In offering Wall Street analysts an update on Univision’s strategic review process Wednesday, Univision CEO Vince Sadusky recalled his executive tenure at Telemundo. The review, initiated in July, could result in a sale of the privately held Hispanic media giant, though other options are being considered.
“There are only two [Hispanic] networks in the U.S. and we are the clear leader,” Sadusky said during the company’s second-quarter earnings call. “I was at Telemundo when it was sold to NBC” for just shy of $2 billion in 2001. “It’s still there and it probably will be there forever.”
The media sector’s scramble to mount streaming efforts and increase scale has left many of them with debt, cash constraints and other battles to fight. Even so, Sadusky said they all would be well-served by at least kicking the tires.
“Whatever state the various media companies are in, there’s not a lot of opportunity to really scale up in a meaningful way” in the Hispanic space, Sadusky said. “Timing may not be perfect for a lot of folks. But you’ve got to take a good look. This is the last opportunity to trade. … [Univision] will trade one time. If you don’t execute on that opportunity, I believe the opportunity is lost forever.”
Billionaire Haim Saban and a collection of private equity firms acquired Univision for $13.7 billion in 2007. Some analysts have questioned whether a serious media buyer exists in that price range. In 2017, Univision turned down an acquisition offer from John Malone believed to be in the range of $13.5 billion to $15 billion, though that came just before the industry’s race to catch up to Netflix and a spate of big mergers.
Sadusky said the strategic review was not prompted by outside interest being expressed. “It really was triggered by the progress we’d made in transforming Univision and the recognition of the historic growth opportunity in Hispanic media,” he said.
Since joining the company as CEO in June 2018, Sadusky has led a complete reset, implementing a “back-to-basics” approach that favors core Spanish-language offerings for Hispanic consumers. Under predecessor Randy Falco, the company had ventured outside its traditional lane, making sizable investments in English-language assets in digital media and cable TV just as both of those sectors started to contract. Last spring, the company sold off Gizmodo Media Group, parent of websites like Deadspin and Lifehacker.
“It was a matter of changing our strategic focus and getting our company in a position where we are attractive,” Sadusky said.
The financial results of the second quarter, which ended June 30, did not offer abundant evidence of a turnaround. Revenue slid 4% to $701.7 million, while adjusted operating income before depreciation and amortization dropped 14% to $265.7 million. The company acknowledged the downturn but pointed to bright spots in recent months, such as highly rated broadcasts of soccer and young-skewing music tentpole Premios Juventud. It also noted the best upfront sales results in four years, including mid-single-digit growth at the flagship broadcast network.
Univision said it reduced debt by $68.5 million in the first six months of 2019, but the leveraged-buyout nature of the 2007 deal, as well as other strategic decisions since, still left $7.4 billion of debt on the books as of the end of 2018.
One glaring operational issue was resolved in the spring when the company reached a distribution agreement with Dish Network, ending a nine-month blackout. Since that reconciliation, Sadusky noted that several other major carriage deals got done ahead of schedule.
“You really don’t have a service for Hispanics if you don’t have Univision,” Sadusky said. “We really proved that out with our Dish battle.”
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