What if billionaire A. Jerrold Perenchio held an auction and nobody came?
On Tuesday, two groups of investors that had been expected to bid for Perenchio's Spanish-language media company Univision Communications Inc. missed the afternoon submission deadline, though both had worked into the night to solidify their offers.
One group, which includes Mexican media conglomerate Grupo Televisa, was restructuring its proposal after a key partner -- private equity firm Carlyle Group -- unexpectedly withdrew, sources close to the matter confirmed.
The other group, which includes billionaire Haim Saban, was trying to agree on a price late Tuesday.
Wall Street analysts predicted that the surprise no-shows indicated that if and when bids are made, they will probably be less than Perenchio had hoped for when he put Univision up for sale in February.
"I don't think he's going to get the $40 a share," Philip Remek, media analyst for Guzman & Co., a Miami-based investment banking firm, said, referring to the initial target set by Perenchio.
Remek predicted that the sale price would be closer to $35.50 a share, or about $12 billion. The company's shares closed Tuesday at $35.40, down 30 cents.
Univision's board had been planning to meet today to consider the proposals. It was unclear late Tuesday whether that meeting would still take place.
Carlyle opted out because executives there felt the proposed offer -- about $34 a share -- was too much, according to two sources close to the group who asked not to be identified because the bidding process was supposed to be confidential. The firm had planned to come up with one-fifth of the financing for the bid.
Carlyle managers figured that Univision was overvalued and was worth only about $31 to $32 a share, one of the sources said.
Carlyle executives declined to comment. So did representatives of Univision, Televisa and Saban.
Sources close to the auction cautioned that Tuesday's developments did not mean that it was over. In fact, both teams are expected to submit their offers as early as today. Such delays are not uncommon when there are so many investors involved.
With Carlyle out, the Televisa team consists of Microsoft Chairman Bill Gates' Cascade Investment, Kohlberg Kravis Roberts & Co., Blackstone Group, Bain Capital and Venezuelan media magnate Gustavo Cisneros, whose Venevision Investments is the largest shareholder in Univision.
The other group, led by private equity firm Texas Pacific Group and Saban, also includes Providence Equity Partners, Thomas H. Lee Partners and Madison Dearborn Partners.
Once the bids are in, the process will be far from over. Three years ago, Univision went through a long and expensive regulatory battle to win approval from the Justice Department and the Federal Communications Commission for its $3.25- billion acquisition of Spanish-language radio chain Hispanic Broadcasting Corp.
Some expect the buyer of Univision to face similar scrutiny. If Televisa and Venevision are among the buyers, there will be concerns over foreign ownership. There are also alleged conflicts of interest involving three of the private equity firms involved in the bidding.
Those three firms -- KKR, Thomas H. Lee and Blackstone, are part of a consortium called Valcon that last month bought Dutch media firm VNU, which owns the U.S. television ratings firm Nielsen Media Research.
Nielsen is the sole firm that measures television audiences in the U.S. Some have questioned the appropriateness of having one group of investors own both the measurement company and some of the TV networks it measures.
"Both groups have this problem," Remek said.
Nielsen only late last year began including Univision in its national ratings. That change revealed that Univision was the nation's fifth-largest network. On some nights Univision draws more of the desirable 18- to 34-year-old audience than does CBS, NBC, ABC and occasionally even Fox.
Before this year, the English- language networks paid little attention to Univision and its sister network TeleFutura because their audience was measured separately.
An attorney for VNU on Tuesday dismissed the assertion that the alleged conflict of interest would give regulators pause.
"Nielsen's independence and its integrity is its stock in trade," said Washington attorney Philip L. Verveer.
"These firms that now own VNU would find a way to protect Nielsen's independence. They would not want anything that would damage Nielsen's value as an asset. These are not unsophisticated people running these businesses."