For years, Univision has had the Spanish-language TV market wrapped up.
Its flagship channel is the fifth-most watched network in America. It had better prime time ratings than at least one of the big four networks — ABC, CBS Fox and NBC — most nights during its first quarter. Nearly one in three Americans who watched the World Cup final last year were watching Univision — a record 9.2 million people.
Now the company is planning to go public, hoping to capitalize on Wall Street’s interest in America's growing Hispanic population. It is expected to be one of the year's biggest initial public offerings.
But Univision’s dominance has slipped as traditional networks jockey for a slice of the Hispanic market, and despite its top spot, it has struggled to turn a profit. And all the while, Spanish-language media faces a fundamental question: Will second-generation Hispanic Americans tune in?
"That is going to be a major challenge for them," said Justin Neilson, an analyst at SNL Kagan, which follows the entertainment industry. "As viewers become younger and younger, maybe Spanish isn't their primary language."
It’s a troubling issue for a company that told prospective investors it expects to draw a “substantial portion” of its growth in the coming years from the nation’s growing Hispanic population. (About 17 percent of the U.S. population is Hispanic, according to the Census Bureau, and the population is expected to be 22 percent by 2030.)
The concern is that second- and third-generation Hispanic Americans who are bilingual or only speak English will pass over Spanish-language shows. If these young viewers grow up immersed in English-language media, they are less likely to gravitate to the types of programs that hooked their parents, analysts say.
A study by the research firm IHS commissioned by Univision found that more than half of native-born Hispanic Americans speak Spanish at home, but at rates far lower than immigrants — 58 percent compared to 94 percent. The analysis predicted that the overall rate of Spanish speaking will slip slightly in the next two decades.
Univision says the study showed that the Spanish language can withstand assimilation. And the issue likely won't become dire for Univision and other traditional Hispanic media for a generation, analysts say, but in the meantime the industry is scrambling to adapt.
Both Univision and Telemundo, a well-heeled competitor owned by NBC Universal, have made efforts to attract younger Hispanic audiences — calling on culture, if not language.
For Univision, that includes an English-language network, El Rey, and Fusion, a TV channel and Web site that it started with ABC. It has also launched Flama, a BuzzFeed-esque Web site with headlines like “25 songs you always hear at a Latino wedding.”
"They have a very deep knowledge of the Hispanic demographic and culture, and I think they're going to be better primed to attract that audience as opposed to the general broadcast networks," Neilson said.
Still, El Rey and Fusion have yet to turn a profit, according to Univision's regulatory filing, and they cost the company a combined $84 million last year. Univision didn’t respond to requests for comment.
Meanwhile, Telemundo has been taking bites out of Univision’s share of the market. It secured the rights to broadcast the next three World Cups, ensuring an introduction to a sizable audience and borrowing a tactic Univision used to build its brand.
"Sports is one of the great, real level-shifters for any media," said Jack Kranefuss, senior director of corporate ratings at the credit rating agency Fitch. Networks usually save ad space during marquee events to promote their regular shows, he said. "That's a good way to push people to watch those programs. Univision did that very well; Telemundo will probably do the same thing."
Five years ago, Univision’s networks had a combined 73 percent of the Spanish-language prime time market among 18- to 49-year-olds, according to Nielsen figures cited in a regulatory filing. Its share has since slipped to 66 percent.
Meanwhile, Telemundo says it is attracting record audiences. It claimed a 32 percent share of the Spanish-language market in the second quarter, which it says was its best showing ever.
Analysts expect the competition to keep growing. Moody’s has cited steeper competition — “particularly from deep-pocketed media conglomerates” — to Univision.
Telemundo has already made inroads nationwide, and Fox created MundoFox, a joint venture with the Colombian broadcaster RCN Television. Analysts say growth in the Spanish-language TV market could offset Univision's slipping share, and they note that its smaller competitors still have a ways to go before they can match its dominance in the market.
"They've got a lot of wood to chip to get there," Kranefuss said, referring to Telemundo.
Univision, which has partnered with The Washington Post to sponsor a Republican presidential candidates forum, has seen strong revenue growth, 11 percent last year, but it has struggled to turn a profit. Saddled with debt, it has posted losses three of the last five years, and in 2014, its profits fell to $900,000, a sliver of the $2.9 billion it reported in revenue.
Univision said in its prospectus that it would use the proceeds of going public to help pay off its debt, which totaled $10.6 billion in March.
Univision went deep into debt when it was taken private in 2007, just before the Great Recession, by a collection of private equity firms — Madison Dearborn Partners, Providence Equity Partners, Texas Pacific Group, Thomas H. Lee Partners and Saban Capital Group. The group paid $12.3 billion cash and took on $1.4 billion in debt.
The firms sought to sell the company last year for $20 billion, according to media reports at the time, but its would-be buyers reportedly balked at the price tag. The asking price has fueled expectations that the Univision initial public offering will be one of 2015's largest, although the company says it hasn't decided how many shares to sell or what to offer them for.
The IPO comes as investors have been enthusiastic about Spanish-language broadcasting. Shares of Entravision Communications Corp., the largest owner of Univision affiliates, soared in June and have risen 14 percent since January, and Spanish Broadcasting System, which runs Spanish-language radio stations, has jumped 124 percent.
That reflects growing interest on Wall Street to capitalize on the United States' growing Hispanic population, analysts said — even if it carries long-term uncertainly.
"America has a long history of assimilating immigrants," said John Tinker, who follows the media industry for the investment banking firm Maxim Group. "I'd say that is definitely a challenge and an opportunity."