Spanish-language media giant Univision sold as challenges loom

Univision Communications Inc. is turning the page after a turbulent 14-year reign of private equity firms that soured on their investment.

The finale of the months-long auction for the nation’s largest Spanish-language media company came early Tuesday when former Viacom executive Wade Davis and private equity firm Searchlight Capital Partners announced that they were teaming up to acquire 64% of Univision for an undisclosed price.

The new investors hope to restore luster to the broadcaster known for its over-the-top telenovelas and star news anchor Jorge Ramos.

And, in a telenovela-like twist, Mexico City media giant Grupo Televisa will retain its nearly 36% stake in Univision. Televisa’s founder helped launch Univision with a single Texas TV station in 1961, and the company has long been a key stakeholder and supplier of the spicy soap operas that run in prime time.

Davis will become chief executive of Miami-based Univision once the deal, which is subject to regulatory approvals, is complete.

The current ownership group, including Los Angeles billionaire Haim Saban, initially had been seeking $10 billion for the company — significantly less than the $13.7 billion it paid in 2007 when it acquired what was then an emerging Spanish-language powerhouse from the late Jerrold Perenchio and his Latin American partners.

But years of infighting, management misfires and changing demographics took a heavy toll.

Univision last year ended its disastrous foray into English-language websites to instead focus on its strength: Spanish-language programming. Univision remains a potent draw with Spanish-speaking viewers, primarily immigrants from Mexico and Central America, and millions of viewers still turn to Univision for news and entertainment. But the audience for the broadcaster’s flagship TV network, which draws about 1.4 million viewers in prime time, is half what it was a decade ago. Univision’s television, radio and digital outlets compete with Netflix, YouTube and Spotify, along with English-language networks.

“We truly feel that this is the right home for Univision moving forward,” Saban said in an email to Univision staff. “We are confident that Wade and Searchlight fully understand and appreciate the immeasurable value that Univision’s programming brings to its audiences, partners and communities.”

Davis, the 47-year-old former chief financial officer of Viacom, departed that company in early December when Viacom completed its merger with CBS Corp. The former investment banker, who spent nearly 14 years at Viacom, owner of MTV, Comedy Central, BET and Nickelodeon, last year formed his own firm, ForgeLight LLC, and began recruiting investors.

Searchlight Capital Partners is a New York-based private equity firm with a varied portfolio. Earlier this month it took a stake in Global Risk Partners, an independent insurance intermediary firm. It also has investments in the Israeli communications services provider Bezeq, the Italian broadband provider Eolo, Frontier Communications’ fiber broadband operations in Montana, Idaho, Washington and Oregon, and Cengage Learning, a textbook and educational materials provider. (Davis is a Cengage board member).

“I am no stranger to the headwinds in the domestic television business,” Davis said in an interview. “But I really look at Univision as the single most attractive asset in media today. Univision has a powerful and unique relationship with its audience.”

Univision has about $7.2 billion in debt, which the new owners hope to pay down. Davis said the company will aggressively bolster Univision’s streaming business, calling that “an enormous opportunity.”

Univision boasts a range of assets, including the broadcast television networks Univision and UniMás and cable channels Galavision and TUDN, a sports channel. The company also owns more than 50 radio stations and more than 60 local television stations, including its flagship, KMEX-TV (Channel 34) in Los Angeles.

Analysts predict a record year for political spending in advance of the November presidential election, and Spanish-language media is expected to receive a growing share. For the first time, Latinos are projected to be the nation’s largest ethnic minority group in a U.S. presidential election. Candidates are wooing Latinos, and Univision’s national and local newscasts, on KMEX and other stations, supply news to millions of viewers.

Still, the company faces steep challenges, in part because of demographic trends, including a significant slowdown in immigration from Mexico in recent years. That’s a problem for Univision because it has long relied heavily on Spanish-speaking newcomers to replenish its audience.

U.S.-born Latinos, who are fluent in English, typically preferto watch shows on Netflix, Hulu, ESPN and Fox.

In addition to Saban Capital, the consortium selling Univision is made up of TPG (formerly known as Texas Pacific Group), Thomas H. Lee Partners, Providence Equity Partners and Madison Dearborn Partners.

The group moved Univision’s headquarters from Los Angeles, which is home to the nation’s largest population of Latinos, to New York and then to Miami, where the company has production facilities and Univision News studios.