Televisa Is Working on Bid for Univision

The board of Mexico’s broadcasting giant, Grupo Televisa, on Thursday authorized senior executives to put together a bid to increase its ownership stake in Spanish-language broadcaster Univision Communications Inc.

The Mexico City company produces the wildly popular telenovelas that generate about 40% of Univision’s revenue, and is eager for a bigger slice of the U.S. Spanish-language advertising pie.

Televisa holds about 11% of the shares of Los Angeles-based Univision. Its 38-year-old chairman, Emilio Azcarraga Jean, has long searched for a way to reclaim the company that his grandfather launched in 1961.

Televisa is the first company to publicly express interest in bidding for Univision in the closely watched auction.

In February, Los Angeles billionaire A. Jerrold Perenchio put the company that he has controlled for 14 years on the block.

Analysts say Univision, which controls about 80% of the U.S. Spanish-speaking TV market, could fetch as much as $14 billion.

Televisa gave few details about its plan. A statement in its quarterly earnings report said its board had authorized Azcarraga and Executive Vice President Alfonso de Angoitia to “enter into a group with others and to make a plan or proposal for a transaction with Univision which, if successful, would involve an increase in Televisa’s minority shareholding of Univision.”

Televisa could not buy Univision outright. U.S. rules prevent foreign citizens from owning more than 25% of a U.S. broadcasting company. That restriction forced Azcarraga’s father to sell the Univision TV stations two decades ago.

Televisa has been working with media investment banking firm Allen & Co. to structure a bid. Several private equity firms also have been trying to woo Televisa.

One group includes Providence Equity Partners, Bain Capital and Madison Dearborn Partners, according to three sources close to the sale.

Another party includes investment bank Goldman Sachs along with equity firms Texas Pacific Group and Thomas H. Lee Partners, the sources said.

A sticking point has been Televisa’s demand that it have the power to veto any eventual exit by its private equity partners, according to three sources involved in the discussions.

Another wrinkle for Televisa was the revelation last week that an investment vehicle of Mexico’s richest family had paid about $288 million to acquire nearly 3% of Univision shares.

Because Carlos Slim Domit serves on Televisa’s board, his family’s purchase of Univision shares probably would count toward Televisa’s total. In other words, instead of being able to acquire as much as 25% of Univision, Televisa now might be limited to 22%.