News Column

A Merger Mired In Controversy

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A major opponent to the deal is Spanish Broadcasting System (SBS), a radio company that owns stations in several key Hispanic markets also served by HBC, including New York, Miami, and Texas. SBS has hired a group called the National Hispanic Policy Institute (NHPI) to lobby against the merger.

NHPI is run by New York state Sen. Efraín González, largely out of his legislative offices, and has been at the forefront of a battle of the press, sponsoring full-page ads in the major national newspapers and those serving Capitol Hill. The campaign came under fire after it claimed in a full-page ad in the political newspaper Roll Call that Mr. Perenchio was anti-Hispanic because he backed Proposition 187, California's controversial anti-illegal-immigration initiative, when he had not – and actually had donated funds to the Mexican American Legal Defense and Educational Fund to fight the measure.

Univision fought back, sponsoring a full-page ad featuring a letter from New Mexico Gov. Bill Richardson – another former Clinton administration official – urging Democrats to stop opposing the merger. The Miami Herald later pointed out that Mr. Richardson received $150,000 from Mr. Perenchio for his 2002 election campaign.

Much of the debate surrounding the merger has focused on whether Spanish-language media should be viewed as a distinct media market. If the FCC determines that U.S. Spanish-language media constitute a market separate from the nation's other media, then Univision's size relative to its competitors – Telemundo, the country's second-ranked Spanish-language television network, commands just 20 percent of the U.S. Spanish-TV audience, for instance – would seem to present a strong argument against the merger.

If, however, the FCC decides that Spanish-language media do not constitute a separate media market, a vote in favor of the merger would seem more likely. Proponents of the merger have pointed out that for all its dominance as a Spanish-language TV broadcaster, Univision accounts for just 5 percent of all primetime viewing and receives about 2 percent of all TV ad spending.

Federico Subervi, formerly a professor in the Department of Radio, Television, and Film at University of Texas at Austin, says the argument put forth by Univision and other merger backers that Spanish-language TV does not constitute a separate media market contradicts the network's own message to prospective advertisers.

"For years Univision and its affiliates positioned themselves as a separate market to advertisers. Now that it's become an issue in the merger debate, they've completely changed their tune," says Mr. Subervi, now an independent media consultant.

"U.S. Spanish-language television is a distinct market by virtue of its news content and public affairs programming, which cannot be found anywhere else."

Other merger critics note that advertising targeting U.S. Hispanic consumers is largely the product of corporate ad budgets specifically earmarked for reaching a discrete audience. Consequently, Univision generally does not compete for ad dollars against general-market TV competitors, but rather competes against other Hispanic media. This view would seem to lend weight to the argument that Spanish-language media constitute a separate market.

Excluding revenue from its Internet and music operations, Univision receives about 41 percent of all Hispanic ad spending and about 67 percent of all TV ad expenditures targeting the U.S. Hispanic market.

Merger opponents also caution that a merger-augmented Univision could provide three companies – Mexico's Grupo Televisa, New York–based Cisneros Group of Cos. and Univision – with a virtual stranglehold on Hispanic media globally. The largest producer of Spanish-language media content in the world, with magazine, radio, and live entertainment divisions, as well as 70 percent of the Mexican television advertising market, Grupo Televisa owns about 13 percent of Univision stock.

The Cisneros Group, whose media interests include stakes in America Online Latin America, DirecTV Latin America, and Ibero-American Media Partners, owns about 8 percent of Univision stock through Venevision, Cisneros Group's flagship broadcasting property and the leading television network in Venezuela.

According to Univision filings with the U.S. Securities and Exchange Commission, Televisa and Venevision supplied about 32 percent and 19 percent, respectively, of Univision's non-repeat programming last year.

Activists fear that these and other foreign producers of Spanish-language programming, on which Univision is dependent for the majority of its broadcast lineup, will continue to crowd out independent producers of TV programming that reflects the experiences of acculturated U.S. Hispanics.



A. Jerrold Perenchio
Chairman of the Board and Chief Executive Officer – Univision Communications Inc.

Emilio Azcárraga Jean
Vice-Chairman of the Board – Univision Communications Inc. Chairman, President, and Chief Executive Officer – Grupo Televisa SA

Ray Rodriguez
President and Chief Operating Officer – Univision Network, TeleFutura Network, Galavisión

Harold Gaba
President and Chief Operating Officer – ACT III Communications Holdings LP

Alan F. Horn
President and Chief Operating Officer – Warner Bros.

John G. Perenchio
President – Ultimatum Music LLC
Executive – Chartwell Services Inc.

Alejandro Rivera
Managing Director and Vice-President – Venevision International Corp.


Victor M. Ferreres Palou
President of Venevision Network and Station Group – Corporación Venezolana de Televisión (VENEVISION)

Alfonso de Angoitia
Executive Vice-President and Chief Financial Officer – Grupo Televisa SA


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