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LATINO MARKET EXPANDS UNIVISION PURCHASES 25 USA TV STATIONS.

Byline: Chris Sieroty and Jesse Hiestand Staff Writers

Univision Communications Inc., the nation's largest Spanish-language television network, said Thursday it will buy 13 television stations from USA Networks Inc. for $1.1 billion in cash.

Univision also will acquire USA Network's minority stakes in four other stations. The local stations that make up USA Broadcasting currently operate in English and are located in important Latino markets including Los Angeles and Miami.

In the Los Angeles market, USA owns KHSC, Channel 46, in Ontario, which is an affiliate of the Home Shopping Network. Univision, which is based in Los Angeles, operates KMEX, Channel 34, locally.

Andy Hobson, executive vice president of Univision, told analysts in a conference call Thursday that the company first became interested in these stations several years ago, but were turned down.

``We were approached by Barry Diller several weeks ago to see if we were interested in purchasing the stations,'' said Hobson. ``We acted quickly to acquire these stations.''

The transaction is expected to close by the middle of next year.

Univision plans to switch Spanish-language formats. ``This will be done on a rolling basis to allow the Home Shopping Network to complete the transition from broadcast to cable,'' he said.

Once the transaction is completed, Univision will have a duopoly in seven of the eight top Latino markets.

``As the U.S. Hispanic market continues to expand, we believe there will be tremendous demand for Spanish-language entertainment,'' said A. Jerrold Perenchio, Univision's chief executive officer in a statement. ``The stations that we are purchasing from USA Broadcasting are highly complementary to our existing assets.''

Diller, chairman and chief executive office of USA Networks, said in a statement that he had been ``overly ambitious'' about his plans for the station group.

``Barry wanting to get rid of these stations also speaks to the advertising slowdown expected next year,'' said Anne Thompson, media analyst with Wedbush Morgan Securities.

In the wake of the deal, speculation mounted that Diller would make yet another bid to buy NBC, the General Electric Co.-owned network that he has twice failed to take over as a prime outlet for his programming.

Several stock analysts discounted that likelihood.

``I don't think NBC's his game,'' said David Goldsmith of Buckingham Research Group. ``I think he's got his eye elsewhere. Times have changed. Advertising is weak and it would take a long time to buy (NBC).''

Goldsmith said regulatory issues could also pose a problem, as Diller would likely partner with French-owned Vivendi, which is on the verge of merging with The Seagram Co. Ltd. and its Universal Studios and Universal Music Group.

The USA Networks station sale was good for Diller, according to Goldsmith and others, because the stations were losing about $55 million per year. Robin Flynn, an analyst with media researchers Paul Kagen & Associates in Carmel, said Diller would probably buy more programming outfits.

``He's coveted (NBC) for a while, and it definitely would be a feather in his cap if he could do it, but I just don't see him selling this station group and turning around and buying NBC and another station group,'' Flynn said.

Those who follow NBC's parent company say GE may not want to sell the network.

``My sense is there's nothing cooking on the GE side and that NBC stays in the portfolio,'' according to Kent Newcomb, an analyst with A.G. Edwards & Sons Inc.

Diller said there were two reasons that dictated the sale of the stations, other than multiple offers to buy them.

``One, a realistic assessment of our inability to either go it alone or join in an equal partnership with a stronger broadcast group to build the stations into competitive forces in their markets and two, the desire to focus our time, effort and investments in the Entertainment sector of our company, on cable program services and the production and distribution of television and theatrical motion pictures.''

In addition to Los Angeles and Miami, USA Broadcasting's fully owned stations are in the key markets of New York, Chicago, Philadelphia, Boston, Dallas, Atlanta, Tampa, Houston, Cleveland and Orlando. The stations in which it has minority interest are in San Francisco, Washington, D.C., Denver and St. Louis.

The deal would give Univision two stations in each of several key cities with large Latino populations, including New York and Los Angeles. Federal prohibitions against one company owning two stations in a single market have recently been lifted.

The acquisition, which has been approved by the boards of directors of both companies, still faces regulatory approvals.

Thompson said she hopes the company will use the stations as a base to start a second network.

``They could program the network to cater to the changing demographic and specifically toward the U.S. Hispanic experience and story,'' she said.

Hobson said the company will not comment at this time on a programming strategy for the stations.

Shares of Univision gained 3.27 percent, or $1.1875 Thursday to close at $37.50 on volume of 985,400 shares traded on the New York Stock Exchange. USA Network shares jumped $1.625, or 9.63 percent, on heavy volume of 8,503,100 shares traded on the Nasdaq exchange.

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Title Annotation:Business
Publication:Daily News (Los Angeles, CA)
Geographic Code:1USA
Date:Dec 8, 2000
Words:880
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