Philip Remek Senior Media Analyst Guzman & Company

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Philip Remek has been closely following the Univision auction in his capacity as senior media analyst of Miami-based investment bank Guzman & Company. Remek spoke with Hispanic Television Update following the announcement that the Univision board had accepted the Saban bid: An edited transcript follows:

Q: Is this over? Could Televisa try to come up with a higher bid?

A: Possible, but not likely given the high valuation. Making an even higher bid would involve considerable risk. Even this valuation is quite high. We are talking more than 17 times EBITDA and 35 times earnings. That is a nosebleed valuation.

Q: What do you make of Univision's future growth prospects?

A: I remain skeptical about re-acceleration of growth. For example, Univision revenue grew 15% in 2004 and 8% in 2005. Excluding the World Cup, I was looking for 8% growth this year.

The growth rate has really slowed in the last year. Univision is not immune to the migration of ad dollars to the Internet. I think a lot of people may have expected too much from the idea of closing the gap in ad rates between Spanish-language and English-language media. The new team has their work cut out from them.

Q: Will Televisa launch a network of their own as they suggested during the auction?

A: Probably a bluff.

Q: What about the ongoing legal dispute over the program licensing agreement?

A: I think the chance of resolving that dispute is much greater now post-[Univision Chairman and CEO A. Jerrold] Perenchio. I always thought the dispute was a pretext for a discussion about the rates being paid on the PLA. The actual numbers in dispute are peanuts. I think ultimately the solution will involve a renegotiation of the PLA. It is highly unlikely that the PLA will be voided.

Q: What will be the impact of the purchase on the Hispanic broadcast market?

A: Too early to tell. I don't see any significant changes in the near-term. I don't see a wholesale change in management. Also remember that this deal goes under regulatory review with the FCC. Closing a deal may take close to a year.

Q: Does this sale offer some opening for Telemundo?

A: No.

Q: Will the sale affect Univision's upfront?

A: I think everyone [at Univision] is still doing their job. At this point we are talking about the sales force. It has been a tough upfront for everyone so it is more an issue of how the upfront is developing in a world with more media platforms and the migration of ad dollars to the Internet. And the preference of more media buyers to make more purchases in the spot market.

Q: Did the Saban group get a good deal or did they overpay?

A: I see fair value at Univision at $33 a share. (The Saban group bid $36.25 a share.)That's a very risky multiple to pay. It is a very high number.

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