After years of bad blood and nearly three weeks of court testimony, Mexico's entertainment giant Grupo Televisa and the dominant Spanish-language TV company in the U.S., Univision Communications Inc., abruptly ended their four-year legal battle Thursday.
The settlement averted a potentially disastrous outcome for Univision, which could have lost its pipeline of Televisa's popular soap operas, called telenovelas, that drive Univision's enormous ratings. In turn, Univision agreed to pay Televisa tens of millions of dollars more in royalties.
The agreement came just minutes before Grupo Televisa Chairman Emilio Azcarraga Jean, Mexico's billionaire media scion, was scheduled to take the stand in an effort to sever his company's long ties to Univision. Televisa had alleged that Univision had withheld $122 million in royalties that Televisa was rightfully due.
The new deal will enable Univision to continue as the leading Spanish-language media company in the United States. Univision commands about 75% of the Latino audience, and its Los Angeles television outlet, KMEX-TV Channel 34, ranks as the nation's No. 1 station, beating established ABC, NBC and CBS stations.
"This is good, good for everyone," a smiling Azcarraga Jean, 40, said as he left the Los Angeles courtroom.
The two companies issued a statement heralding the truce.
"It assures the public that Univision will continue to have access to consistently top-quality Hispanic programming. . . . For Univision, it assures that there will be no disruption in some of its most popular and valuable programming."
Investors had been monitoring the trial closely. Univision is struggling amid a slowdown in advertising, and it faces looming payments on its $10-billion debt that stem from a highly leveraged buyout two years ago. Losing its supply of low-cost Televisa shows would have been "devastating," a Univision executive told the jury last week.
Trial testimony included mind-numbing details on how Univision calculated Televisa's royalties. There were no bombshells. Still, about a dozen people were on hand each day taking notes of the proceedings.
Most of the scribes had been sent by transcription companies hired by large banks and investors that hold Univision debt. As the trial wore on, the price of Univision's bonds, which have been trading at steep discounts, fluctuated as one side or another appeared in court to gain an advantage.
