Univision Communications, Grupo Televisa & Venevision Form Multi-faceted Alliance.

Univision Communications Inc., Grupo Televisa, S.A. and Venevision — jointly announced that they have reached a multi-faceted global alliance to further penetrate the rapidly growing U.S. Hispanic market. This agreement aligns the resources of Univision – which owns the #1 Spanish-language broadcast network in the U.S. and fifth largest U.S. network overall, the Galavision cable network in the U.S., Univision.com internet portal in the U.S. and Fonovisa records, and Venevision, a member of the Cisneros Group of Companies.
Venezuela.

Under this comprehensive agreement, Univision’s three networks — Univision, Telefutura (Univision’s new network scheduled to launch January 14, 2002), and Galavision — will now have exclusive U.S. broadcast rights to Televisa and Venevision programming, the most popular Spanish-language programming in the world, through 2017. As part of the agreement, Televisa and Venevision will increase their ownership stake in Univision Communications. In addition, Univision will acquire Televisa’s music recording company, Fonovisa, North America’s premier Latin music label. Univision and Televisa have also
agreed to form a strategic joint venture to leverage Televisa’s satellite and pay-TV programming in the U.S.

“This extraordinary agreement represents the most important and broad-reaching alliance in Spanish-language media today,” said A. Jerrold Perenchio, Chairman, President and Chief Executive Officer, Univision Communications Inc. “This strategic transaction further aligns the interests of Univision and its world-class programming partners, Televisa and Venevision, and will enable all three companies to significantly accelerate future growth by capitalizing on the tremendous opportunities in the U.S. Hispanic market. I look forward to working closely with our partners Televisa and Venevision in the years to come.”

Emilio Azcarraga Jean, Chairman, President and Chief Executive Officer of Grupo Televisa, will join Univision’s Board of Directors as Vice Chairman. Mr. Azcarraga said, “I am pleased to be joining Univision’s Board of Directors. This agreement vastly expands the reach of our programming distribution network in the important and growing U.S. Hispanic market. This partnership also enables Televisa to participate in Univision’s enhanced growth opportunities in the U.S. through our increased equity ownership in the company as well as through our increased royalty fees. We are thrilled to build on what
has been a tremendous alliance and look forward to growing our businesses together.”

“We are excited to join our partners, Univision and Televisa, in strengthening this already successful strategic alliance which we started 9 years ago, almost to the day. The agreements we have reached not only benefit the Univision network, but they will also ensure a solid and profitable launch of the Telefutura network, which will serve the rapidly growing U.S. Hispanic market,” said Gustavo Cisneros, Chairman and Chief Executive Officer of The Cisneros Group of Companies.

Under terms of the expanded programming agreement, Univision will pay Televisa an additional fee of 3% on incremental net time sales on Univision and Galavision, as well as a 12% fee on sales of Telefutura, subject to certain adjustments. Venevision may also be eligible for up to 3% of additional fees on incremental net time sales on Univision and Galavision if it meets certain performance targets as well as additional Telefutura fees subject to program usage. In addition, certain Univision governance rights previously held by Televisa and Venevision have been amended or eliminated, which will give Univision additional flexibility to pursue future strategic opportunities.

Under the agreement, Televisa will also make an equity investment in Univision of $375 million and will receive preferred shares of Univision automatically convertible upon receipt of required regulatory approvals into Univision Class A Common Stock. Televisa’s fully diluted ownership stake in Univision will increase to approximately 15%. Also as part of the transaction, Venevision’s fully diluted ownership stake in Univision will increase to approximately 19%.

Univision has also agreed to acquire Televisa’s regional music recording business, Fonovisa, for 6 million shares of Univision Class A Common Stock and 100,000 warrants. Univision will merge Fonovisa into the Univision Music Group, which includes a 50% ownership stake in Mexican-label Disa Records. Fonovisa, based in Los Angeles, includes an impressive roster of 120 artists, which span a broad range of Spanish-language musical genres. In addition, Televisa and Univision have agreed to create a 50/50 joint venture to introduce Televisa’s powerful satellite and cable pay-TV programming in the U.S and create future channels. Televisa’s existing channels include three music video channels and two movie channels.