News Column

Still Percolating

December 2002, HISPANIC BUSINESS Magazine

Tim Dougherty

Los Angeles-based Univision is the nation's leading Spanish-language TV broadcaster.
Los Angeles-based Univision is the nation's leading Spanish-language TV broadcaster.

Analysts are holding fast to their initial predictions that the proposed merger involving Univision and Hispanic Broadcasting Corp. (HBC) will win regulatory approval, though they are hedging their bets about a timetable.

Merrill Lynch analyst Keith Fawcett says it could be January before regulators sanction the merger, though he expects the deal to be approved.

David Joyce, a senior equity analyst at Guzman & Co. in Miami, says the deal could still close in the fourth quarter, but he too leaves open the possibility that regulators will not issue a ruling before January.

When the merger proposal was announced in June, analysts joined HBC and Univision in predicting that it would close by year's end. Since then, however, the deal has drawn increased scrutiny from the Justice Department, and questions have been raised about Univision's 31 percent stake in Entravision Communications, whose media properties include radio stations in several markets also served by HBC.

Another possible complication is the Spanish Broadcasting System (SBS) lawsuit against HBC and Clear Channel Communications Inc. for alleged antitrust behavior, although Messrs. Fawcett and Joyce insist the suit will have no impact on the proposed merger. At press time, the suit was in the discovery phase.

In the meantime, the Congressional Hispanic Caucus is taking up the issue. The caucus, whose 18 members all are Democrats, reportedly is considering issuing a statement about the merger. Members have heard arguments from representatives of both SBS and HBC and talks are ongoing.

Three Republican Hispanic House members Henry Bonilla of Texas, and Ileana Ros-Lehtinen and Lincoln Diaz-Balart of Florida have written the FCC in support of the merger, however.

"We have been apprised that Univision and HBC plan to use their mutual expertise to better inform, entertain, and educate American Hispanics," they wrote.

Rep. Bonilla was unavailable for comment, but a spokeswoman said the congressman a former broadcast journalist views the merger as a private matter requiring minimal government involvement.

Valued at $3.5 billion when it was announced June 12, the merger was worth considerably less at press time because of the decline in Univision stock. Univision shares closed at $27.40 November 4, down from $37.70 on June 11. Under the merger, HBC stockholders are to get 0.85 shares of Univision for each share of HBC they own. Univision Chairman A. Jerrold Perenchio controls more than 60 percent of his company's voting stock.

HBC, whose shares closed at $22.80 November 4, down from $24.45 on June 11, recently reported a third-quarter profit increase of 41 percent. The company's net income increased to $12 million, or 11 cents a share, from $8.5 million, or 8 cents, last year. HBC also raised its earnings forecast for the year to 4041 cents a share, excluding expenses. The company had previously estimated 3840 cents a share.


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