Univision, Telemundo, and the Rise of Spanish-Language Television in the United States - Craig Allen

[Saluki]

Just finishing up this book which was released in paperback a couple of months ago.  Very interesting read about the early days of cable and Spanish TV in the US.  It focuses on Univision (started and half owned by Televisa) and Telemundo (who has been a distant second in the US until recently).   I learned some things that I didn't know, like that "retransmission consent" for cable channels came about from an FCC case where Televisa sued because someone was picking up their signal and broadcasting over their cable system without paying.  Interestingly, the first satellite /cable transmissions were not from US companies, they were also from Televisa.  They beamed the programs to Univision's cable systems in the US where before they ferried them over from Mexico in vans every week. They innovated a lot of things that are common practices now. 

 

Univision grew immensely due to an extremely favorable deal negotiated by Televisa, because they were secretly larger owners than was permitted under US law.  The Televisa founder planned on eventually taking it over so he gave them a sweetheart deal. He eventually married a US citizen and was planning on buying Univision but was double crossed when it was sold out from under him to Haim Saban, of Power Rangers fame, for $13.7 bln dollars.   Lots of other double crosses in the book and people playing Telemundo and Univision against each other. 

 

If you're interested in Televisa (TV) or Telemundo (owned by Comcast), there isn't a lot of information available and this is a great source to get the history and all the players involved.  And for me it's a reminder that the due diligence doesn't stop after you buy a stock.  Keep digging and learning. 

[LC]

38 minutes ago, Saluki said:

was double crossed when it was sold out from under him to Haim Saban, of Power Rangers fame, for $13.7 bln dollars.   Lots of other double crosses in the book and people playing Telemundo and Univision against each other. 

 

Sounds wild. I always knew Zordon was up to something sneaky. Thanks for sharing the recommendation.

Edited July 18, 2023 by LC

[LC]

https://s29.q4cdn.com/983326523/files/doc_financials/2023/q2/2Q23-Earnings-Press-Release.pdf

 

Univision Q2 earnings:

 

• Total revenue grew 11% to $1.2 billion, driven by growth across all major revenue streams in both geographies

• Total advertising revenue grew 10%, which was led by 29% advertising growth in Mexico that included a benefit from foreign exchange rates

• Global subscription and licensing revenue grew 14%, driven primarily by ViX’s premium subscription tier

• Adjusted OIBDA held flat with the Company’s core linear business continuing to fully fund investments in ViX • Engagement on ViX continued to grow, with 17% sequential growth in total streaming hours

• The company expanded its market-leading soccer portfolio and secured the rights to two key Liga MX teams this quarter, now holding rights to 17 out of the 18 teams in both the U.S. and Mexico

 

Adjusted OIBDA held flat, despite absorbing significant investments in the company’s streaming service, ViX. Operating expenses reflect these investments in ViX, including new original premium content, sports rights, marketing and technology, and grew 17% to $846 million.

 

 

[Spekulatius]

Comcast did a great job with Telemundo. Telemundo has gained a lot of market share in Spanish language TV from Univision as they weren’t from distinct second to going toe to toe.

 

OT - since Peacock carries Telemundo and Telemundo carriers many sports event, subscribing to Peacock is great way to get streaming access to live sports event (on top of the stuff that NBC carries), if you don’t mind Spanish speaking commentators. I restarted my subscription to Peacock just to watch the Woman soccer Worldcup on Peacock.

[Saluki]

2 hours ago, Spekulatius said:

Comcast did a great job with Telemundo. Telemundo has gained a lot of market share in Spanish language TV from Univision as they weren’t from distinct second to going toe to toe.

 

OT - since Peacock carries Telemundo and Telemundo carriers many sports event, subscribing to Peacock is great way to get streaming access to live sports event (on top of the stuff that NBC carries), if you don’t mind Spanish speaking commentators. I restarted my subscription to Peacock just to watch the Woman soccer Worldcup on Peacock.

 

Telemundo has improved a lot.  It went from 80/20 Univision/Telemundo to something like 40/30.  For must of the competition Univision had programming (telenovelas) imported from Mexico and the longest running, most popular variety show (Sabado Gigante) in history.  Telemundo tried to compete by buying programming from other latin american countries that was very country-specific and didn't catch on, or later stuff from Azteca in Mexico, which was like the wanna be Televisa.  Telemundo also tried to produce Spanish versions of US TV programs, like Charlie's Angels, in the US which was expensive and never caught on.  It was like they were trying a lot of different things and none of them worked because it was like a Buffet with lots of different foods but where all the food was mediocre, instead of a restaurant that only sold burgers but did it well.  Eventually, Telemundo got a few things going for them. The host ofUnivision's Sabado Gigante retired, Telemundo got a hit with "Ugly Betty" and a few other shows, and the sports helped a lot. Part of the decline in Univision's market share is the growth of digital media.  Unlike immigrants, US born Latinos can watch programs in English on other platforms, or use their time online with YouTube/Facebook/TikTok etc. I think the shrinking of the dominant position because of digital alternatives, and the fact that US born Latinos may prefer to watch English language programs, is something that I didn't fully appreciate until I read this book, but Televisa/Univision still looks cheap to me and I still think the parts are worth more than the whole and I'd be very happy if Univision was spun off to shareholders eventually.  Hell, a tracking stock with Telemundo might be interesting to me too, at the right price.  

[rogermunibond]

Saluki - would you mind sharing your thoughts on TV and what they have available to them to get the share price up.

 

Would the family ever consider breaking it up?

[Saluki]

It's talked about in the Televisa thread I think.  A breakup (or spinoffs) are the best bet.  It would be trading at 2-3x what is now if MegaCable had agreed to merge with them instead of overbuilding in TV's territory and fighting city by city.  So that and the capex for upgrading the cable network are probably what is dragging down the stock. Satellite TV is a melting ice cube too, but still profitable. 

 

A spinoff of Univision would be great, but that hasn't been talked about.  They did announce that they will spinoff the Soccer Team, and the Soccer Stadium ahead of the next world cup. That should help with unlocking value because the pieces are hard to value.  How much is a stadium in Mexico city worth? So if they are publicly traded that should provide clarity. 

 

Spinning off the stadium will prevent them from incurring capex to upgrade the stadium before the games, and a spinoff of the Soccer Team in Mexico city should help with visibility too. Some teams, like Manchester United trade at incredible values, but how much are the non (Yankees, Red Sox, etc) teams worth?  

 

There are some other things that aren't core assets, like publishing or TV and Radio that could be sold, but I haven't heard anything about that. I think cash-wise they are fine. They got $4bln in cash and stock from Univision in exchange for giving them all Televisa's prior content.