Hallmark Cards, which stirred controversy when it became the nation's largest Spanish-language broadcaster four years ago, said Wednesday that it had reached an agreement to sell its nine TV stations and Univision TV network to a group led by investor A. Jerrold Perenchio for $550 million.
The sale would signal a dramatic upheaval in the Spanish-language TV market, as Univision likely would be merged with one of its top competitors, the Galavision network. Galavision is owned by the huge Mexican media conglomerate Grupo Televisa, a partner in Perenchio's investor group.
Televisa in turn is controlled by Emilio Azcarraga, who was forced to sell Univision's predecessor company in 1988, when the Federal Communications Commission found him in violation of rules governing foreign control of broadcasting licenses.
The sale also represents a major reversal for Kansas City-based Hallmark, which spent considerably more than the $550-million sale price acquiring Univision and then made substantial investments in programming.
Univision programming reaches 90% of the approximately 6 million Latino households in the country. But in recent years, the network's ratings have slipped under challenges from Galavision and Telemundo, the third Spanish-language network. In Los Angeles, Univision owns KMEX Channel 34, and Telemundo owns KVEA Channel 52; KWHY Channel 22 is a Galavision affiliate.
Hallmark said its move to sell the operation was based on a decision to refocus its television emphasis on its cable interests. Last year, Hallmark acquired Cencom Cable Associates, which reaches more than 700,000 cable TV subscribers, for about $500 million.
Perenchio, who once owned Channel 52 in Los Angeles and a Spanish-language station in New York, was a partner with TV sitcom producer Norman Lear in Embassy Communications. Forbes magazine estimates that he is worth more than $650 million
"Jerry thinks the Spanish-language TV community is growing, and this is a unique opportunity for him to get back into TV," explained Robert Cahill, an attorney and executive who works for Perenchio. "We see it as one of the few growing markets."
In order to comply with the FCC's foreign ownership rules, the deal will be structured so that Perenchio controls a 75% interest in the station group while being a 50% partner in the network. Unlike TV stations, there are no foreign ownership restrictions regarding broadcast networks. Televisa and Venevision, a Venezula-based broadcasting company, each will hold 25% stakes in the network and 12.5% stakes in the station group.
