Univision/Hispanic Merger Gets FCC OK

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After more than one year, the Federal Communications Commission Monday approved
Univision Communications Inc.'s $3.5 billion purchase of Hispanic Broadcasting Corp.

The commission's order requires Univision to unload two radio stations -- one
each in the Albuquerque, N.M., and Houston markets -- if a court upholds new
restrictions on local radio ownership.

Univision also must comply with an earlier Department of Justice order to
significantly reduce its investment in rival Spanish-language broadcaster
Entravision Communications Corp.

Immediately upon the FCC’s announcement, the company agreed to reduce that
stake from 27% to 15% by 2006 and 10% by 2009.

The deal combines the country's largest Spanish-language TV and radio groups.

Univision almost immediately closed the deal, announced in June 2002, and
renamed its purchase Univision Radio.

The 3-2 approval along party lines is sure to stoke the already-hot debate
over media concentration and will likely heat up the partisan battle for votes
among the country's 38.8 million Hispanics in the 2004 presidential
election.

The commission's two Democrats argued that the deal should be blocked, saying
Univision gains a "hammerlock" on Spanish-language news and entertainment.

In rejecting Democrats' plea to declare Spanish media a separate market from
English, chairman Michael Powell and his two GOP colleagues said such a
"balkanization" would defeat the principal of a diverse marketplace of ideas.
"Should there be an Arabic-, French-, Chinese-language market?" they asked.

The Hispanic community was somewhat divided over the deal.

Backers included the Association of Hispanic Advertising Agencies, the League
of United Latin American Citizens and the National Council of La Raza, along
with prominent individuals including Rep. Jose Serrano (D-N.Y.), and New Mexico's
Democratic Gov. Bill Richardson.

Opponents included House Democratic Caucus chairman Bob Menendez (D-N.J.),
LatinoHOME Coalition and Latino fraternity Lambda Theta Phi.

The merger was also the target of a letter campaign by South Florida
religious groups, students and community activists opposing the deal.

The degree of consolidation created by the merger depends on how you do the
math.

Supporters pointed out that the new company will own 51 of the country's 222
Spanish-language TV stations and 67 of 706 radio stations.

"These are not the numbers of dominance," the FCC Republicans wrote.

Univision's market shares -- 70% share of viewers to Spanish TV, 40% national
TV-household reach (not counting the 50% UHF discount), the leading Spanish
cable network and programming producer, music producer and Internet portal -- do
demonstrate dominance, the FCC Democrats countered.

"This company is aptly named Univision -- 'one vision' --because that's just about
all we're going to get from Spanish-language media from now on," Democratic commissioner Jonathan Adelstein wrote.

He argued that the FCC should have included in its public interest analysis -- a
type of review the DOJ does not conduct -- the DOJ finding that
Spanish-language radio is its own market.

Powell and the Republicans, however, noted that the DOJ
required no station sales.

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