Original URL: http://www.azcentral.com/business/articles/0818merger18.html

FCC expected to OK merger of Latino TV, radio stations
Gannett News Service
Aug. 18, 2003
Sergio Bustos
 12:00 AM

WASHINGTON - Controversy over the proposed merger of two major Spanish-language media companies could affect millions of U.S. Hispanics who rely on Spanish-language radio and television for news and entertainment.

Univision, the nation's largest Spanish-language television network, is seeking the federal government's approval to merge with Hispanic
Broadcasting Corp., the nation's largest Spanish-language radio network.

In Phoenix, the country's ninth-largest Hispanic market, the move would create a local media powerhouse. Univision would own Spanish-language television stations Channel 33 (KTVW) and Channel 35 (KFPH), and five local HBC-owned Spanish-language radio stations, including KHOT-FM (105.9). In Tucson, Univision owns television stations KUVE and KFTU.

Executives of the two companies say they need to combine to compete with English-language media conglomerates such as Fox, Viacom and AOL Time Warner.

Critics of the proposed merger, especially other Spanish-language media companies, charge that permitting the $2.3 billion deal to go through would allow a single company to dominate the Spanish-language airwaves.

The Federal Communications Commission could announce its decision by the end of the month. Analysts believe the FCC will OK the deal. The Justice Department has already signed off on it.

The proposed merger got little public attention when it was first filed with the FCC in July. But in the last month, it has triggered a nasty political and personal battle.

Supporters and opponents have purchased ads in major newspapers attacking each other and have recruited some of the nation's top
Democrats and Hispanic leaders to argue their cases.

Univision and HBC have tapped Democratic Gov. Bill Richardson of New Mexico, the nation's only Hispanic governor, and former Housing and Urban Development Secretary Henry Cisneros, a former Univision president, to defend the merger.

On the other side are Senate Minority Leader Tom Daschle, D-S.D.; Sen. Hillary Rodham Clinton, D-N.Y.; Sen. Edward Kennedy, D-Mass.; and House Democratic Caucus Chairman Bob Menendez, D-N.J.

Among key issues the FCC must resolve is whether the Spanish-language audience is a distinct media market from the English-language audience. FCC officials also must weigh how the merger would affect diversity and competition within the Hispanic community.

The United States is home to about 39 million Hispanics and at least 28 million speak Spanish at home, according to the latest census estimates.

Although they broadcast in Spanish, Univision and HBC executives argue they must compete with the country's leading English-language-media conglomerates for advertising dollars. Univision said it receives just 2 percent of total television ad dollars despite drawing 5 percent of the national primetime viewing audience.

"Why shouldn't a Hispanic media company get a chance to compete on an equal footing against Disney, Viacom, News Corporation, AOL Time Warner and the rest of the media establishment?" Richardson said in an open letter to Democratic leaders in Congress.

"With this merger, a Hispanic-run media company will finally have the scale and scope to attract those national marketers that currently advertise only on English-language media."

Opponents charge that approving the merger would keep out other Spanish-language competitors and reduce the number of news outlets within the country's diverse Hispanic community. They contend that about one-quarter of U.S. Hispanics speak little or no English and receive all their news and information from Spanish-language media.

"This deal will create unacceptable market power in Spanish-language media in this country," Menendez said. "Virtually all Latinos would see and hear their news and entertainment from a single source: Univision."

The company already dominates the Spanish-language television airwaves, reaching 97 percent of all U.S. Hispanic households. Its only Spanish-language competitor is Telemundo, which is owned by NBC and General Electric.

Univision owns and operates 53 television stations, along with two Spanish-language television networks, Telefutura and Galavision. Net revenues last year topped $1 billion.

HBC is no bit player, either. It operates more than 60 radio stations across the country and had net revenues last year of $256 million.

Opponents question whether the FCC, which is dominated by Republicans, can make an unbiased decision on the proposed merger
when Univision CEO A. Jerrold Perenchio is a major donor to the Republican Party.

But he also has contributed campaign dollars to Democrats, including $150,000 to Richardson's gubernatorial campaign. Richardson said the contribution had no influence on his decision to publicly support the merger.