Titans of Hispanic TV take feud to new level.
The dominant producer of hit Spanish-language television shows has sued the nation's largest Hispanic broadcaster, Univisión Communications, in the latest salvo in an escalating power struggle between the two media giants over the lucrative and rapidly expanding U.S. Hispanic media market.
In another dramatic move, two top executives of Mexico's Grupo Televisa abruptly resigned from Univisión's board. The feud boiled over on the eve of today's Univisión annual shareholders meeting in Los Angeles.
Televisa, whose popular shows such as Sabado Gigante and Amor Real are seen on Univisión's WLTV-23 and WAMI-69, has been long rumored to be hunting for a television station group of its own so it can make its own play for the U.S. Hispanic audience.
The company's lawsuit against Univisión, some industry observers believe, is a step toward that goal.
Televisa's and Univisión's fortunes are deeply intertwined. Univisión relies on Televisa's highly successful programs, especially its prime-time telenovelas, to drive ratings at its two broadcast networks. Univisión, which has programming and production operations based in Miami, has become a competitor to English-language networks, particularly among audiences aged 18 to 34, which are coveted by advertisers.
Televisa owns more than 10 percent of Univisión's stock, and its programming partnership with Univisión gives the Mexican company access to the U.S. Hispanic media market.
A source close to both companies said Televisa's lawsuit could lead to an attempt to sever the programming partnership, which expires in 2017.
In that lawsuit, filed in Los Angeles District Court, Televisa claims Univisión violated the terms of their programming agreement by withholding some $1.5 million in royalty payments and by altering some of the programs it rebroadcasts. The suit also seeks to prevent Univisión from trying to get back $5 million in royalties Univisión claims it mistakenly paid in past years.
Univisión paid $170 million in royalties to Televisa and Venevision, its second programming partner, in 2004, according to federal filings.
In a statement, Univisión responded: ``This lawsuit is baseless and we intend to vigorously defend against it.''
The resignation of Televisa Chief Executive Emilio Azcárraga and Alfonso de Angoitia, Televisa's executive vice president, set the stage for what could be a dramatic Univisión stockholders' meeting today, in a secluded Los Angeles hotel.
The moves surprised industry observers.
''It's a new escalation in the level of the feud,'' said Jose Cancela, a former Univisión executive who runs marketing consultancy Hispanic USA. 'This is Emilio's version of `shock and awe.' ''
Already rocky relations between Televisa and Univisión worsened in February when Univisión Chairman A. Jerrold Perenchio named Ray Rodriguez as his No. 2 executive. Perenchio controls the majority of the company's stock.
The appointment infuriated Azcárraga, then Univision's vice chairman of the board. The 37-year-old Mexican had wanted to conduct an outside search to fill the president's post.
Azcárraga's departure reflects dissatisfaction with his limited influence at Univisión, said David Miller, a stock analyst at Sanders Morris Harris.
''There's some personal dissension between Emilio and Jerrold Perenchio,'' Miller said. ``Plus, Azcárraga wants to increase his stake in Univisión, and the shares aren't available unless he wants to buy them in the open market.''
Azcárraga currently can't own his own U.S. network because of laws barring foreigners from owning majority stakes in domestic media companies. He could, however, apply for U.S. citizenship. His wife is an American citizen and he owns homes in Miami and San Diego.
On Tuesday, Univisión said Televisa retains the right to appoint another representative to the board.
This report was supplemented by Herald wires.
[Source: The Miami Herald, Usa, 11May05]
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