With eye on growing clout of Latinos, Univision files for IPO

Univision, the largest Spanish-language broadcaster in the U.S., is going public at a time when Wall Street is salivating over the growing clout of Latino consumers.

The New York media titan filed for an initial public offering with the Securities and Exchange Commission without disclosing the number of shares it would offer or the price range. But analysts believe Univision could be valued at up to $20 billion in its market debut.

The move comes at a time when the Spanish-speaking audience remains one of the nation’s fastest-growing demographics, and has proved to be an increasingly vital group for advertisers. A recent report by Spain-based nonprofit Instituto Cervantes said that the U.S. now has more Spanish speakers than any country other than Mexico.

The Hispanic U.S. population is expected to reach 77 million by 2030 and account for more than a fifth of the nation’s population, up 35% from last year, according to a Univision regulatory filing released Thursday. The demographic represents $1.3 trillion in buying power, a number expected to grow 30% by 2019. The Hispanic market also skews younger, with 60% of it in the 34-and-under group favored by advertisers.

Univision, whose networks reach 49 million people each month, has long been expected to tap the public markets to help pay down a heavy debt load the company projects to be about $10 billion. The broadcaster in March assembled a team of investment bankers to handle the offering.

“They have been preparing for this,” said Carl Salas, a vice president and senior credit officer for Moody’s. “Timing isn’t a coincidence.”

Univision’s owners, including Los Angeles billionaire Haim Saban, have long been looking to cash out. Saban and his four private-equity partners bought the company for $13.7 billion 2007 in a highly leveraged deal that saddled the company with debt.

The owners — which also include Providence Equity Partners, Madison Dearborn Partners, Thomas H. Lee Partners and Texas Pacific Group — had wanted to sell the company outright to another media firm. But potential buyers, including Time Warner Inc. and CBS Corp., balked at the $20-billion price tag.

Univision had been expected to schedule the offering before the 2016 presidential election cycle gets into full swing. The race is expected to produce a bounty of campaign cash for Univision as politicians attempt to woo Latino voters.

Hispanics are a growing voting bloc, with roughly a 10th of the total voter base this year. That’s up 14% from 2012, a growth rate far quicker than the general voting populace over the same period.

Univision “will benefit immensely from the inflow of record levels of political spending,” Moody’s Salas said. “The consumer spending and the capabilities of the Hispanic market in America is growing faster than the rest of America.”

The IPO also comes as Univision finds itself in a feud with outspoken billionaire Donald Trump, a dispute that further illustrates the growing political and business clout of Latinos.

Univision last week announced it will not simulcast the Miss Universe and Miss USA pageants, which Trump part-owns, on its flagship network after the real estate mogul and presidential candidate made inflammatory remarks about Mexican immigrants. In lambasting U.S. policy in his campaign announcement, Trump said immigrants “are bringing drugs. They’re bringing crime. They’re rapists.”

Trump on Tuesday sued Univision for $500 million in damages over its decision. Comcast-owned network NBC and department store chain Macy’s are also severing business ties with Trump.

Univision’s robust portfolio includes two Spanish-language broadcast TV networks: Univision itself and the male-skewing UniMás. It also owns 60 television stations, nine cable channels, and a chain of popular radio stations in the U.S. and Puerto Rico.

The broadcaster generated $2.91 billion in sales in 2014, up about 11% from the previous year. Its annual profit was $900,000 last year. Driving much of the profit is Univision’s flagship network, which is the nation’s fifth-largest broadcaster with more than 2.8 million viewers each night.

The media giant has also tried to make inroads with English-language viewers. Its portfolio includes businesses such as El Rey Network, from filmmaker Robert Rodriguez, and Fusion, a TV and digital news hybrid aimed at Latino millennials. Fusion is a joint venture with ABC News.

El Rey and Fusion, both newer ventures for Univision, lost a total of $85.2 million last year, according to the company’s financial statement.

Univision said it plans to raise $100 million, a figure commonly used to determine registration fees. The actual amount will probably be significantly higher. The IPO will be led by Morgan Stanley, Goldman Sachs & Co. and Deutsche Bank Securities Inc. The company plans to trade shares on either the New York Stock Exchange or Nasdaq under the symbol UVN.

Univision also on Thursday said it has extended its licensing agreement with Mexican television giant Grupo Televisa. Univision will keep U.S. rights to broadcast Televisa’s programming, including telenovelas (soap operas), sports, sitcoms and reality shows, through at least 2030. Televisa invested $1.2 billion in Univision in 2010.