Universal Music Buys Latin Labels

Univision Deal Offers Chance to Promote Artists on Spanish-Language TV Network

Universal Music Group, the world's largest music company and home to such artists as Eminem and Sheryl Crow, said it had agreed to buy Univision Music Group, the industry's largest collection of Spanish-language labels and part of the Univision media empire.

The acquisition, if approved by federal regulators, would create an unrivaled music-promotion powerhouse for Universal's Latin artists. As part of the deal, Universal could promote its singers and musicians on Univision television, which dominates the Spanish-speaking audience.

Univision Network is available to 99 percent of Spanish-speaking households in the United States. Its sister network, TeleFutura, is available to 89 percent. Univision also owns the Galavision cable television channel.

According to Nielsen rating data from the week of Feb. 18, all of the 10 most popular Spanish-language television programs were on Univision. The most popular English-language program that week, the Academy Awards, would have been only the seventh-most-watched program in terms of audience share among Spanish-speaking viewers. Univision frequently draws as many or more 18-34-year-old viewers than ABC, CBS, NBC or Fox.

In Washington, Univision programs appear on WMDO (Channel 47), and the company owns WFDC (Channel 24), a TeleFutura station.

Universal, which has 36 percent of the U.S. music market, according to SoundScan, agreed to pay about $100 million for Univision Music, according to a source familiar with the deal who spoke on the condition of anonymity because terms were not made public.

Universal, based in Santa Monica, Calif., already has a wide range of popular Latin artists, including Enrique Iglesias, but Univision Music leads the market in "regional Mexican," the top-selling genre of Spanish-language music. Regional Mexican includes such styles as Tejano, norte¿o (popular in northeast Mexico, often featuring the accordion), banda (horn-based) and duranguense (also horn-based, originating in the northwest Mexican state of Durango). Universal would also get Univision's music publishing assets.

Univision Music, based in New York, is a small piece of the Univision Communications empire, whose reach among its audience is far greater than News Corp.'s or Disney's reach among English-speaking consumers.

In 2006, the last full year for which results are available, Univision Music produced $141 million in revenue, about 7 percent of Univision's total. The music group's revenue was down from $206 million in 2005; operating income dropped from $32 million to $3 million.

Under public ownership, Univision has over the past several years added radio, music and Internet assets to its dominant television properties, much like Anglo media giants Viacom, Walt Disney and Vivendi Universal.

But like those English-language companies, Univision found that bigger is not always better, and not all parts fit together well. Viacom split off CBS, Disney sold its ABC radio stations and Vivendi Universal sold its television and movie properties, though it retained Universal Music.

In Univision's case, the company sold outright to a group of private-equity led investors for $13.7 billion, a transaction that was approved by regulators last year. The new owners identified Univision's music group as not central to the company and began shopping it.

Universal Music President Zach Horowitz drove the deal to acquire Univision Music.

"This acquisition expands UMG's presence in one of the most dynamic and vital genres of music today," Horowitz said in a statement.