Televisa and Univisión have reached an agreement to merge their media, content and production assets and create the largest global Spanish-speaking media company, the two groups reported in a joint statement.
The agreement for the merger establishes that Univision will pay the Mexican Televisa 4.8 billion dollars (just over 4 billion euros) in the operation, of which 3,000 million dollars (2,508 million euros) will be disbursed in cash and the amount remaining in shares and other commercial considerations.
Following the merger, which is expected to conclude this year, Televisa will maintain a 45% stake in the newly created company and will continue to retain ownership of Izzi Telecom, Sky and other businesses, as well as the main real estate properties linked to the facilities of production, transmission concession titles and transmission infrastructure in Mexico.
The combination of assets will be financed through an investment of 1 billion dollars (836 million euros) led by SoftBank and supported by Google and the bank The Raine Group, which will enter as shareholders of the media conglomerate. Likewise, the operation will have another 2,100 million dollars (1,756 million euros) in debt commitments coordinated by JP Morgan.
The companies have indicated that the business resulting from the merger will feature the world's largest long-form content library, as well as a strong portfolio of global sports rights and intellectual property.
The groups also say that "the power and reach of these content assets are unmatched." In 2020, the Mexican Televisa produced more than 86,000 hours of content in all genres and categories, including sports and special events; In addition, the company has four free-to-air television channels, 27 pay television channels, a film studio (Videocine) and a video-on-demand subscription service.
On its side, Univisión's assets include the Univisión and UniMás channels, nine cable channels in Spanish, 61 television stations and 58 radio stations in the main Hispanic markets of the United States and Puerto Rico, as well as streaming service on demand. .
Televisa and Univisión have framed this action in their offensive to penetrate the global streaming market in Spanish, a market that has 600 million people and that, according to the firms, "is significantly neglected from a streaming perspective in relation to other important markets ".
In this sense, media groups allege that less than 10% of the Hispanic population currently uses a streaming product, a figure much lower than that of the Anglo-Saxon market, in which almost 70% of the population has at least one streaming service .
"This strategic combination generates significant value for the shareholders of both companies and will allow us to more efficiently reach all Spanish-speaking audiences with more of our programming," said Emilio Azcárraga, Executive Chairman of the Board of Directors of Televisa. .
For his part, the CEO of Univisión, Wade Davis, has indicated that the combination of assets will serve Hispanic audiences in the United States "with the leading media platform in Mexico powered by the world's most powerful content engine in Spanish." .
"Televisa-Univisión will emerge as the world's leading Spanish-language multimedia company, uniquely positioned to capture the significant market opportunity for Spanish-speakers around the world," he added.
Wade Davis, leader of the new group
Regarding the new organizational structure, the groups have explained that Wade Davis, the current CEO of Univisión, will be the leader of this new synergy, while Alfonso de Angoitia will serve as Chairman of the Board of Directors of Televisa-Univisión, and Marcelo Claure, current CEO of SoftBank International, will become vice president of the board.
The new board will have 13 members, including five appointed by Televisa, three by Searchlight and ForgeLight, two appointed by group shareholders and three independent directors.
Thus, the new council will be made up of Emilio Fernando Azcárraga, Bernardo Gómez, Alfonso de Anogitia, Marcelo Claure, Michel Combes, Gisel Ruiz, Óscar Muñoz, María Cristina González, Wade Davis, Eric Zinterhofer, Jeff Sine and two other additional appointments from Televisa .
45% Ebitda target
As a result of the capital injection and the improvement in the company's profitability, the gross operating profit margin (Ebitda) is expected to be around 40% due to the synergies inherent to the integration. According to the companies, the joint venture will achieve estimated sales of $ 4 billion, with an Ebitda of $ 1.6 billion.
In addition, the group plans to invest in the early launch of its global streaming platform in early 2022, given the combined financial strength of the companies.
After the transaction, Televisa will continue to develop and expand its telecommunications business in Mexico. It will also use the resources received from Univision to reduce its debt, while continuing to seek growth opportunities and strengthen its market position through investments in its core businesses.