Entravision angles to take over some univision radio stations: Saban purchase may lead chain to unload some assets.

Now-private Univision Communications Inc. has a big debt problem, but an old friend may provide the solution. On March 27, the FCC cleared the sale of Univision, the Los Angeles-based company that dominates Spanish-language media in the U.S., to an investment group led by Beverly Hills billionaire Haim Saban. The next day Univision's stock stopped trading and the acquisition was complete.

It only took another day for Entravision Communications Inc., another L.A.-based publicly traded Spanish broadcaster, to start angling for Univision assets.

"Univision has discussed selling some radio stations," said John DeLorenzo, chief financial officer at Entravision, at a New York banking conference. "We haven't really seen a formal list. but we've heard they're in a lot of markets that would allow us to enhance our existing clusters--markets like McAllen (Texas), Las Vegas and possibly El Paso."

Univision hasn't publicly announced its intention to sell stations, but Saban's group paid $13.7 billion for the company and could recoup some quick cash by selling off non-core assets. In his presentation, DeLorenzo also mentioned an interest in buying the Univision TV station in Salt Lake City.

The deal might work for Univision, but it puts Entravision in the familiar role of supporting player. Entravision owns 48 TV stations and 47 radio stations, nearly all affiliates of Univision's TV and radio networks. The company's symbiotic relationship gives Univision the big metro markets and Entravision the mid-sized and smaller cities. In addition to its programming leverage, Univision owns about 15 percent of Entravision's stock,

Historically, Entravision has played second fiddle to Univision's dominance of the market. When Univision announced its purchase of Hispanic Broadcasting in 2003, it put Entravisign in competition with its program supplier. As a result, Univision had to sell-down its substantial stock holdings in Entravision, a long-term downer for Entravision's stock price.

If Entravision buys stations, it could end up sacrificing its shareholders for Univision's benefit once again.

"We remain concerned about Entravision's leverage ratio, which continues to stand at a nosebleed five times trailing operating income," wrote David Miller, an L.A-based analyst at Sanders Morris Harris, in a report on April 2. "While we continue to be sold on Hispanic media as the only secular growth story in the media sector fight now (and Entravision is about to become one of only two publicly traded names on that front), we think investors should stay on the sidelines for now. In our opinion, the current share price does not pose a logical entry point."