Big Plans, Many Opportunities In Television

Michael Hedges October 12, 2010 Follow on Twitter

Big media deals come together for many reasons. Usually it’s the money, sometimes it’s the power. Almost always it’s the trill of the really big deal.

Grupo Prisa, struggling with debt, agreed to sell a majority stake to Liberty Acquisition Holdings ending, it seems, insecurity at Spanish newspaper El Pais. Billionaire-investors Nicolas Berggruen and Martin Franklin will stump up €900 million. The deal is expected to close by years end.

Grupo Prisa is “the world’s largest Spanish-language media group,” said The Economist (September 30). “Prisa will now be able to concentrate on its operations, which include plans to grow its education-publishing business in Brazil and Mexico. It is also eyeing the fast-growing Hispanic media-market in America, so may start challenging the dominance of Univision and Telemundo, the two biggest Spanish-language networks.”

“Better 30% of something than 70% of nothing, to put it brutally,” said Grupo Prisa CEO Juan Luis Cebrián. Cebrián, a co-founder, said he’d stay on as CEO for three years. The Polanco family that founded the media company is giving up its controlling stake. Grupo Prisa is sitting on about €4 billion in debt, made rough by several years of tough economic times in Spain.

“I don't speak Spanish,” said Berggruen, quoted by The Guardian (October 5). “When I owned Media Capital I had no editorial voice whatsoever. At the same time, I wouldn't want to invest in a bad editorial voice.”

“In this challenging media environment,” he continued, “the dominant publications will actually do quite well. Over the next few years, there will be survivors, and they will survive at the expense of the smaller competitors.”

While most of the ink given to the billionaire’s investment centered on the sagging fortunes of el Pais, Groupo Prisa owns radio and television channels in Spain, Portugal, Chile, Argentina and Columbia and a news network in Mexico with Televisa. Media Capital is the Portuguese media company sold to Grupo Prisa by Berggruen and Franklin.

“Prisa makes money,” said Sr. Cebrián at the annual shareholders meeting (June 30), “and has continued to make money during these difficult years in all its business units. Its companies are generating significant turnover, and the strength of its activities and the strength of the markets in which it operates are our best guarantee of solvency.”

“Brazil and the US (are) the Group's priority markets for growth in the areas of radio and education, as well as an area of growth for audiovisual production operations,” said a company statement after the annual meeting.

“We can be the News Corporation of the Hispanic world,” said Franklin, quoted by The Guardian (October 6). “Linguistic markets count with globalization and we are fortunate to operate in two sister languages: Spanish and Portuguese."

The same day the Grupo Prisa deal was announced Mexican television giant Grupo Televisa took a 5% stake in American Spanish language network Univision for US$1.2 billion. Televisia is a huge producer of Spanish language programming, distributed widely in Latin America. The shares and debt can be converted to as much as 40% of Univision’s stock, notwithstanding a little problem with US law preventing foreign ownership exceeding 25%.

Univision is sitting on US$10 billion in debt from the leveraged buy-out in 2006 by Haim Saban from several venture capital firms. Televisia’s initial 5% stake includes its TuTV pay-TV channel operating in the US with Televisia programming. Univision’s content deal with television, including Mexican football, will be extended until 2020.

Mr. Saban famously sold ProSiebenSat.1 Media to private equity firms KKR and Permira for €5.8 billion in 2006.

These may be the big television deals of the week but another underscores interest in Spanish and Latin American television. Time Warner, which has global holdings including Latin America, purchased Chilevision SA (October 7) from an investment company owned by Chile’s president, Sebastian Pinera. During the recent election campaign Pinera promised to sell certain assets if elected, which he was in January. The reported price-tag is US$140 million.

“Our presence will not change the editorial line of Chilevisión,” said Time Warner Latin America president Juan Carlos Urdaneta, quoted by Terra.cl (October 8). “We liked the channel for everything it does, its people, its projects and we are not going to change.”

See also in ftm Knowledge

Media in Spain and Portugal

The Iberian Peninsula is home to media with vast international reach. Yet, at home the economic crisis has taken its toll. The ftm Knowledge file profiles Spanish and Portuguese public and private media as it struggles to cope. Includes Resources 58 pages PDF (September 2009)

Order here

Become an ftm Individual or Corporate Member and receive Knowledge files at no charge. JOIN HERE!

ftm Knowledge files are available to non-Members at €49 each. The charge to Individual Site Members is €15 each.