Televisa-Univision: ¡Hasta la vista, Netflix!

If you can’t beat ‘em, join ‘em. The bell is tolling for traditional televisual media, and the only way to exist in the consolidated streaming marketplace, it seems, is to team up with an erstwhile rival. The latest evidence of this is Televisa’s merger with Univision.

Posté le vendredi, décembre 10 2021
Televisa-Univision: ¡Hasta la vista, Netflix!

In the entertainment business in the United States, the past few years in have seen the merger of Time Warner and Discovery, Disney and 21st Century Fox and numerous marriages of convenience, such as between Viacom-CBS and Paramount. Flying slightly under the radar, but no less significant, was April’s announcement of the tie-up between America’s leading Spanish-language broadcaster, Univision, and Mexico’s Televisa.     

When SoftBank and Google want a piece of the financing action, observers expect big things, and this deal certainly fit the bill. Little known on this side of the Atlantic, the two broadcasters are major players in their respective markets.

With 31 TV channels and a pre-existing streaming platform, Blim, Televisa is the world’s biggest producer of Spanish-language programmes. On the other bank of the Rio Grande we have Univision, the fourth-largest network in the United States after Fox, NBC and ABC – no mean feat for a country where English is the main language.

Dedicated to the 40-million strong Latino community in the US, Univision has an 80% penetration rate among households in that demographic. Under the terms of the deal, Televisa is to contribute its content assets for a total value of $4.8 billion, including $3 billion in cash and $1.5 billion in Univision equity.

Double or quits
Why would two leading TV networks from different jurisdictions join forces? The stark reality is that they need each other if they are to remain attractive to their traditional consumer bases, who can increasingly find top quality Spanish-language shows on Netflix or Amazon Prime, or as the Los Angeles Times puts it, “In Mexico, Televisa has struggled to adapt to the streaming era and has lost some of its audience to Netflix [while] Miami-based Univision… also faces increased competition from Telemundo, which is owned by NBCUniversal, as well as English-language channels, YouTube and streaming services.”

The Mexican streaming market was estimated to be worth $881 million in 2020 and is set to cross the $1 billion threshold in 2022

With this merger, the group is looking to establish itself as the leading streaming player in the Latino market, which is predicted to grow strongly in the coming years. The Mexican market alone was estimated to be worth $881 million in 2020 and is set to cross the $1 billion threshold in 2022.

In addition to 130 million Mexicans, around 60 million Americans speak Spanish as either their first or second language, and when you consider that the Spanish language streaming market is far less saturated than its English counterpart, there is reason to believe that this merger could bear considerable fruit.

But Televisa-Univision will be playing catch-up. According to Mexican think-tank the Competitive Intelligence Unit, Netflix’s share of the Mexican streaming market in 2021 stood at 76%, well ahead of its closest rival Amazon Prime with 8.5%. Televisa-Univision’s first order of business will be to create a video-on-demand platform featuring locally made content.

Enthusiastic response
A Mexican company rubbing shoulders with the elite in the global entertainment business, that was bound to please the powers that be in the country. Reacting to the merger, president Andrés Manuel López Obrador could hardly contain his pride, remarking that the deal “promotes Mexican investment” at the highest level.

Less welcome is his governments new 16% tax on companies providing digital services, which applies to both Mexican and foreign companies operating in the country. Not that this will scare off Netflix which, to fend off competition from Televisa-Univision has announced it is to invest $300 million on original Mexican content and is setting up a base in the country. Let battle commence.