News

Whither Televisa?

6/28/2006 7:37 AM Eastern

Assuming Saban Capital’s bid for Univision is eventually approved by shareholders and clears all regulatory hurdles, one of their priorities will be managing the relationship with Univision's biggest and most important programming supplier, namely Televisa.

"The first thing [Saban] is going to have to do is negotiate and reach an agreement with Televisa," said Luis Echarte, chairman of Azteca America.

Televisa is contractually obligated by a program licensing agreement (PLA) to provide Univision access to its programming at a modest rate through 2017. The existing PLA is being actively contested by Televisa in federal court. Televisa maintains Univision has violated the PLA and the agreement should be scrapped. Univision strongly argues the contrary.

During the auction process, Televisa officials suggested they would launch a network of their own if they failed in their bid for Univision. A Wachovia analyst dismissed Televisa's stance as posturing. Yet, if a court frees Televisa from its obligations under the PLA the world's largest Spanish-language broadcaster would have several options.

It could put together an all-affiliate network after the fashion of Azteca America. The drawback is its broadcast footprint would be limited in comparison to the many full-power stations currently owned by Univision.

Televisa could make good on its threat to place its telenovelas and other programming online for the U.S. Hispanic audience. Such a move, though, could be the equivalent of cutting their nose to spite their face.

Televisa could also talk to Telemundo.

In May, Telemundo president Don Browne was asked by Multichannel News if given the chance he would be willing to buy and air Televisa telenovelas. Browne responded, "I would totally have an open mind because Televisa does what they do very, very well. We will never put the control of our destiny in someone else’s hands but that doesn’t mean if there is a potential relationship there we wouldn’t sit down and consider working with them to co-create product and talk to them about anything."

The likeliest scenario, if cooler and more profit-minded heads prevail, seems that Saban will be forced to consider renegotiating the terms of the PLA. "If they are sensible [Saban and Televisa], then they will try and reach an agreement. If not, [Saban] has ten years to resolve the matter" said Echarte.

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