If all goes according to plan, investors will get another way to play the rapid growth of the U.S. Latino population. Univision, the nation’s dominant Spanish-language broadcaster, took the first step toward an initial public offering Thursday by filing a registration statement with the Securities and Exchange Commission.
The IPO filing was for up to $100 million, but that’s just a placeholder for the purposes of calculating fees. It’s more likely that Univision will raise something like $1 billion or more, according to reports.
An IPO of that size would give Univision — to trade under the ticker UVN — a market value of anywhere from $15 billion to $20 billion, reports say. There has been no word, yet, on whether UVN will list on the NYSE or the Nasdaq.
That sounds like a pretty good exit for the consortium of billionaires and private equity funds that currently own Univision. A group comprised of Madison Dearborn Partners, Providence Equity Partners, Thomas H. Lee Partners and others bought Univision for $13.7 billion in 2006.
The owners tried to sell Univision last year, but media companies such as CBS (CBS) and Time Warner (TWX) wouldn’t bite.
So, Univision ownership will be open to anyone with a brokerage account. That doesn’t make it an automatic buy, of course, but the investing thesis on UVN could be compelling.
Univision Shows Good Timing
Univision certainly chose to go public into a reasonably favorable market, as U.S. media stocks are outperforming the broader market this year. The PowerShares Dynamic Media Portfolio (PBS) is beating the S&P 500 by 5 percentage points year to date.
Top-line growth doesn’t look too bad, either. For the most recent fiscal year, revenue grew 10% to nearly $3 billion. Operating income came to $634 million, good for an operating margin of 21%, which is on par with CBS and TWX.
Perhaps the biggest part of the Univision story is a demographic one. The nation’s Spanish-speaking community grew 43% from 2000-2010. By 2050, it’s forecasted to hit more than 100 million, according to the U.S. Census Bureau.
With 16 broadcast, cable and digital networks, and 128 local television and radio stations, UVN has the scale to take advantage of that expanding audience. Indeed, Univision likes to brag that it’s one of the top five networks in the U.S. regardless of language, and the most-watched Spanish-language broadcast television network in the country.
There’s much more to come in the IPO process, and a lot more due diligence to be done on the part of potential investors. On a net basis, Univision barely broke even last year, and it carries a heavy debt load as a result of the 2007 leveraged buyout.
That said, the nation’s largest privately-held media company is coming to the public markets, and that’s a show worth watching.
As of this writing, Dan Burrows did not hold a position in any of the aforementioned securities.
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