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Ownership

Ownership

The biggest shakeup in ethnic media ownership in 2006 — and the biggest for some time — happened on the broadcast side with the well-publicized sale of the TV and radio giant Univision. In September its owner, A. Jerrold Perenchio, sold the network for $12.3 billion to a consortium of investors including the media mogul Haim Saban.1

Perenchio, who purchased the Spanish-language broadcaster in 1992, was always something of an odd fit as a media titan. While he had owned a few Spanish-language TV stations in New York and Los Angeles, he was mostly known as a fight promoter. Univision was seen as primarily an investment for him to be sold when the time was right. At 74, he was ready to cash in. But the sale failed to draw a large-scale bidding war, surprising many.

Considering the growth of the nation’s Latino population (see Audience) and the group’s growing buying power, estimated to be roughly $480 billion annually, interest was expected to be high.2 But the scenario that many watchers considered most likely, a big bid from the Mexican TV giant Grupo Televisa, didn’t materialize before the June deadline. The delay was reportedly due to a dispute with its investment partner in the deal, the Carlyle Group, over how much they would offer for Univision.

Instead, a bid of about $10.7 billion from the Saban group, a collection of private investors, sat alone on the table. After the deadline, Grupo Televisa finally put forward a bid with a different group of investors that was slightly higher. Saban’s group raised its offer to over $12 billion and eventually the sale was approved at a September 27 Univision board meeting.

The sale created hard feelings between Univision and Grupo Televisa, which not only owned 11% of Univision but provided the network with roughly a third of its prime-time programming.3 After the sale Grupo announced its intention to sell its holdings in Univision and use the proceeds from that sale to look for new business opportunities in the U.S. without Univision — hinting that the network could be left with a large hole in its primetime lineup. Univision quickly fired back that it has exclusive U.S. broadcasting rights for all Grupo content running through 2017. But would those agreements cover online programming, reportedly an option Grupo was considering? That question presumably will be sorted out in the coming year.

Regardless of what happens in the Grupo Univision spat, the bigger question for the Spanish-language media is why was there such lack of interest in a network that reaches 99% of U.S. Hispanic homes?4

Some analysts believe the company might have gotten more interest if Perenchio had been willing to split it up and sell its pieces. Perenchio and the firm conducting the auction reportedly did not want that more complicated kind of sale. But over all, analysts have not been particularly high on the company. Of 10 different analysts who have evaluated Univision since August 2005, only one, J.P. Morgan, upgraded its opinion of the company, moving Univision in June from “underweight” to “neutral.”5

Despite the nation’s increasing Latino population, analysts and potential investors see longer-term demographic trends with the next generation of Hispanics and wonder about the future of the Spanish-language media. If indeed the next generation of Latinos — a group with an average age of 15 today that will be on their own soon (see Audience) — decide when they leave home that they would rather tune into English-language programming, Univision’s audience and income numbers could plunge.

There is no guarantee, though, of how demographic forecasts will play out. That next generation could remain bilingual and watch and listen to programming in both languages. And Univision’s value has been underestimated before. In 1992, Perenchio and his investment partners bought the struggling Univision for $550 million from Hallmark; 14 years later Perenchio earned a sizable return.6

The other big broadcast company owner, NBC, seems to be trying to figure out what it wants to do with its property Telemundo. Faced with slumping ratings, Telemundo announced in the fall of 2006 that it was considering launching a network in Mexico to compete with the two broadcast networks that already exist there.

Also in the fall, NBC announced it was going to cut staff at all its TV properties, including Telemundo. And the network said it was planning to eliminate local Telemundo newscasts in large markets — Houston (4), Dallas (6), San Antonio (7), San Jose (8) and Phoenix (9) — and replace them with a hubbed newscast out of Fort Worth.7 Critics have charged that the move stands in contrast to what NBC promised when it purchased the network in 2001. Then the company said it would give Telemundo “the resources to compete effectively with Univision.” But as many Hispanic newspapers have discovered in recent years, an English-language owner with deep pockets does not always mean good times are ahead. As we noted in last year’s report, the sale of the Knight-Ridder chain left some of the company’s Spanish-language papers in a difficult position. In San Jose, Nuevo Mundo was closed and replaced by a paper imported from Mexico. In Miami, McClatchy, which bought much of the Knight-Ridder chain, held on to El Nuevo Herald.

