LOS ANGELES (By Meg James, LATimes) June 27,
2006 The board of Univision Communications Inc., the nation's largest
Spanish-language media company, voted late Monday to accept an $11.3-billion
offer for the company from a group of investors including billionaire media
mogul Haim Saban, according to three sources close to the board.
The two sides were still working out the details of the agreement Monday.
Univision and Saban declined to comment.
A breakthrough in the tumultuous auction for Los Angeles-based Univision
came over the weekend when Saban's group, led by private equity firms Texas
Pacific Group and Thomas H. Lee Partners, raised its bid to $36.25 a share.
The group had initially entered a $35.50-a-share bid last week, but Chairman
A. Jerrold Perenchio deemed it too low.
However, a challenge could still come from the other bidder, a group led by
Mexican broadcasting giant Grupo Televisa. That team had submitted a bid of
$35.75 a share which it believed was the highest offer after a chaotic
week that saw the departure of several of its private equity bidding
partners in a dispute over price.
At Monday's meeting, two members of the Univision board voted against the
Saban group. Those seats are controlled by Televisa and Venezuela's
Venevision media conglomerate.
The Televisa group had been prepared to raise its initial offer. But the
group didn't hear from Perenchio for three days and didn't learn of the
higher bid until the Univision board meeting, held in Univision's corporate
suite in Century City, according to a member of the team.
Perenchio has long been known as a hard-nosed negotiator. One of his
business tenets, which he calls the "rules of the road," is: "Take options,
never give them."
Saban's group also includes Providence Equity Partners and Madison Dearborn
Partners. The private equity partners each put up nearly $1 billion and
Saban contributed about $250 million, according to a source close to the
negotiations. The group also would assume $1.4 billion in Univision debt.
Saban, who made his fortune on the Mighty Morphin' Power Ranger cartoons,
has had his eye on Univision since 2001, when he made about $1.5 billion in
the sale of the Fox Family cable channel to Walt Disney Co.
A year ago, Saban paid Perenchio a visit in his offices and asked to buy
Univision. But Perenchio, who has run Univision since 1992, told Saban his
company was not for sale.
Perenchio, 75, decided in February to put Univision on the block. He figured
he had expanded the company to a $2-billion-a-year revenue generator but
wanted to give new owners more than a decade to reap returns on their
investment before the expiration of a programming agreement with Televisa,
which supplies the wildly successful telenovelas that drive
Univision's enormous ratings.
Monday night's board vote revealed just how much animosity exists between
Perenchio and Emilio Azcarraga Jean, the chairman of Televisa. Azcarraga had
long sought to have a greater say in the management of Univision, which his
grandfather started 45 years ago. But Perenchio spurned his attempts.
In 1992, it was Azcarraga's father who joined Perenchio and Venezuelan media
magnate Gustavo Cisneros, who controls Venevision, to acquire Univision from
Hallmark Cards Inc. for $550 million. Each of the three partners chipped in
$33 million of his own money. But because Perenchio was the only U.S.
citizen, he won control of the company.
U.S. laws prohibit foreign citizens from owning more than 25% of a
broadcasting company. That restriction hobbled Televisa's bid.
Univision board members ultimately decided to go with the Saban group's bid,
figuring it would have an easier time winning regulatory approval since its
members were all U.S.-based firms, a source close to the board said.
Televisa was joined in its bid by Microsoft Chairman Bill Gates' Cascade
Investment and the Boston-based private equity firm Bain Capital.
Univision shareholders must approve the purchase, which is expected to close
next year after clearing regulatory hurdles.
At issue could be Saban's ability to work with Televisa, which provides its
programming to Univision in the exclusive deal that doesn't expire until the
end of 2017. Televisa has long chafed under that ironclad agreement, because
it pays Televisa royalties of 9% of the ad revenue even though Televisa
programming brings in 40% of Univision's revenue.
Another fight probably will be waged over the rights to use the Televisa
telenovelas on the Internet and other new media platforms. The two sides
have tabled a disagreement over who has digital rights to that content until
the end of this year. Next year Univision will also lose the U.S.
broadcasting rights to Televisa's Mexican soccer matches.
Many analysts figured that teaming up with Televisa would be the way to win
Univision, a view not shared by Saban.
A native of Egypt, Saban immigrated at age 12 to Israel, where he attended
agricultural school and served in the Israeli Defense Forces. He moved to
Los Angeles in 1983.
In Los Angeles, he launched a chain of recording studios that supplied music
for television. Saban's venture into television began in 1988, when he
formed Saban Entertainment.
The company produced a number of hits, including "The X-Men" and other shows
developed around Marvel Comics characters.
