• by David Goetzl  @dgoetzl, July 28, 2008

A Wall Street analyst offered an endorsement Friday for Univision's efforts to extract significant retransmission consent fees from cable operators, going so far as to suggest that Time Warner Cable could suffer from the Spanish-language broadcaster's demands.

Pali Research's Richard Greenfield has placed a "Sell" rating on TWC, in part, due to the looming battle with Univision, as well as coming competition from telco TV provider Verizon. Verizon is nearing the launch of its FiOS TV service in Manhattan--a TWC stronghold and key market with its upscale, media-savvy residents.

Greenfield wrote in a report that when an agreement is reached where TWC would pay Univision Communications for carriage rights to the slew of local stations that Univision owns--for both the Univision flagship and Telefutura networks--it will force the cable operator to "absorb significant incremental costs in 2009." A deal apparently needs to be cut by Jan. 1.

Some 14% of current TWC customers are Hispanic homes, according to Pali. Any interruption in carriage of the Univision trio, which also includes cable outlet Galavision--even for a short period during negotiations--could prompt homes to flee to Verizon or satellite competitors.

In the same vein, an interruption is also a potential hindrance for TWC's efforts to attract new customers--a seemingly significant opportunity, given that TWC says almost half of U.S. Hispanic homes (presumably many in New York, Los Angeles and Dallas) fall within its footprint.

"Without Univision content, we believe it will be very challenging for TWC to sign up new Hispanic households, and it would likely lose a meaningful number of its existing subscribers," Greenfield wrote.

In May 2007, Univision's CEO Joe Uva said the company deserves $1 per home per month from cable/satellite/telco TV operators to carry its owned Univision and Telefutura stations. (Univision's new private ownership group is looking to a rush of retrans dollars to bolster the company's revenues.)

Greenfield suggested that the $1 goal is a starting point in negotiations, but he expects the cost to still net out at more than 50 cents. Even at that level, it would be costly to TWC, he said.

In the meantime, Greenfield wrote he expects satellite competitors Dish and DirecTV to reach retrans agreements with Univision. Both need the deals in order to market their Spanish-language packages. And DBS operators have shown a willingness to cut deals that may be expensive up front, but can yield a back-end advantage in added subscribers when competing with cable.