Univision Communications and Grupo Televisa plan to merge their entertainment assets to create a powerful new Spanish-language media company with one foot in the United States and the other in Mexico.
The companies jointly announced the move late Tuesday, formalizing a process that began quietly after Univision came under new ownership late last year. The historic merger represents a dramatic retrenchment for media scion Emilio Azcárraga Jean, whose family has long been among Mexico's power brokers due to its vast media holdings.
The new entity will be known as Televisa-Univision. The world's largest Spanish-language media company, it will be managed by Univision Chief Executive Wade Davis, a former top Viacom executive who put together the investor group that purchased Univision late last year from a consortium of U.S. private equity firms. The deal is expected to close later this year.
The union underscores the pressure facing traditional media giants.
In Mexico, Televisa has struggled to adapt to the streaming era and has lost some of its audience to Netflix. Although the company produced more than 86,000 hours of content last year, its signature telenovelas haven't connected with young audiences. The company does have valuable rights to sports and special events and produces news, movies, reality shows, children's programs and educational programming.
Miami-based Univision, which has long relied heavily on Televisa's low-cost telenovelas to fill its prime-time schedule, also faces increased competition from Telemundo, which is owned by NBCUniversal, as well as English-language channels, YouTube and streaming services.
During the 14 years Univision was controlled by Los Angeles billionaire Haim Saban and other investors, it squandered its leadership position in the U.S. Spanish-language market amid a failed foray into English-language programming.
Televisa, based in Mexico City, will retain 45% interest in the new entity. It said it would contribute its four broadcast TV channels, 27 pay-TV networks, Videocine movie studio and Blim TV subscription video-on-demand service, as well as the iconic Televisa trademark.
Univision will add its Univision and UniMás broadcast networks, nine Spanish-language cable networks, 61 television stations and 58 radio stations in the U.S. and Puerto Rico, along with its recently launched streaming service PrendeTV. Its management team will be in charge.
"This transformative combination brings together the leading network serving U.S. Spanish-language audiences with the leading media platform in Mexico powered by the most powerful Spanish-language content engine in the world," said Davis. "Televisa-Univision will emerge as the leading global Spanish-language multimedia company, uniquely positioned to capture the significant market opportunity for Spanish speakers worldwide."
Televisa valued its assets at $4.8 billion.
Under the terms of the agreement, Univision will pay Televisa $3 billion in cash and provide $750 million in Univision common equity and $750 million in Series B preferred equity.
The transaction was partially financed by a $1 billion investment series led by the SoftBank Latin America Fund with participation from Google, the Raine Group and Davis' firm, ForgeLight, and $2.1 billion of debt commitments arranged by J.P. Morgan.
As part of the deal, Televisa will retain ownership of Izzi Telecom, Sky and other businesses and real estate associated with the Mexico production facilities. It will also maintain the Mexican government-issued broadcasting licenses and its transmission infrastructure in Mexico.
"This strategic combination generates significant value for shareholders of both companies and will allow us to more efficiently reach all Spanish-language audiences with more of our programming," Azcárraga Jean, executive chairman of the Televisa board of directors, said. "Together, Televisa-Univision can more aggressively pursue innovation and growth through digital platforms as the industry continues to evolve."
