer will have to deal with Azcarraga and possibly partner with him.

Wall Street and industry executives see an array of possible buyers, but the limits on ownership of TV stations is a major complication. Sumner Redstone, chairman of Viacom and new spinoff CBS, has long expressed interest in the Spanish-language company, but CBS is already at federal ownership limits and would have to significantly prune its holdings to acquire Univision’s portfolio.

Tom Freston, who runs the Viacom half of Redstone’s empire, might be attracted because his MTV Networks is built around serving niche cable audiences. But buying such a big portfolio of TV and radio stations would be a major leap. Also, because Redstone controls both Viacom and CBS, Freston might run into the same problems as CBS CEO Leslie Moonves.

It’s hard to see Time Warner making a major acquisition in the midst of its fight with activist shareholder Carl Icahn, and News Corp. Chairman Rupert Murdoch doesn’t sound very interested. “We don’t have any specific intentions,” he said Wednesday, “and at the prices I’ve heard thrown around, we have no intentions.”

The wild card is Azcarraga. As a Mexican citizen, he’s blocked from fully controlling Univision’s broadcast licenses. However, he has married an American citizen and purchased a home in Miami. That leads some Wall Street executives to believe he may become an American citizen or back a family member in taking control. “It’s easy to see him working with private-equity funds and making a deal,” says David Joyce, media analyst for Miller Tabak.

Belo's Sander Is Broadcaster of the Year

Veteran broadcaster Jack Sander, newly named vice chairman of Belo. Corp., is Broadcasting & Cable’s 2006 Broadcaster of the Year. He will be honored April 20 when the Television Bureau of Advertising (TVB) holds its fifth annual Marketing Conference in New York.

“I’m stunned, delighted and particularly honored by both B&C and the previous recipients of this award to be in such fine company,” Sander says.

Sander and Belo, which owns 20 stations, endured a tough year. Hurricane Katrina hammered New Orleans, where Belo operates WWL. Remarkably, although the station was forced to evacuate, WWL had a backup plan and was the only station in the ravaged city that stayed on the air continuously, providing an invaluable public service by delivering the news via its Web site. Belo’s Houston station, KHOU, was later threatened by Hurricane Rita.

Sander joins an elite group of broadcasters honored by B&C and the TVB: Post-Newsweek’s Alan Frank, Hearst-Argyle’s David Barrett, Tribune Co.’s Dennis FitzSimons and Fox Television’s Dennis Swanson (when he was general manager of WNBC New York). The TVB conference is held in conjunction with the New York International Auto Show.

A 40-year veteran of the business, Sander joined Belo in 1997 as executive VP of the television group. He was promoted to executive VP of media operations in 2001 and named president of media operations in 2004.

The CW Looks For Affiliates

CBS and Warner Bros. executives, meeting in Los Angeles last week to finalize roll-out plans for the new CW Network, are expected to open the first markets for affiliation pacts within the next two weeks.

Industry sources tell B&C that letters are set to go out shortly informing stations outside the core Tribune and CBS markets with details on how to go about gaining a CW affiliation, as well as the anticipated timetable for completion of the process. The UPN and The WB networks will fold this fall into a single network, The CW.

Many expect reverse compensation to be a key component of bidding wars among multiple stations in the impacted markets. Since many stations will revert to independent status after being orphaned in prime time and other dayparts by their former networks, the level of anxiety was running particularly high after the initial surprise Jan. 24 announcement about the formation of The CW.

Some UPN and WB general managers had complained that their calls to their network-affiliate contacts for information were going unanswered. Fox, which is losing its UPN affiliations on nine stations, including the top markets, has already made clear that its O&Os in Orlando, Fla., Minneapolis, Phoenix and Baltimore will steer clear of any CW affiliations, despite the fact that there are no Tribune or CBS stations there.

