After the end of January it became known that Hemisphere Media Group Inc. He had withdrawn from the auction of the important Spanish-language media company, Univision Communications Inc., sources familiar with the issue reported that the group formed by Searchlight Capital and Wade Daviswho is a former chief financial officer of Viacom, continue in conversations to acquire this company.
According to the American newspaper, The Wall Street Journal, the broadcaster of informational and entertainment content, has been running a sales process for a good number of months, but this could come to an end soon. However, so far there is no guarantee that the parties have reached a agreement.
It should be remembered that Univision Communications was acquired a dozen years after a leveraged purchase of USD 14 billion, but the problem for the original buying group is that they could get less than what they disbursed at the time.
The companies that made up the alliance from which Univision was acquired were TPG Capital, Saban Capital, Thomas H. Lee Partners, Madison Dearborn Partners and Providence Equity Partners, however, are currently going through a USD 7.4 billion debt, which has them on the edge of a financial crisis.
To try to resolve this issue, the executive president of Univision Communications Inc, Vincent Sadusky, he has trimmed costs and also tried repair relationships with other distributors like Dish Network. It is important to mention that these operations would not impact the Univision sale process.
While Univision became one of the most important Spanish-language television networks worldwide, lost ground and with the change caused by the digital interruption from platforms like Netflix, among others, the owners decided to start the sale process and thereby get approximately USD 10 billion.
Each of the partners who were involved in the operation to acquire the company more than a decade ago contributed little less than USD 4 billion and according Reuters, the Mexican company TV, also acquired a 36% share.
But the financial reports they suggest that have not obtained significant dividends. For original buyers to reach a breakeven, Univison’s assets must be worth close to USD 6.2 billion, plus a net debt of USD 7.4 billion and thus achieve that it is valued in little more than USD 13.6 billion, which is an approximate amount to what they paid for it.
However, according to the same news agency, “last year, Univision earned around USD 1 billion in operating income before depreciation and amortization (…). Supposing that no growth, but neither do the falls continue, a potential buyer would have to stay close to a high OIBDA of 13.5 times“