NBC ACQUIRES TELEMUNDO NETWORK GAINS GROUND AMONG LATINO VIEWERS.

Byline: Greg Hernandez Staff Writer

NBC made official Thursday its plans to buy Telemundo Communications Group Inc., the second-largest Spanish-language broadcaster in the U.S., for nearly $2 billion in cash and stock.

NBC officials said the deal is its largest acquisition ever and will give the broadcast network a foothold in the rapidly growing Latino population in the U.S. NBC will also assume Miami-based Telemundo's debt, estimated at about $700 million at the close of the deal.

The deal continues a trend of media consolidation in recent years, including Walt Disney Co.'s purchase of ABC, Viacom Inc.'s purchase of CBS and the merger of AOL and Time-Warner, which includes CNN.

NBC Chairman and Chief Executive Officer Bob Wright acknowledged that Telemundo faces an uphill battle against Los Angeles-based Univision Communications Inc., still the nation's largest Spanish-language television network.

``Univision clearly has a very big piece of the Spanish-speaking audience, but I think Telemundo has enormous potential,'' Wright said during a news conference in New York.

Locally, Telemundo owns KWHY (Channel 22) and KVEA (Channel 52). NBC, which owns KNBC (Channel 4) and KPXN (Channel 30), plans to seek a Federal Communications Commission waiver to the limit on the allowable number of stations in a single market.

Telemundo, which is privately held by Sony Pictures Entertainment, Liberty Media and a consortium of financial backers, will continue to be lead by Telemundo President and Chief Executive Officer Jim McNamara and Chief Operating Officer Alan Sokol after the merger.

The Telemundo network currently reaches 88 percent of Latino households in the U.S. NBC said the deal provides them with strategic opportunities across all divisions, including sales and production, station operations, news, entertainment programming and sports.

Other possibilities include the addition of Spanish-language versions of NBC shows on Telemundo including late-night and reality programs and the Olympics.

``The Spanish language market likes novellas, novellas, novellas ... that will continue Monday through Friday,'' McNamara said. ``(But) we are woefully under-comedied, and NBC is the king of comedy. As we go forward, we can look at expanding our comedy area.''

Several analysts said NBC's acquisition of Telemundo should not have an immediate effect on industry leader Univision.

``I think any negative effects on Univision's ratings and advertising would take at least a year,'' said David Joyce, a Miami-based analyst for Guzman and Co. ``It will take awhile to assimilate cultures and use the deeper pockets of NBC to bolster production.''

Gordon Hodge, a media analyst with Thomas Weisel Partners in San Francisco, said the NBC acquisition actually bodes quite well for Univision.

``I think it's flattering to Univision in that you've got a major broadcaster making note of how important the Hispanic space is,'' Hodge said. ``The opportunity is for Telemundo to enjoy the rapid growth that is implied by the rapid Hispanic population growth. It's a good deal for NBC. This is a 100-year population wave that that is be a boon for any media company.''

Univision has spent the past year increasing its presence in several ways, highlighted by the purchase of 13 television stations from USA Networks Inc. Univision will use the stations to launch the movie-oriented Telefutura network on the stations in January and is negotiating with several studios to obtain broadcast rights for feature films dubbed in Spanish as well as first-run Spanish-language films from Mexico and Spain.

The addition of the USA stations gives Univision two stations in each of several key cities with a large Latino population, including Los Angeles and New York.

``Tactically and defensively, it was a good move for them because it ensures their dominance of the Spanish-language sector,'' said Alissa Graham, an analyst with William Blair & Co. in Chicago.

Univision also got into the music business earlier this year by launching a label, Univision Music Group, and buying a 50 percent interest in Disa Records, one of Mexico's largest independent labels.

``Univision has been approached by a number of the bigger players and they have been making moves to become a media conglomerate of their own evidenced by the USA deal. They're moving along on the music side of the business and an online portal that is probably the most-used Spanish-language portal in the country,'' Joyce said.

NBC parent General Electric Co.'s stock rose to $38.94 per share Thursday on the New York Stock Exchange, gaining $1.03 per share. Meanwhile, shares of Univision jumped by $2.04 to close at $28.38 per share on the NYSE.

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