Univision sees value in holding off on sale

Owners of the Spanish-language U.S. media company think it could fetch more by further improving its earnings ahead of an initial public offering or sale in 2015, three people familiar with the board’s thinking told sister news service Reuters.

Univision’s reluctance to commit to a formal sale process at this stage highlights the challenges that the company’s potential suitors face in winning what is widely considered to be one of the media industry’s most highly coveted businesses. The company held preliminary talks with CBS Corp and Time Warner Inc earlier this year, but those talks were preliminary in nature, the people said.

The board, including members who represent private equity firms that bought Univision for $12.3 billion in 2007, could still decide to sell if Univision fetches an offer that is too good to turn down, said one of the people. For now Univision is focused on paying down its $9.2 billion in debt through its rising cash flow, that person added.

New York-based Univision was taken private by a group of buyout firms including Haim Saban’s Saban Capital Group, Madison Dearborn Partners, Providence Equity Partners, TPG Capital and Thomas H. Lee Partners. Mexican media company Televisa owns an 8 percent stake in Univision and has bought debt that could be converted into a stake of up to 30 percent. It holds three board seats and also collects hundreds of millions in licensing revenue and royalties every year from Univision which airs a large chunk of its programming.

“It is unclear if Televisa would be willing to divest its stake or even acquire the remainder of the company at this juncture,” Barclays analyst Danish Agboatwala said.

A representative for Televisa declined to comment on its plans.

Univision reduced its debt by nearly $130 million in the first quarter ended March 31, its most recent quarter, compared to a year ago, according to a financial statement on its website. Net cash flow from operations more than tripled, to $77.8 million in the quarter that ended March 31, as the company enjoyed higher ratings at its UniMas broadcast network and Univision Deportes Network cable sports channel.

Representatives for CBS and Time Warner Inc declined to comment. Univision spokeswoman Monica Talan said the company does not comment on rumors.

The talks underscore the consolidation sweeping the telecoms, cable and satellite TV industry, which is being shaken up by Comcast Corp’s proposed $45 billion takeover of Time Warner Cable Inc and AT&T’s agreement to buy satellite TV provider DirecTV. Walt Disney Co is another media company that could be interested in Univision, analysts said. Maxim Group analyst John Tinker said the fees that Univision collects from pay TV operators could appeal to Disney, while there could also be synergies with its theme park business since many park visitors are Spanish speaking. A Disney representative declined to comment.

Univision, which based in New York, owns two broadcast TV networks, 62 TV stations and 68 radio stations in major U.S. Hispanic markets and Puerto Rico. Its cable channels include entertainment network Galavision and Fusion, a news and lifestyle channel for English-speaking viewers it launched in October with Walt Disney Co.

Ronald Grover and Liana B. Baker are correspondents for Reuters in New York. Additional reporting by Greg Roumeliotis.