The battle for Univision.

The battle for Univision.

The battle for Univision.

Moneybox
Commentary about business and finance.
June 27 2003 5:59 PM

The Univision Division

A fight about Spanish-language media jostles Washington.

At last, Washington is fighting the kind of war it really knows how to fight: a lobbying battle. The dispute over the merger of two Spanish-language media heavyweights has exploded into a brutal conflict about media conglomeration and Latino political power—and how far Democrats and Republicans will go to influence Latino voters.

The drama started a year ago when Los Angeles-based Univision, the largest Spanish-language media company, with 50 television stations, the broadcast networks Univision and Telefutura, and cable network Galavision announced a merger with Texas-based Hispanic Broadcasting Corp., which owns 63 radio stations. The deal is worth about $2.8 billion at current stock prices.

Miami-based Spanish Broadcasting Systems, founded in 1983 by Cuban exile Pablo Raul Alarcón Sr., opposed the deal. The combined Univision-HBC would garner about 70 percent of all Spanish-language advertising dollars, and SBS claimed that would unfairly monopolize the Spanish-language media market. SBS wanted to do its own deal, combining its 27 radio stations with those of HBC.

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The deal's non-financial implications have agitated Washington types. As Juliet Eilperin put it in the Washington Post: "Although the fight is ostensibly over media ownership, several Democrats acknowledge it is part of a larger battle for Latinos' political allegiance." But Democrats may be fighting the wrong battle.

This spring, after the Justice Department signed off on the deal and while the Federal Communications Commission was mulling it over, SBS went to work. The National Hispanic Policy Institute—a grandly named organization that seems to exist largely in the office of Democratic New York State Senator Efrain Gonzalez—began to run ads in the Capitol Hill newspaper Roll Call. One misleadingly accused Univision CEO Jerrold Perenchio—who, like HBC CEO McHenry Tichenor, is not Hispanic—of supporting Proposition 187, the 1994 California state measure aimed at illegal immigrants. (Gonzales later complained the deal would stymie Hispanic ownership."Are you telling me we can only be gardeners?" he asked the Denver Post.)

As part of a broader effort backed by SBS, Democratic senators such as Minority Leader Tom Daschle, Hillary Clinton, Edward Kennedy, and Bob Graham have sent letters asking FCC Chairman Michael Powell to put the kibosh on the merger. (For Graham's letter, and the whole FCC docket on the matter, click here.)  Eight Hispanic members of Congress weighed in with a letter saying they were "concerned about the impact of consolidation on our constituents and the fact that Hispanic ownership and management of U.S. media has virtually vanished in recent years."* Democrats have also publicly expressed concern that Univision was trying to curry favor with the administration by airing favorable coverage of filibustered Hispanic judicial nominee Miguel Estrada.

In response, Univision enlisted its own Democratic worthies to argue its case, and took out advertisements in Roll Call, as well as full-page advertisements in the Washington Post and the New York Times. In one ad, New Mexico Gov. Bill Richardson suggested Democrats should drop their opposition. Henry Cisneros, the Clinton-era Housing and Urban Development secretary who later served as president of Univision, also came to his former company's defense.

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What to make of all of this? Univision and HBC are controlled by non-Hispanic shareholders who are also major Republican donors. In the 2000 and 2002 cycles, Perenchio and his family gave $1.1 million to Republicans and $22,000 to Democrats, while Tichenor gave $289,000 to Republicans and $15,000 to Democrats. What's more, Clear Channel Communications Inc., the pro-Bush radio Borg, has a 26 percent stake in Hispanic Broadcasting and will wind up with a small stake in the new entity.

But do the political donations of owners compromise HBC and Univision's news judgment? There's no evidence that the Spanish-language media were any more deferential to the administration as it made the case for war than the English-language media.

Nor is there much evidence that the two companies are hostile to Hispanic participation in management and ownership of Spanish-language media properties. At Univision, half of the board, the three heads of the major business units, and 80 percent of employees are Hispanic.Univision also owns a 27 percent nonvoting stake in Entravision, which owns Spanish-language television and radio stations, and El Diario/La Prensa, the respected newspaper. Entravision's CEO, Walter Ulloa, is Hispanic.

Perhaps most troubling is the message Democratic officials are broadcasting about Spanish-language media, and Spanish-language voters. If the merger goes through, they suggest, Republicans—or at least executives aligned with them—will turn Univision's steady diet of telenovellas, variety shows, and tabloid-y news shows into a cavalcade of content touting supply-side economics, school choice, and medical savings accounts. Captive Hispanic audiences will be unable to change the channel, or to keep themselves from voting Republican. "I'm amazed at the condescension that's part of the effort to derail it," said Gregory Rodriguez, a fellow at the New America Foundation who writes engagingly about diversity and assimilation among America's vast Latino population. "This debate doesn't seem to be envisioning the ability of the Spanish-speaking audience to discern their own truths."

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The Democratic opposition also errs in trying to segregate Spanish-speaking media from the rest of media. The opposition assumes that the borders between the two languages, and the two media worlds, are sealed tight. They're not. Soccer-mad Anglos, including Moneybox, routinely tune in to Univision for its superior soccer coverage. Dominican immigrants in New York's Washington Heights watch ESPN for its baseball coverage. In a nation where millions of immigrants from Mexico have attained literacy in English, and public schools start teaching Spanish as a second language in kindergarten, I'm not convinced it makes sense to view the Spanish-language advertising as a separate universe. As Univision Television Networks head Ray Rodriguez told the Los Angeles Times,  "Nationwide, Univision has 4.5 percent of the viewership and approximately 2 percent of the advertising dollars." In plain Spanglish, this shouldn't be una problema for the anti-trust cops.

(In a way, the Univision dispute mimics the national debate over affirmative action. Democrats are arguing that Hispanic media needs to be treated as something separate and isolated, to be protected, while the Bush administration is so far insisting that it should be lumped in with the media as a whole.)

The merger is likely to pass the FCC on a party-line vote, three Republicans to two Democrats. The media world—and the nation—will absorb this media merger, just as it has absorbed others in the past. Indeed, the fact that interest groups are fighting in Washington over this merger the way they have fought over virtually every large merger of the past two decades may be the most convincing evidence of all that Spanish-language media has entered the mainstream.

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[Correction, July 2, 2003: This piece originally credited this letter to the Congressional Hispanic Caucus. In fact, the letter was sent by eight of the 20 members of the Congressional Hispanic Caucus and was signed by them as individuals. The Congressional Hispanic Caucus hasn't taken a formal stance as to whether the merger should be approved or not.]

Return to the corrected sentence.