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Univision, Televisa Near Royalty Settlement

People close to the situation say the Spanish-language TV partnership won't be derailed.
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Univision Communicationsundefined is close to settling a lawsuit with a key producer of Spanish-language entertainment, Mexico's Grupo Televisa (TV) , people close to the matter say.

The dispute over soap opera royalties prompted a Televisa executive to quit the Univision board earlier this month and fed speculation about a serious rift between the two companies.

"This will be settled shortly," a source close to Univision said Wednesday. Another source said the fissure never threatened to widen into a full break-up of the production agreement the two have shared for several years and noted that he expected the two sides to come to terms soon.

Wall Street has taken notice of the rift. Univision stock is more than 25% off its 52-week high.

Univision is highly dependent on Televisa to produce popular Latin telenovellas. If the two parted ways, it would pose major problems for Univision, which is highly dependent on Televisa for both revenue and for product to fill its schedule. Televisa would lose significant royalties from any split but could probably find a competing network to sell its product to.

Univision executives speaking at the annual Upfront presentation in New York on Wednesday morning wouldn't comment on the timing of any resolution. But Ray Rodriguez, Univision's president and chief operating officer, pointed out that the long-term production deal between the two companies is "iron clad" and it doesn't expire until 2017. He said that in any long-term relationship there are ups and downs.

Other Univision executives on the sidelines of the presentation said that that they anticipated that both sides would come to their senses soon, noting that the disagreement was over a small amount of money -- $1.5 million. Univision claims in turn that it overpaid Televisa $5.2 million in royalties.

On Wednesday, Televisa rose $1.70 to $58.38, and Univision added 4 cents to $26.21.