Univision Communications Inc. on Wednesday confirmed it is mulling putting itself up for sale, in an auction worth nearly $10 billion that could have the country's media giants vying for a slice of the lucrative U.S. Hispanic market.
Shares of Univision jumped 12 percent to settle at $34.20 on Wednesday. The stock hit $35.01 earlier in the day.
The Los Angeles-based Spanish-language broadcaster said its board has decided to begin a process to explore strategic alternatives to enhance shareholder value, which could include a sale or merger of the company with another entity, Univision said in a statement. Univision also may decide to raise capital through the sale of securities or company assets or pursue a recapitalization or strategic acquisitions.
The company has retained UBS Investment Bank to act as its exclusive financial advisor in this process. Univision said it can't guarantee that the exploration of strategic alternatives will result in a transaction.
The New York Times had reported Wednesday morning that a company sale was being considered, and said that interested parties could include News Corp., CBS Corp. and Time Warner.
Reuters, in its report, included the Walt Disney Co. and General Electric Co.'s NBC Universal, which bought Univision's main rival, Telemundo, in 2001.
The buyer would gain a major gateway into the growing Latino market with about $480 billion in annual buying power. Univision owns the No. 1 Spanish-language television network, radio broadcaster, music company and online operations. Since it bought Hispanic Broadcasting for $3 billion in 2002, it has been the leading Spanish-language radio broadcaster in the U.S., said the Times.
But suitors could face considerable hurdles, such as a Federal Communications Commission regulation that limits ownership to stations that reach 39 percent of the nation's homes.
Univision has also been involved in a legal dispute with its main supplier of programming, Mexico's Televisa. Televisa sued Univision over royalty payments and last week said Univision was in material breach of the 1992 licensing agreement.
Univision's stock trades at nearly 37 times expected earnings, so an acquisition of the company would not be cheap, analysts said.
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