Univision Courts Millennials With 'The Onion,' but What About Its IPO?

Announcing an investment in satire publisher The Onion on Tuesday, Jan. 19., Spanish-language broadcaster Univision Holdings' chief news and digital officer, Isaac Lee, noted the increasing strategic value of humor in the media business.

Comedy is "an incredibly engaging format for Millennial audiences," Lee stated in a press release, and it would play an increased role in coverage of the 2016 presidential race. Presumably, some of the humor would come at the expense of Univision foe Donald Trump, who is seeking the Republican nomination.

While backing The Onion may be a bet on the strategic value of levity, heavier matters await Univision backers Madison Dearborn Partners, Providence Equity Partners, TPG Capital, Thomas H. Lee Partners, Saban Capital and Grupo Televisa (TV) in 2016. Primarily, the backers must decide whether to revive a stalled initial public offering for the largest Spanish-language cable network and broadcast and media group in the U.S.

While Univision declined to comment on the status of the offering, for which it filed a proxy last summer, the company is widely said to have put the IPO on hold late last year. The listing had been anticipated in the early fall. While the offering has lagged, Univision updated its proxy on Jan. 12.

"My view is that the IPO is still on, but they are going to be prudent and launch that when the market conditions are supportive of the offering," said Moody's Investors Service analyst Carl Salas. "That typically is a matter of time."

Even before the recent market turbulence, shares of premier media groups such as Walt Disney (DIS) and Time Warner (TWX) encountered static last year.

"People are still trying to determine how the ad market is going to look in 2016, and subscriber growth trends have been somewhat in flux," said Macquarie Capital analyst Amy Yong.

SNL Kagan analyst Justin Nielsen suggested that Univision and its backers would be better off selling some of their TV spectrum in cities where it owns multiple stations, via a government auction, and paying down its debt.

"The Univision IPO is on hold for now, and in my opinion, the environment right now is not right to go public," Nielsen stated. Univision could test the IPO market later this year or next year.

Univision had $2.9 billion in 2014 sales, and through the first nine months of 2015 the top line exceeded $2.1 billion. Madison Dearborn, Providence, TPG, Thomas H. Lee and Saban took the company private via a $13.7 billion leveraged buyout in 2007. Televisa invested $1.2 billion investment in 2010 and signed a new programming deal.

If the market becomes more hospitable, Moody's analyst Salas suggested that Univision took a number of steps in 2015 that would make an offering easier.

Univision invested in networks and content that it obtained through agreements with Televisa, Salas said. Univision extended U.S. distribution agreements with Televisa through at least 2025, and at least until 2030 if it does have an IPO. Lastly, Univision converted $1.125 billion in debt held by Televisa to equity.

"A lot of the work they had to do to prepare for an IPO was taken care of last year," Salas said.

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