Over all, ownership on the print side of the Hispanic media was more settled than in broadcast.

ImpreMedia, the Hispanic ownership group that was created in 2004 when one owner combined La Opinion in Los Angles, El Diario in New York and La Raza in Chicago, used 2006 to again extend its national reach and began to leverage its strength as a national group to target more national advertising.

In January of 2006, the group purchased La Prensa, a free weekly in central Florida with a circulation of 50,000.8 And in mid-2006, Impremedia began selling advertising for special themed “packages” in weekly editions of some of its papers — supplements that featured special editorial content on specific themes like back-to-school and new cars. That approach, often used by mainstream English-language media to generate ad dollars at times when specific advertisers are looking to reach readers (see Newspapers section), shows an advantage of Impremedia’s nationalized ownership.

And in October, ImpreMedia announced it was launching La Vibra, a weekend entertainment supplement that would appear in its papers in six markets — New York, Los Angeles, Chicago, San Francisco, Orlando and Tampa. La Vibra seeks readers among young urban Latinos with music and movie coverage. Why have a separate issue for those topics? As the alternative weeklies have found, there are big national advertisers looking to target a younger crowd that goes out for the evening — liquor and tobacco companies in particular as well as film and music makers. La Vibra gives those advertisers a way to target the Hispanic subset of that group.9

Meanwhile, not all Spanish-language papers affiliated with mainstream owners are suffering. McClatchy invested more heavily in 2006 in Vida en el Valle, its free weekly published in the San Joaquin Valley of California. In February, the company vastly increased the paper’s home delivery numbers, to more than 130,000 from about 80,000. The publisher also increased the number of copies left for “public access” in various locations to about 40,000 from 27,000. The paper’s free circulation went from 108,000 to more than 170,000 in one week.10

In other words, many of the benefits of being owned by a big mainstream owner still exist, but such ownership leaves outlets to the whims of their corporate overseeers.

Another ownership model for the Spanish-language media is being tested in Texas. In 2004, Edward Schumacher Matos, a journalist and businessman, launched the Rumbo chain of four papers from scratch in different metro areas — Austin, Houston, San Antonio and McAllen/Brownsville. Rumbo has struggled at times, and when its first group of investors pulled out in 2005, the papers had to find a different source for funding, which they did.

But 2006 created new challenges. In March, the chain suspended its Austin edition and cut its other editions back to three days a week from five days a week. The chain portrayed the moves as a new strategy “tailored to meet the needs of readers and advertisers,” but no newspaper wants to scale back, and the cuts indicate Rumbo may be in trouble.

What’s more, the company announced in January 2007 that Rumbo editions in Houston and San Antonio would scale back their publication to once a week from three days a week. And at the same time founder Edward Schumacher Matos announced he was stepping down as chairman and CEO of the company as of January 15, 2007, though he would stay on as an adviser.

Footnotes

1. “Univision Board Approves Sale,” AP, June 27, 2006

2. “Disarray in Auction of Univision” Andrew Ross Sorkin, New York Times, June 21, 2006

3. “Televisa Beats Rival Bid for Univision,” prophet.net, June 23, 2006

4. Univision press release. May 25, 2007

5. Gathered from a Yahoo.com “Upgrade and Downgrade History” for Univision

6. Forbes 2006 List of Richest 400 Americans, profile on Perenchio

7. NAHJ press release “NAHJ Board’s Statement on NBC’s Plans for Telemundo” October 23, 2006

8. Impremedia Press Release, January 31, 2006

9. Impremedia Press Release, October 21, 2006

10. Audit Bureau of Circulations report for Vida En El Valle, March 2006