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Univision CEO Says Comcast-Time Warner Cable Merger Is Bad For Hispanic Consumers

Randy Falco, who previously served as one of the highest-ranking executives at NBC, said on Univision's first-quarter earnings call Monday that the Comcast-Time Warner Cable merger is bad for competition, particularly for Hispanic consumers. NBC owns Univision's top competitor, Telemundo.

Posted on April 28, 2014, at 4:03 p.m. ET

Al Diaz/Miami Herald / MCT

Univision CEO Randy Falco.

Well, the CEO of a big media company finally spoke out against the Comcast-Time Warner Cable merger. But it wasn't Disney, News Corp, or any of the usual suspects. Instead, it was Randy Falco, the chief executive officer of Spanish-language broadcast company Univision.

On Univision's first-quarter earnings call Monday, Falco called the impending $45 billion merger "truly a cause for concern," saying it was "bad for competition" and that a combined Comcast-Time Warner Cable would have "staggering influence over Hispanic consumers."

"When you have the number one and number two cable providers come together, it's truly a cause for concern, requires greater scrutiny by the government for approval, obviously, and you're hoping at the very least that there is that scrutiny and potentially much tougher restrictions added to the existing consent decree that will protect Comcast competitors such as Univision who are serving minority communities," Falco said. "You know, the fact is that there is not one other media or telecommunications company that has the level of vertical integration of Comcast, and I'm talking about video and broadband and content. Not Google, not AT&T, not Facebook, not the satellite providers."

Falco went on to say he was concerned that, if approved, Comcast would serve markets representing 91% of all Hispanic households and be the top TV distributor in 19 of the top 20 Hispanic markets. This is a particularly important concern for Univision since Comcast, through NBC, owns its Spanish-language broadcasting rival, Telemundo.

"This new company will have staggering influence over Hispanic consumers and the risk of this merger is really not a hypothetical, especially for providers like us who offer networks and services that compete with NBC and Telemundo and even NBC Sports," Falco said.

As an example, Falco cited the success on the company's sports-focused Univision Deportes Network, which doesn't receive distribution on Comcast systems.

Pointing to Univision Deportes's strong ratings and right to World Cup soccer, Falco said, "All of the top distributors have embraced this network and are distributing it, all except Comcast. Either Comcast doesn't understand that soccer is a passion point for Hispanics or they don't support competitors. My fear is the latter is the case and this type of anti-competitive conduct would continue."

Falco conveniently forgot to mention that another of Univision's networks, El Rey, a partnership with film producer Robert Rodriquez, came to life as a condition of Comcast's merger with NBC requiring it to carry more minority-focused networks.

Falco did pretty much everything except come right out and say he opposed the merger, as Netflix CEO Reed Hastings did on his company's first-quarter earnings call last week.

Falco's comments are interesting not only because they look at the merger through the prism of the Hispanic audience, but also because he spent more than three decades in various executive positions at NBC, including as president and chief operating officer. He left NBC in 2006 for an ill-fated tenure atop AOL after it became clear that he lost the competition to succeed Bob Wright as CEO of NBC to Jeff Zucker. Before joining Univision in 2011, Falco served as a consultant on Comcast's takeover of NBC.

Univision is perhaps the most-watched television network that no one talks about, sometimes beating its larger English-language broadcast counterparts in certain ratings demographics, including the advertiser-coveted 18-49 year-olds, in prime time. But the share of advertising and carriage fees it attracts has not yet caught up to its ratings, something executives have sought to rectify by talking up the size and buying power of the Hispanic market.

"Not reaching out to the Hispanic audience through Univision, the gateway to that audience, is a flawed business strategy," Falco said on the call.

On the numbers, Univision grew revenue 10.5% in the first quarter to $621 million, but earned just $6.2 million, a drop from the $9 million it posted in the year-ago quarter, owed to higher expenses and a tax-related charge. For comparison, NBC's broadcast network alone recorded revenue of $2.6 billion in the first quarter (Comcast does not separately break out net income for NBC's broadcast network.)

Univision is owned by a group of private equity firms — among them Thomas H. Lee Partners, Providence Equity Partners, Madison Dearborn Partners, and TPG Capital — that bought the company for just over $12 billion in 2007. Though the company is private, its debt is held publicly, which requires it to disclose earnings. Reports have periodically surfaced over the last two years saying Univision's owners were exploring a sale or IPO of the company. That is definitely a possibility given the five- to seven-year time horizon that private equity firms typically hold onto investments before seeking an exit.

Last week, Citigroup analysts reiterated that view in a report, saying they believe 2014 "could be the year when Univision decides to IPO or put itself up for sale."

In addition to its main network and the sports-focused UniMas, Univision also owns several other cable networks and radio stations serving the Hispanic population.

Correction: This post mistakenly identified the sports-focused network that doesn't receive distribution on Comcast as UniMas. He was referring to Univision Deportes Network.