Is Hispanic Media Unique? Univision Deal Tests FCC


Univision's bid to buy radio group Hispanic Broadcasting is cursed by bad timing. For starters, last summer's deal to marry the No. 1 Spanish-language television provider with the top U.S. Spanish radio company, was announced just as the country entered a rancorous debate over media concentration.

But wait, there's more. Just about then, Clear Channel, an investor in Hispanic Broadcasting, became the prime target for opponents of big media, just as Hispanic media exploded from a little-noticed niche to one of the media business's hottest sectors in both business and politics.

Things have grown more complicated for Chairman Jerry Perenchio's $3.5 billion deal to buy Hispanic Broadcasting Corp. since it was announced June 2002. Critics have made Univision's perceived right-wing bias an issue in the bitter partisan battle over President Bush's judicial nominations. And if that weren't enough, in the past month, the deal has been caught in the growing backlash against the FCC's relaxation of media-ownership rules.

The result: The merger has languished at the FCC longer than Comcast's bid to acquire AT&T Broadband. Amazingly, the deal is close to taking longer to finalize than the formation of the world's largest media company, the merger between America Online and Time Warner.

The FCC must decide whether Spanish-language broadcasting is a separate market. If commissioners say yes, the merger would undoubtedly be conditioned, most likely by forced divestitures. According to Univision's foes, the combined company would control more than 70% of local ad dollars in four of the top nine Hispanic markets and more than 50% in eight of nine.

The Justice Department approved the merger four months ago with the stipulation that Univision shed most of its interests in another Spanish-language broadcaster, Entravision Communications. At the time, FCC approval was expected imminently.

But the agency's plans to tighten local radio-ownership limits in some small markets complicated things. Now, in addition to the Spanish-as-a-separate-market question, the commissioners are said to be debating whether the merger should be considered under the old or new restrictions. If the tighter new rules apply, Univision may have to sell stations in Houston, San Antonio, Phoenix and Albuquerque, N.M.

But Univision, with an estimated $1.2 billion in revenue this year, is by far the dominant Spanish-language media company in the U.S. Among Hispanic audiences, experts say, its influence surpasses that of AOL Time Warner or any other media giant on the overall U.S. market. "Virtually all Latinos would see and hear their news and entertainment from a single source: Univision," Rep. Robert Menendez (D-N.J.) warned the Senate Commerce Committee last week.

Menendez, chairman of the House Democratic Caucus, has complained that Univision was trying to boost chances for federal approval of the merger by airing programming supporting President Bush's nomination of Miguel Estrada to a key federal appeals court post. Estrada is opposed by the Congressional Hispanic Caucus, which is composed entirely of Democrats.

Univision combined with HBC would be a Hispanic juggernaut controlling 40% of the Hispanic audience's radio ad revenue and 70% of TV revenue. Univision already controls the two leading Hispanic cable nets, Galavision and Telefutura.

The only deep-pocketed competitor is NBC-owned Telemundo, which hasn't been able to gain a 15% share of a major local market. Mexican giant TV Azteca supplies programming to some U.S. stations but hasn't yet established a presence.

Spanish Broadcasting System, which bills itself as the largest Hispanic-controlled
radio group has led a legal and public-relations fight against the merger. In addition to the competitive worries a combined Univision/HBC would create, SBC Chairman Raul Alarcon Jr. blamed Univision for the demise of his own attempt to buy Hispanic and unsuccessfully took Univision to court alleging antitrust violations. Univision's critics have also made much of the fact that the country's largest Spanish-language media firm is not run by a Latino.

On the other side of the fight, Alarcon has been dogged by Miami gossip-column coverage of his messy and probably expensive divorce. The source of the reports is unclear, but Univision's allies have been more than willing to circulate them to reporters whose beats don't touch South Florida.