Grupo Televisa and Univision Communications Inc. announced that they have amended the current program license agreement that will keep Televisa’s immensely popular Spanish-language programming flowing to Univision, the hugely-dominant Hispanic network in the U.S., until 2017.
Settlement of a lawsuit filed four years ago by Televisa will cost Univision dearly. According to published reports, a lawyer for Televisa says the Mexican broadcaster will receive $65 million of advertising time on Univision stations every year, and receive $25 million in cash from Univision.
Televisa's lawsuit claimed its contact had been breached by Univision, which severely underpaid them for royalties for programs that more or less give Univision its unique hold on American’s Hispanic audiences, mainly the popular telenovelas that power its ratings. Univision had been paying Televisa $130 million for programming previously.
The settlement ends the dispute but may not end Univision’s problems. The network was acquired in 2006 for $13.7 billion by investment groups including Saban Capital Group and Madison Dearborn Partners, and still carries over $9 billion in debt as the broadcast industry wavers during a recession that is zapping advertising revenues.
The settlement was announced outside a Los Angeles court room Thursday morning just before Emilio Azcarraga, the grandson of the founder of Televisa was about to take the stand in the court case, which began Jan. 6.
The lawsuit was filed even before Univision was sold, but Televisa was doubly insulted when Unvision’s previous owner chose the current management group. Televisa, prevented from owning a broadcast station outright because it is a foreign company, was trying to form an alliance with American backers that would have given them some measure of ownership.
Univision late last year warned if it would have a difficult time programming the network if it lost the Televisa case. After the inevitable appeals, Univision admitted in a financial filing, if it lost Televisa the void “could have a materially adverse effect on the company.”