Univision and Grupo Televisa strengthen Strategic Relationship

Univision Holdings, Inc. and Grupo Televisa, S.A.B. announced that, together with Univision’s major shareholders, they have entered into a Memorandum of Understanding (“MOU”) and that certain subsidiaries of Univision and Televisa entered into an amendment to their existing Program Licensing Agreement (the “PLA Amendment”).

Under the PLA Amendment, the terms of the existing strategic relationship between Univision and Televisa have been amended as follows:

    •    Term Extension – Univision’s exclusive U.S. broadcast and digital rights (with limited exceptions) to Televisa’s programming including premium Spanish-language telenovelas, sports, sitcoms, reality series, new programming and feature films, will remain unchanged. Subject to Univision completing a public offering of its common stock that results in net proceeds to Univision of a minimum agreed upon amount and no change of control having occurred, the PLA Amendment extends the term of the PLA from its current expiration date of at least 2025 to at least 2030.
    •    Revised Royalty Computation – In exchange for Univision agreeing to make certain additional revenue subject to the royalty, effective January 1, 2015 and through December 2017, the royalty rate on substantially all of Univision’s Spanish-language media networks revenue is 11.84 percent, compared to 11.91 percent under the prior terms. On January 1, 2018, the royalty rate will increase to 16.13 percent, compared to 16.22 percent under the prior terms. Additionally, Televisa will continue to receive an incremental 2 percent in royalty payments on such media networks’ revenues above an increased revenue base of $1.66 billion, compared to the prior revenue base of $1.65 billion. The royalty rate will again increase to 16.45 percent starting in June 1, 2018 and for the remainder of the term, compared to the prior rate of 16.54 percent. With this second rate increase, Televisa will receive an incremental 2 percent in royalty payments above a reduced revenue base of $1.63 billion.

In addition, under the terms of the MOU, Univision, Televisa and the major shareholders of Univision have agreed to the following:

    •    Equity Capitalization Amendment – The equity capitalization of Univision will be adjusted to realign the economic and voting interests of Televisa and Univision’s other stockholders. As a result, Televisa will hold common stock with approximately 22% of the voting rights of Univision’s common stock. The classes of Univision shares of common stock to be held by Televisa will also provide Televisa the right to designate a minimum number of directors to Univision’s board of directors.
    •    Conversion of Debentures – Televisa will convert $1.125 billion of Univision debentures into warrants that are exercisable for new classes of Univision’s common stock. As a result of the conversion, Univision’s annual interest payment obligations will decrease by approximately $16.9 million. The conversion of Univision debentures into warrants will have the effect of reducing Univision’s consolidated debt by $1.125 billion. Univision has agreed to pay Televisa on the date of conversion, $135.1 million as consideration for the conversion using a combination of existing liquidity and previously restricted cash, which will become unrestricted as a result of the conversion.

“These amendments to the PLA and the terms of our MOU underscore the strength of Univision’s relationship with Televisa and the significant and unique benefits of our mutually beneficial partnership,” said Randy Falco, President and Chief Executive Officer of Univision. “By taking these steps and our pursuit of other related initiatives, Univision is in a stronger competitive position going forward. Televisa is the best Spanish-language content producer in the world, and we are pleased to continue to have its support as we enter the next exciting chapter of Univision’s history.”

“We are excited to enter into a new phase in the relationship with Univision, the leading media company serving Hispanic America. Univision today is one of the most successful and diversified media organizations globally thanks to the hard work and dedication of Randy Falco and his team,” said Alfonso de Angoitia, Executive Vice President of Grupo Televisa. “With these transactions we strengthen our relationship further and reiterate our full commitment to Univision and its future. On a personal note I want to thank Haim Saban for his leadership of the Company and personal dedication in bringing these transactions to fruition.”

 

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