Univision's Chickens Coming Home To Roost

Univision’s purchase of the remnants of the Gawker group was, predictably, the chronicle of a disaster foretold. Media reports now suggest that this disaster has, in fact, arrived for the nation’s largest domestic Spanish-language network.

As the result of a failed IPO and declining ratings, the network is moving to sell what is now known as the Gizmodo Media Group (GMG). Per The Miami Herald:

Univision Communications Inc. (UCI), the Spanish-language TV giant that has been struggling to keep pace with the changing tastes of the evolving U.S. Hispanic audience, wants to get out of the English-language website business.

Univision has hired Morgan Stanley as a financial advisor to explore the potential sale of Gizmodo Media Group (GMG), a suite of websites that include The AV Club, Gizmodo, The Root, Jezebel and Deadspin, and its majority stake in the comedy/satire website The Onion.

"The Company determined that pursuing a sale of GMG and The Onion collectively will allow UCI to focus on its core assets and further strengthen UCI’s position as the No. 1 media company serving U.S. Hispanics, while enabling both GMG and The Onion even greater opportunities to grow under new ownership," Univision said in a statement.

But the whole purpose of the Gawker purchase was to help Univision “keep pace with the changing tastes of the evolving U.S. Hispanic audience. From our initial analysis of the purchase less than two years ago:

The dust has settled, the ink has dried, and a bankruptcy judge has approved Univision's purchase of Gawker Media for $135 million at auction. How does Gawker fit into Univision's media strategies, and what follows this blockbuster move? Let's take a look.

The remnants of Gawker Media- Deadspin, Lifehacker, Kotaku, Jalopnik, Gizmodo and Jezebel- will join Fusion, La Flama, El Rey, The Onion, The Root, and A.V. Club under the umbrella of Fusion Media Group, the apple of Univision Chief News/Digital/Entertainment Officer Isaac Lee's eye. Not so, however, for the company namesake and source of the litigation that ultimately led to this purchase. Having been leg-dropped into oblivion by Hulk Hogan (with a chairshot assist from billionaire Peter Thiel), Gawker-dot-com will officially shut down as of Monday.

For Univision, this is a quadrupling down on a Millennial strategy that began with the founding of Fusion. Demographics is destiny and per Pew, growth among U.S. Hispanics is no longer driven by immigration but by birth- which results in an increase in English-dominant Hispanic households

Univision's core asset, as it stands, is still Spanish-language TV, and the whole rationale for Isaac Lee dumping $135 million into Gawker’s unique readership was explicitly to offset Univision’s decline in viewership. So the sale of GMG will have the net effect of offsetting the offset.

News of the proposed asset dump couldn't come at a more embarrassing time for Univision, which just underwent an executive shuffle after yet another failed IPO bid, faces steeply declining revenues, and is now embroiled in a nasty carriage-fee fight with the Dish Network. Per the Los Angeles Times

Negotiations to hammer out a new distribution deal hit a snag Friday — on the eve of the contract deadline, according to the Englewood, Colo.-based Dish Network. The talks “reached an apparent impasse following untenable demands by the programmer,” Dish said in its statement.

Univision has been seeking higher fees to bring its Spanish-language channels closer to those charged by English-language networks, such as ABC, NBC and CBS. But Dish has balked at Univision’s demands and declined Univision’s offer of a two-week contract extension to continue the talks.

Contract extensions are typical when the two sides are making progress toward a new agreement, but that does not appear to be the case in this situation. Dish said the New York-based Spanish-language media company has been demanding 75% higher fees even though Univision channels have been experiencing ratings declines, particularly for its soapy telenovelas.

In many ways, Univisin's GMG sale echoes the scathing indictment penned from within the company, apltly titled "Univision Is A F***ing Mess" (and we analyzed here)- which reads like a cry to be rescued from capitalists, and from capitalism itself:

The fate of GMG now rests in the hands of Univision, an indulgently run and suicidally structured company. In turn, Univision’s fate rests in the hands of impatient private equity vampires who are not concerned with the long-term damage to revenue streams that could result from slashed budgets, or with damage to the company’s connection with tens of millions of Spanish speakers—or with journalism, or with anything, as far as anyone can tell—but with their desire to get out of a bad deal with as little damage as possible. This is their right; the people who work for Univision and its subsidiaries are simply unlucky enough to be employed under an economic system that considers the livelihoods of thousands to be less valuable than the panic and avarice of a few fathomlessly wealthy people.

...

Even if we survive this round of cuts relatively unscathed, our unstable, bumbling, debt-ridden corporate parent can decide to shut us down or turn these sites into a hellscape of branded content and inane social video at any point. But they can’t do it in the dark.

It appears that GMG is getting its wish, and is soon to be rid of its fearsome step-parent.

Given that Univision is now forced to unwind so much of Isaac Lee's legacy, the question begs to be asked: when is Univision ridding itself of the architect of this disaster?

 

 

 


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