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Televisa Not Done with Univision Yet

7/20/2006 9:22 AM Eastern

The battle for Univision Communications isn’t quite over yet, after a top executive at rival Grupo Televisa told analysts he might consider re-entering the fray for the Spanish-language broadcasting giant.

On a conference call discussing its second-quarter financial results, Televisa executive vice president Alfonso de Angoitia Noriega said he would not rule out making another offer for Univision.

“We haven’t ruled that out. It is one of the alternatives Televisa has,” de Angoitia said on the conference call.

Analysts have estimated that a Televisa bid would have to be at least $38 per share.

Televisa bid $35.75 per share for Univision in June, only to be bested by a $36.25-per-share bid (worth $13.7 billion) from a group of private-equity investors (Providence Equity Group, Texas Pacific Group, Madison Dearborn Partners and Thomas H. Lee Partners) and media mogul Haim Saban.

Earlier this month, Televisa said it would not contribute its shares (about 11% of Univision) to the partners, and it would be interested in selling its Univision stake. Televisa also said that if its Univision stake dips below 13.6 million shares (it currently has about 39 million), it would be free to create its own U.S.-based Spanish-language network to rival Univision.

Offering more for Univision won’t be that easy. Several of Televisa’s partners backed out of the bidding because they believed the first offer was too high.

Miller Tabak media analyst David Joyce believes a higher offer would be too much for remaining partners Bain Capital and Microsoft chairman Bill Gates’ private investment vehicle, Cascade Investments, to bear.

Under the Providence Equity deal, Univision would also have to pay a $300 million breakup fee if it accepts another offer.

Televisa has chafed at its existing content deal with Univision -- a 25-year pact that expires in 2017 -- going as far as suing Univision for breach of contract in order to nullify the agreement. That litigation has been put on hold until February, Joyce said, which could mean that the new owners could reach a compromise.

According to a report in The New York Times last week, Televisa chairman Emilio Azcarraga Jean, de Angoitia and executive VP Bernardo Gomez were seen at the Allen & Co. annual media retreat in Sun Valley, Idaho, meeting with Providence Equity founder Jonathan Nelson. According to the Times, Azcarraga may have been negotiating a way for Televisa to continue its investment in Univision.

On the conference call, de Angoitia confirmed that Televisa was at the Allen conference and had discussions with the Providence Equity group. But he added that past discussions with the Providence group have involved Televisa selling its Univision stake.

While creating its own U.S.-based network would be costly, Joyce said Televisa has other options. It expects to begin offering much of its programming -- including its popular telenovelas -- in the United States via the Internet beginning Dec. 19.

Televisa said it launched its Internet-TV initiative -- called EsMas TV -- in Mexico in the second quarter with about 1,500 short videos. In five weeks, the company added, the service had 8 million downloads. An alternative ending to telenovela Rebelde had about 1.7 million Internet viewers, the company said on the conference call.

March