By Veronica Villafañe
It’s a done deal. The English-language network announces the
purchase of Telemundo, the second largest Hispanic network
in the U.S. for almost $2 billion. What will this acquisition
mean for its employees and the TV audience? Minutes after
the announcement was made, Ted David, CNBC’s "Street Signs"
anchor was chit chatting in Spanish with stock editor Joe
Kernen. "Y ahora vamos a ver… the stocks for…" "Don Francisco,
who’s he?" "Telemundo is the best" "I watch Betty La Fea"
"si hablo español."
little banter went on several times, as they talked about
how the stock market was doing. Both men showing they can
speak a few Spanish phrases, while pointing out that their
parent company, General Electric will now own Telemundo Network,
the country’s second largest Spanish-language network. NBC
is paying $1.98 billion for the Hialeah, Fla.-based Telemundo.
It will pay half cash, half GE stock and also assume about
$700 million in debt. Sony Corp. currently owns about 40 percent
of Telemundo, while Liberty Media has a 35 percent stake.
The rest is held by other investors. Other companies were
looking into buying Telemundo. There was early interest from
Walt Disney Co., which owns ABC and until recently, Viacom
Inc., which owns the CBS television network, was a major contender,
placing a bid.
Telemundo Network owners originally wanted to sell at a higher
price, but settled
for the $1.98 billion. Sony and Liberty bought the network
in 1997 for $539 million. "It’s a very good price and we at
Telemundo are very excited about this deal," said Joe McNamara,
Telemundo Network president, during a CNBC interview. By his
side was NBC chairman Bob Wright, who agreed with McNamara
that there was "tremendous synergy" between NBC and Telemundo,
as both networks will be able to profit from their alliance.
NBC will have an "in" to the ever-growing Spanish-language
market and Telemundo will have access to more resources.
"Telemundo has tremendous potential," says Wright. "It never
really has had access to the capital we can provide, it never
has had access to the facilities, sales organization, the
client relationships that we provide. Those things will add
a big shot in the arm to Telemundo."
considered an expensive acquisition by some analysts, Wright
pointed out "it was a very attractive investment to us," which
will translate, according to his estimates, to a $500 to $600
additional revenue for the first year of operation by NBC,
"Our goal is to become number one, as NBC is number one."
McNamara says by emulating the best practices by NBC they
will achieve that goal. In a memo sent to all Telemundo employees,
he says the purchase, pending regulatory approval by the FCC,
is a process that will take several months to complete.
Here’s an excerpt from that memo: "With the resources offered
by our new ownership, we will have an even greater opportunity
to improve the quality of our local and network newscasts,
to introduce new advertisers to Spanish language television,
to enhance our station operations, to improve access to new
programs and formats and to upgrade our overall distribution.
With NBC's help, there is no doubt that we will take Telemundo
to the next level. I am very proud of everything that Telemundo
has accomplished in the past, and I look forward to even greater
successes in the months and years ahead."
Telemundo owns 19 television outlets, 10 of which are low-power
stations. In addition, the Telemundo network has 40 broadcast
affiliates. Five of Telemundo's full-power stations are in
cities where NBC already operates. The deal is not expected
to go through.
Even after combining the 10 full-power television stations
owned by Telemundo
with the 13 stations it already owns, NBC’s national audience
reach would remain under 30 percent, below the FCC 35 percent.
They might face one problem though. Telemundo Network recently
bought KWHY-22, giving it the first acting duopoly in L.A.
This would mean NBC would have to sell one of its stations.
The NBC chairman says they will be applying for a waiver from
the FCC, but that they face no other impediments.
NBC plans to keep the current management of Telemundo in place,
including chief executive Jim McNamara, who will report to
NBC president Andrew Lack, as well as Telemundo’s chief operating
officer Alan Sokol.
About the Author
Verónica Villafañe is an Emmy award-winning television writer
and reporter, with more than 12 years of research and reporting
experience. She is a journalism graduate from the University
of the Saviour, in Argentina. She can be reached by e-mail