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FCC Approves Merger of Spanish-Language Media Companies

BY Admin  September 22, 2003 at 12:00 PM EDT

The Republican-controlled FCC voted 3-2 along party lines to approve the deal.

The three Republican commissioners, including Chairman Michael Powell, said in a joint statement that the merger “will give Hispanic media a better opportunity to compete against big media companies, capturing more advertising revenue to allow it to expand unique language and cultural offerings to its audiences.”

The commission’s two Democrats, Jonathan Adelstein and Michael Copps, voted against the merger saying it would hurt competition and reduce the news and entertainment choices for Spanish-speaking Americans.

“Rather than allowing further media concentration by Univision and other media conglomerates, this commission would be better advised to focus its attention on ways to promote minority participation in our media and to do it before the next wave of consolidation makes a complete mockery of that objective,” Copps wrote in his dissent. “Latinos are under-represented not only in boardrooms, but in newsrooms as well. … The record is clear on that and it is cause for alarm because additional consolidation can only reduce opportunities for Latinos and other minorities in this country.”

The FCC did require the merged companies to sell two radio stations, one each in Houston, Texas, and Albuquerque, N.M., as mandated by the agency’s new media ownership regulations. Though a federal appeals court on Sept. 3 postponed the effective date for the new media rules, the FCC structured its approval as though those rules existed. The new rules — approved June 2 again along party lines — eased several restrictions on the corporate ownership of newspaper and television properties, but tightened limits on radio ownership.

HBC’s ownership of multiple radio stations in a single market violated the FCC’s new Local Radio Ownership Rule in two markets, and the FCC ordered HBC-Univision to sell the radio stations when the new FCC rules go into effect.

Los Angeles-based Univision, headed by A. Jerrold Perenchio, first petitioned that the FCC approve its bid to purchase HBC in July 2002. The Justice Department approved the deal last February on the condition that Univision reduce its 27 percent ownership of Entravision Communications to less than 10 percent over the next six years. Entravision is the largest owner of Univision’s TV affiliates and owns 55 radio stations, many of them in the same markets served by Dallas-based HBC.

Univision owns the Univision and TeleFutura TV networks, the Galavision cable network, an Internet site, a Latin recording label, over 50 television stations nationwide, and 43 TV affiliate stations. The company, with net revenues topping $1 billion last year, reaches over 97 percent of Hispanic households with its telenovelas, soccer and Latin-American oriented news programming. Its Galavision network serves nearly six million cable subscribers. The Cisneros group, the powerful Venezuela-based media conglomerate, owns 20 percent of Univision and supplies the company with a majority of its entertainment programming.

HBC, the nation’s largest Spanish-language radio broadcaster, owns 68 radio stations in major markets. Clear Channel Communications, the largest English-language radio broadcaster in the United States, owns 26 percent of the company.

Univision’s main Spanish-language competitors are Telemundo, owned by NBC’s parent company General Electric, and the Texas-based Hispanic Television Network, which filed for bankruptcy in 2002.

Telemundo, along with the National Association of Hispanic Publications and other advocacy groups, vigorously opposed the deal, contending it gives Univision excessive power in the Spanish-language broadcast market and would harm competition and limit viewpoints.

HBC’s main rival, the Spanish Broadcasting System Inc., also protested the deal. The Miami-based SBS, which owns or operates 27 radio stations in seven of the top 10 U.S. Hispanic markets, has sent the FCC numerous filings warning the merger would cause too much concentration in the media.

Opponents of the deal say Spanish-language media should be considered a distinct marketplace, without regard to English-language competitors.

“The deal raises a special set of concerns about competition and diversity that are specific to Hispanics in the U.S.,” said Philip Verveer, a Washington lawyer who represents Spanish Broadcasting System Inc. “This is already a very concentrated market, and this deal will, if allowed to go through, substantially reduce both viewing and listening choices for the country’s Spanish-speaking audience.”

Univision maintains there is broad support for the merger within the Hispanic community and there isn’t a separate market for Spanish-language media. The company says its presence in the broadcast market is relatively small, and the merger was necessary to compete against the larger networks for advertising dollars and viewers, who are often bilingual.

Other supporters, like 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, wrote letters to the FCC and Congress in defense of the merger.

“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 asked in a June 6 open letter to Democratic leaders in Congress, published in newspaper advertisements.

“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,” he wrote.

The three Republican commissioners also agreed with Univision’s position that there is no separate market for Spanish-language media.

“The facts simply do not support conflating television and radio into a mega-Spanish media market,” they wrote in their joint statement. “It is important to understand that Spanish-speaking Americans spend a majority of their viewing and listening time with English language stations.”

Latinos are the nation’s largest minority group. The nearly 39 million Hispanic residents constitute 13.5 percent of the U.S. population and at least 28 million speak Spanish at home, according to the 2000 census estimates.