Investing In TV Companies? Choose Wisely

• by Wayne Friedman , Staff Writer, June 23, 2014

What’s your TV investment pleasure: sports TV or Spanish-language TV?

Sending up smoke signals that it was interested in selling, Univision Communications, may be looking to capitalize on both -- especially this time of year, when it’s airing the World Cup. Soccer is a sport that has a strong base among U.S. Latino consumers but is also growing among diverse non-Spanish-speaking U.S. TV viewers as well.

Seems that all signs would seemingly point upward for the Spanish-language TV marketplace. But wait a second -- at what price? Univision wants $20 billion, but it also has $9 billion in debt, some of this due to its $13.7 billion sale price some seven years ago when Haim Saban and a group of investors bought in.

Though the market still seems to have a big upside, now things are a bit different. Univision has recently been plagued with sinking ratings. This is not what we are thinking about when it comes to soaring Spanish-language TV growth. The network is blaming a couple of shows as contributing to its downfall.

Others would say Univision caters to an older Latino U.S. population, who speak mostly in Spanish and look to find mostly Spanish-language entertainment. Though Univision has made efforts to shift gears with Spanish/English-language TV networks and programming targeted to younger U.S. Latinos, the numbers might still give investors pause in paying a premium for the TV network group.

That said, Univision has some 60 TV stations, as well as cable TV networks, radio networks, digital properties  and other media platforms -- all which will be valuable to a future media conglomerate. Additionally, Univision’s revenue increased nearly 8%, to $2.6 billion.

Question is: If you missed the upswing of Spanish-language TV platforms in the U.S, why would you want to pay a premium now? That question might be relevant for any sports TV networks that are looking for buyers as well.