THE IMPACT OF THE TELEVISA & TELEMUNDO CABLE NETWORK TO UNIVISION

Summary

The newly announced Televisa & Telemundo Cable Network has a foretelling impact to Univision under Univision's current business strategy.

Analysis

What is the significance not just to  Televisa and Telemundo of the just announced Televisa Networks and Telemundo agreement to launch the Telemundo channel, which will be distributed throughout Mexico and Latin America, but also to Univision?

 

The Telemundo channel agreement is a part of the strategic alliance announced in March 2008, to distribute Telemundo's original content in Mexico through various platforms, including open television, paid television and emerging digital platforms which now extend to distribution additionally in Latin America.

 

For Telemundo it means that it will be able to amortize and gain additional  revenue for its key programming which is originally produced in Colombia, Miami and Mexico across some of the same markets where Televisa sells its programming in addition to Telemundo’s world wide sales of programming which is dubbed into the languages of Eastern Europe, Asia and the Middle East. An additional benefit to Telemundo is that it will be able to pre-introduce potential immigrants to the US from Mexico and other Latin American countries to Telemundo branded content which should logically accrue a benefit to Telemundo stateside.

 

For Televisa it means the ability to consolidate content through its owned distribution vehicles using its leverage in Latin America to enhance distribution opportunities.

 

For Univision it means just one more distancing from it by Televisa which although bound to provide Univision with programming on an exclusive basis in the US until 2017 is no longer bound by the “Participation Agreement” (which was abolished when the Televisa sold its stock in Univision upon the sale by the Perenchio interests to the five private equity funds which control Univision today) and which previously required Televisa and Univision to make media investments in the US on a joint basis.

 

So Telemundo extends the reach of the content it produces in line with the worldwide footprint of its parent companies GE and NBC, Televisa aggregates content further expanding its sphere of influence in Latin America, indirectly in the US and also in line with its global strategy and Univision at least in this transaction remains a US distributor of Televisa’s programming with limited efforts to date to produce effective content on its own.