(Photo credit: Wikipedia)
Billionaire Emilio Azcarraga Jean, owner and CEO of Mexican TV powerhouse Grupo Televisa SAB, announced this week a new alliance between Spanish-language broadcaster Univision and a division of ABC News to launch a one-of-a-kind English-only cable network geared toward second- and third-generation Hispanics who don’t speak Spanish.
The new cable TV channel, which will also appeal to mainstream Americans, will significantly strengthen the share Mexico’s number one broadcast TV network has in the increasingly influential Hispanic population. The University of Georgia’s Terry College of Business estimated that the buying power of Hispanics will rise to $1.5 trillion in 2015, 11 percent of the nation’s total buying power.
In an exclusive interview with Noticias, Televisa’s flagship nightly newscast, Azcarraga Jean revealed the new venture between Univision and ABC, and said that Univision’s large audience puts it in a position to compete with English-only channels. “Univision has one of the highest ratings among TV networks in the United States and that’s how we know that Televisa’s quality content can be very successful.”
In 2010, Televisa invested $1.2 billion in Univision in return for a minimum 5 percent stake in the company and a new content licensing agreement for the telenovelas (Spanish-language soap opera dramas) and for the telecasts of some Mexican soccer matches in the United States, reported The New York Times. The deal ended a long standing feud between the two television giants around content licensing. Since then, the relationship has been mutually beneficial. So much so that now Televisa, which controls around a 70% share of the broadcast television market in Mexico and is also the principal satellite and cable TV operator in Mexico, will lean on Univision to begin conquering English speaking audiences.
A few days before Azcarraga’s announcement, Zacks Equity Research reaffirmed its long-term neutral recommendation on Grupo Televisa SAB, noting that the U.S. Hispanic television market is "highly lucrative and growing at a remarkable pace." It noted that Televisa's income mainly comes from its U.S. operations, including the sale of content, the website and cable television. Televisa’s relationship with Univision is what has analysts feeling positive about the conglomerate. Zacks Equity Research reported that Televisa’s third-quarter 2012 financial results outpaced the Zacks Consensus Estimates. In the previous quarter, royalty from Univision was $62 million, up 6.5% over the previous year. Management estimated that Univision will generate $245 million of royalty revenue in 2012, the research firm further said.
The new venture will give Univision, the largest Spanish television network in the United States with 12 networks, 62 radio stations and 69 local TV stations, a great competitive advantage over its closest rivals, Telemundo (owned by NBC) and the recently created Mundo Fox, own by Fox News, a unit of News Corp. Univision will be the first to provide English content to Hispanics and mainstream Americans.
The Univision and ABC alliance, now limited to a website, will set up a 24-hour network cable to be marketed to providers nationwide. Univision President Cesar Conde told The Miami Herald that “the content will be a mix of hard news and soft programming, including daytime fare aimed at lifestyle and cultural topics.” According to documents filed with Miami-Dade County, where Univision is based, and reviewed by The Herald, Univision projects a payroll of about 350 people within five years, with the partnership spending about $275 million to set up the network. Conde said he hopes to have the network available for viewing on cable and satellite by the summer of 2013.
Follow me on Twitter at @DoliaEstevez