“It certainly makes no sense for our four available UPN stations to sign with the CW,” Fox Television Stations CEO Jack Abernethy said in a memo to general managers last Thursday. “Handing over 30 hours of valuable time, receiving little inventory to sell and being asked to pay comp makes no sense for our TV stations. This would ensure losses, less growth opportunities and continue station brand confusion in this competitive media landscape.”

To fill the void, Fox intends to announce its own unwired network comprising five- or six-night first-run strip programming, likely including Twentieth Television’s English-language telenovelas under the Desire banner, in the next several weeks.

The station group is talking to both domestic suppliers and international producers about potential product.

—Jim Benson

DTV Bill Signed

President George W. Bush made the DTV transition hard date a reality with a signing ceremony for a larger budget bill last week. National Association of Broadcasters President David Rehr praised the bill’s passage: “With today’s enactment of the budget-reconciliation bill and its digital-television provisions, we have crossed an important threshold. NAB is pleased that Congress adopted many pro-consumer DTV measures in the legislation.”—John Eggerton

FCC Report Supports À la Carte

The FCC Thursday released a report on à la carte cable service, saying that consumers might be “better off” picking their own channels. Commerce Committee Chairman Ted Stevens (R-Alaska) responded that he would support à la carte if it is not more expensive, “subject to discussions with providers on the downsides.”

The report also details what it says are numerous errors in an earlier Booz Allen study. Booz Allen is standing by its study’s conclusions. The FCC submitted the study to Congress to support the conclusion that à la carte is uneconomical.

According to the new report, the previous report relied on “unrealistic assumptions” and “biased analysis” in concluding that à la carte would not lower rates for most pay-TV households.

FCC Chairman Kevin Martin said in a statement, “A careful analysis reveals that à la carte and increased tiering could offer consumers greater choice and the opportunity to lower their bills. Indeed, in recent months, more consumer choice has proven to be technically possible, and many companies have begun offering the kinds of tiers the previous report found to be infeasible.”

The National Cable & Telecommunications Association was ready with a list of more than 150 people and groups it says have sent letters to the FCC and Congress opposing mandatory pay-per-channel pricing, ranging from the NAACP to the NCAA.

“Most studies conclude that a mandated à la carte regime would be more expensive for consumers and result in less diversity in programming,” says NCTA President Kyle McSlarrow. “The notion that the government knows better how to improve on a competitive marketplace is not supported by the evidence.”—J.E.

Katrina Behind CBS v. Belo Suit

CBS has filed a lawsuit against Belo Corp. over the failure to close on the sale of UPN affiliate WUPL New Orleans, Belo said Thursday.

The station group cut a deal in July to buy WUPL for $14.5 million. It planned to form a duopoly with its top-rated CBS affiliate in the market, WWL.

The deal was slated to close by the end of 2005 but skidded to a halt when Hurricane Katrina devastated the market in late August. Along with some physical damage to their facilities, area TV stations have taken a huge financial hit.

In the fourth quarter alone, Belo says, WWL lost $4.3 million in revenue.

Recently, local stations have said that advertising is picking up, but the market’s future remains uncertain. Hundreds of thousands of residents fled the area, shrinking the market size, with many expected never to return.

Along with a diminished audience, TV stations are not receiving ratings information. Nielsen has been unable to collect ratings in the market since the storm, and November 2006 is the earliest that any measurement is expected.

Without new ratings, stations have been forced to sell off old books and estimates from national numbers. WWL has even contracted a research firm to provide some additional data for its advertisers.

On a conference call with analysts, Belo Chairman Robert Decherd said that CBS filed the suit in January, but he would not comment further.

“We believe our position in the lawsuit is sound,” he said, “and we intend to defend vigorously against the allegation.”—Allison Romano

Correction

Channel 20 Television Co./NewsWeb Corp. did not sell KUPN(TV) Sterling, Colo., but did sell KTVD Denver and other low-power channels and translators in the area, all UPN affiliates, to Gannett. Co. NewsWeb’s Fred Eychaner owns KUPN, not Isaac Max Jaramillo. Information on that transaction (Deals, 1/16, p. 48), provided by an outside source, was incorrect.

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