TelevisaUnivision’s Lead Investor Snaps Up Hemisphere

By Adam Jacobson / Editor in ChiefEditor in Chief – Radio & Television Business Report

When it comes to Puerto Rico, there are perhaps no better known radio properties than WKAQ-AM 580, the Spanish-language News/Talk station, and “KQ105,” the Spanish Contemporary cadena. Since 2003, the AM/FM combo have been owned by Univision Communications and today are “Uforia” stations under TelevisaUnivision Inc. Soon, they won’t be.

Hemisphere Media Group is getting the stations, along with some cash, in exchange of a streaming platform that could further boost TelevisaUnivision’s recently launched ViX product.

That’s only part of the story, however: Hemisphere is going private, and TelevisaUnivision’s lead investor is behind the purchase.

Hemisphere. publicly traded as “HMTV” on Nasdaq, has entered into a definitive agreement to be acquired for $7.00 per share in cash by a subsidiary of Gato Investments LP.

Gato is a portfolio investment of Searchlight Capital Partners L.P. If that name is familiar, it is because Searchlight III UTD and ForgeLight in December 2020 completed their acquisition of a majority stake of Univision Holdings. Furthermore, Searchlight Capital Partners is a private investment firm founded by TelevisaUnivision CEO Wade Davis that has been an investor in Hemisphere prior to the Univision deal. While Davis is a co-founder of Searchlight, it is today led by Eric Zinterhofer.

Hemisphere has an asset portfolio that includes cable networks Cine Latino, telenovela-focused Pasiones, Central American consumer-focused CATV, and Televisión Dominicana; the long-successful WAPA-4 in Puerto Rico and its associated branded content, including stateside offering WAPA América; Spanish-language content distribution company Snap Media; and an ownership interest in RTVC Canal 1 in Colombia.

Until now, Hemisphere Media Group has also been the owner of the Pantaya streaming platform, focused on feature films and series en español.

That’s changing, as the privatization effort is being done concurrent to a separate agreement that sees TelevisaUnivision acquire Pantaya, perhaps seen as a competitor of sorts to TelevisaUnivision’s ViX Spanish-language visual entertainment platform. In April, TelevisaUnivision launched global AVOD service ViX. Its global SVOD service ViX+ will come to market in the second half of 2022.

“The acquisition of Pantaya’s digital assets, including renowned titles like ‘Señorita 89’ and ‘A La Mala,’ is an exciting opportunity to build upon our strategic growth plan as we continue to redefine the global streaming landscape,” said TelevisaUnivision President and Chief Transformation Officer Pierluigi Gazzolo. “We look forward to welcoming the Pantaya team, the existing subscribers and having access to the content assets which perfectly complement TelevisaUnivision’s library.”

To secure Pantaya, TelevisaUnivision is giving Hemisphere’s HMTV DTC LLC subsidiary an undisclosed amount of cash, and its Puerto Rico radio assets.

“Hemisphere contemplates using the net cash proceeds from the TelevisaUnivision transaction to promptly prepay Hemisphere’s outstanding senior secured term loans,” the company said, regarding its net leverage and debt.

While news of the sale — and its privatization effort — sparked a buying frenzy Monday morning for shares of “HMTV,” Hemisphere’s stock has been particularly depressed in value since November 2011 and was trading in the $12 range in summer 2021.

Hemisphere is led by CEO Alan Sokol. He said, “We are pleased to have reached this agreement with Gato, which we believe is the right path forward for our organization and delivers immediate value and certainty to stockholders. We have worked tirelessly to create an extraordinary portfolio of assets, and this transaction is a direct reflection of the quality of our networks, growing audience, and premium news and entertainment outlets. As a private company, and with the support of Gato, we will have the ability to make long-term investments in content and innovation that will best serve Hemisphere’s audiences.”

Zinterhofer added, “We have had a longstanding relationship with Hemisphere and this transaction will provide the Company with enhanced financial flexibility to achieve its goals. Hemisphere is a leader in delivering news and entertainment to its growing audiences. We will continue to partner with the management team at Hemisphere to bring our communities the unique and important content they desire.”

Hemisphere in April 2021 acquired the remaining 75% stake in Pantaya that it didn’t already own for $124 million.

Regarding the trade that sends Pantaya to TelevisaUnivision and the Puerto Rico radio assets to Hemisphere, Sokol commented, “Pantaya will flourish under TelevisaUnivision’s ownership. Given the highly competitive video content market environment, the streaming service is best positioned as part of an organization that can provide it with the resources and investment it needs to scale and grow. In addition, Hemisphere’s acquisition of certain TelevisaUnivision Puerto Rican radio stations including WKAQ-AM and KQ105 will be an ideal complement to WAPA, Puerto Rico’s leading broadcast network.”

Sokol also revealed that after the transaction closes, the TelevisaUnivision Uforia programming team will continue to program KQ105. Details as to how that arrangement will transpire were not disclosed.

The transfer in control of WKAQ-AM and the “KQ105” network’s FM properties in Puerto Rico will bring to a close 19 years of ownership of the stations by Univision and a predecessor company. It was acquired from a foundation set up by the stations’ founder, Angel Matos, in early 2003 by the former Hispanic Broadcasting Corp. Months later, despite local opposition, the FCC approved the deal. Shortly thereafter, HBC was acquired by Univision Communications for $3.1 billion.

WKAQ-AM 580 and WUKQ-AM 1420 air a Spanish-language News/Talk format that has long been a market leader. WKAQ-FM 104.7 and WUKQ-FM 98.7 are “KQ105,” a uniquely Puerto Rican Spanish Contemporary station that has long blended international pop hits with salsa, reggaetón and bachata songs populating the Latin music charts.

This article originally appeared in full at the Radio + Television Business Report’s website,RBR.com.