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Resignation Intensifies Univision Battle

Chairman of Mexico's Televisa leaves the board of the L.A. firm, a sign that he may try to buy it.

May 11, 2005|Meg James | Times Staff Writer

Univision Communications Inc.'s simmering boardroom battle boiled over Tuesday when the Spanish-language media company announced that the head of its second-largest shareholder, Grupo Televisa, had resigned as Univision vice chairman.

Some analysts said Emilio Azcarraga Jean's departure, which came on the eve of Univision's annual shareholder meeting, signaled that he was probably stepping up his campaign to wrest control of the company from Los Angeles billionaire A. Jerrold Perenchio.

"He has thrown down the gauntlet," Leland Westerfield, a media analyst with Harris Nesbitt, said of Azcarraga Jean.

The 37-year-old chairman of Televisa, Mexico's powerful media conglomerate, has been feuding for months with Univision's 74-year-old chairman, Perenchio. The younger man sees the elder as too controlling because, among other things, he refuses to map out a succession plan.

The rift grew deeper in February when Perenchio installed a longtime lieutenant as Univision president despite protests from Televisa and the company's largest shareholder, Venevision of Venezuela.

Azcarraga Jean and his board alternate, Alfonso de Angoitia, Televisa's executive vice president, Monday told Univision that they were stepping down. They did not give a reason, said a source familiar with the matter.

Also on Monday, Televisa filed suit in U.S. District Court in L.A. alleging, among other things, that Univision had shortchanged it by about $1.5 million in programming royalties. Televisa has hired the firm of high-powered attorney David Boies.

Univision issued a statement in which it called the suit "baseless," adding, "We intend to vigorously defend against it."

The statement continued: "We appreciate Mr. Azcarraga's and Mr. Angoitia's many contributions to the Univision board and look forward to working with the new board member and alternate [that] Televisa appoints to replace them."

A Televisa spokesman declined to comment.

Some observers speculated Tuesday that Azcarraga Jean might be positioning Televisa to team up with a U.S.-based firm to buy Univision. Azcarraga Jean cannot directly take over Univision because U.S. rules prohibit foreign citizens from owning more than 25% of a broadcasting company.

Azcarraga Jean has made no secret of his desire to control Univision, a company that his grandfather, Emilio Azcarraga Vidaurreta, started in 1961 when he bought a San Antonio station and began building the first Spanish-language television network in the U.S.

But Jessica Reif Cohen, Merrill Lynch media analyst, said it was "way too soon" for that.

"At some point they would like to buy Univision, but it doesn't make sense right now to take on Perenchio," she said.

Perenchio, who owns 10.2% of Univision's common stock, has super-voting shares that give him 56% of the vote. But his company is dependent on Televisa for its programming.

Televisa's prime-time telenovelas, or soap operas, have made Univision the dominant force in Spanish-language TV. About 65% of Latinos in the U.S. are from Mexico or are of Mexican descent, and they tend to favor Televisa's shows.

"The fact remains that these companies, by agreement, cannot separate," said Westerfield, the media analyst. "Their strategies are interdependent. Televisa enjoys enormous revenues from its U.S. partner, and Univision benefits by having the advantage of Televisa's Mexican-grown novelas."

Azcarraga Jean's departure seemed timed to have a maximum effect on Univision. The company's shareholders are meeting this morning at the Hotel Bel-Air. And next week in New York, Univision's top programmers will unveil the shows that will run on Univision's broadcast networks, Univision and TeleFutura, and cable channel Galavision in the coming season.

Univision -- which has long lagged behind its English-language rivals in ad dollars despite delivering a huge, loyal audience -- has been hoping this year to boost its share of the advertising revenue pie.

Azcarraga Jean is the second board member to resign in recent months. After the tense February meeting at which Ray Rodriguez was named president, independent director Fernando Aguirre, an executive of Chiquita Brands International Inc., quit.

Univision now has two independent directors: Alan Horn, president of Warner Bros., and Harold Gaba, president of Act III Communications Holdings.

Univision shares fell 60 cents to $26.50 on the New York Stock Exchange.

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