Univision Communications Inc. will have to divest itself of two-thirds of its partial ownership
stake in Entravision Communications Corp. if it wants to close on its $3 billion
purchase of Hispanic Broadcasting Corp.
That's according to the Department of Justice, which also put other conditions
on the proposed purchase in both filing suit in U.S. District Court and offering
a consent decree to settle that suit.
Univision owns 30 percent of Entravision stock, and it has two board seats and a
veto over some business decisions, according to the DOJ.
The consent decree requires Univision to cut its stake to 1 percent within
three years and 10 percent within six years, and to convert its holdings into nonvoting
equity with limited rights.
The DOJ cited the fact that HBC and Entravision are "each other's closest
competititors" in many areas where there are a limited number of
Spanish-language radio stations.
"If the combined company were to retain a large equity stake and governance
rights in Entravision, Univision's acquisition of HBC would substantially reduce
competition," the DOJ added, "and result in increased prices and reduced levels
of service in the sale of advertising time on Spanish-language radio."
Univision, based in Los Angeles, is the nation's largest Spanish-language TV
programmer. It owns broadcast networks Univision and TeleFutura and cable
HBC owns 60 radio stations with net revenue of $240 million. Entravision owns
55 radio stations 49 TV stations ($65 million radio revenues, $209 million total). Many of the TV's are Univision or TeleFutura affiliates.