Bloomberg — Wade Davis took over as chief executive officer of Univision Communications Inc. at a rough time for the largest Spanish-language broadcaster in the US. Its namesake TV network had lost some of its edge to its biggest rival, Comcast Corp.’s Telemundo, and was seeing younger viewers flock to video-streaming services and social media. The company had tried and failed to sell shares to the public, depriving its billionaire backers of a lucrative exit. Rather than try again, the private equity funds that owned Univision opted to sell the company for less than they paid 13 years before.
But then, after merging last year with the largest producer of TV shows in Mexico, Univision did something few traditional media companies in the US have accomplished in recent years: It grew its sales and profit. TelevisaUnivision Inc. boosted sales by 13% to $4.7 billion last year, including 22% in the final quarter, buoyed by a booming advertising business and wider distribution of its main TV network.
It’s also benefited from growing demand for the Spanish-language shows produced by Televisa (TV, TLEVICPO), as well as the debut of its new streaming service, Vix, which now has more than 25 million monthly active users on its free tier alone. TelevisaUnivision has invested hundreds of millions of dollars in that streaming service without hurting the overall earnings of the company. Operating income before depreciation and amortization grew slightly to $1.69 billion last year, according to results released on Thursday. In the fourth quarter, profit rose 5% to $504.4 million.
That makes TelevisaUnivision an outlier at an otherwise dour time in media, as investors punish companies for losing billions of dollars on new streaming services in pursuit of Netflix Inc., the market leader. Davis has taken a more cautious approach, and the challenge is to prove that the company’s turnaround can be sustained, potentially paving the way for the very outcome—an IPO—that its previous owners so desired.
“Univision had always been this powerhouse—it had been a market leader— but really it had never come close to its full potential,” Davis said over breakfast at a hotel in West Hollywood, California. “We all had a vision for what this could be, which is really the first at-scale global media company serving the global Spanish-language audience. And I think two years later we’ve delivered a lot of that.”
Davis joined Univision after witnessing up close the decimation of another once-great media company. He worked for more than 14 years at Viacom, the owner of MTV and Nickelodeon. Viacom was one of the most powerful media companies in the world thanks to its stable of cable networks popular among young viewers, channels that defined pop culture for the better part of three decades.
Yet the company failed to anticipate the damage wrought by the internet, and failed to reinvent itself before YouTube and Netflix stole its audience. When Davis left Viacom in 2019, the company was worth less than half what it was when he joined in 2005.
Univision appeared to be headed in the same direction. While the company had been the dominant player in Spanish-language television in the US for decades, it was losing young viewers to streaming services such as Netflix, as well as to rival Telemundo. Netflix and Telemundo offered programming that felt fresher than the telenovelas that had been Univision’s mainstay. Telemundo invested in narco-dramas, serialized shows about drug kingpins that appealed to younger audiences.
Davis scored a lot of his early wins at TelevisaUnivision by overhauling the company’s approach to advertising and distribution. The previous owners were selling ads at a discount, trying to lure marketers by charging less than English-language networks. Davis invested in the company’s advertising technology and hired industry veteran Donna Speciale to take over sales. The company’s advertising revenue increased 10% in 2022.
Univision also secured distribution on YouTube TV, the most popular of a new crop of online pay-TV providers and one with a younger audience than most cable companies. Viewership of Univision increased in 2021, one of the only linear TV networks that could make that claim.
Davis’s most important asset is his alliance with Grupo Televisa SAB, the largest media company in Mexico. Emilio Azcárraga Vidaurreta founded the companies that would become Televisa in the middle of the 20th century, and his grandson, Emilio Azcárraga Jean, is chairman of Televisa’s board. Grupo Televisa is the largest shareholder of closely held TelevisaUnivision with a 45% stake.
Though Televisa supplies most of Univision’s most popular series, the two companies hadn’t always seen eye to eye. When Davis joined forces with the private equity firm Searchlight to buy Univision, he made sure he had the support of Televisa, which already owned a large share of the business. Then they combined Univision with Televisa’s studio operations to form one company.
“Everything starts with our studio in Mexico,” said Davis, who has moved from New York to Miami, the unofficial capital of Spanish-language media in the US. “I would never have done this if we didn’t share a vision.” To appeal to younger viewers, Televisa has reinvented its programming with more action and comedy and shortened the length of the story arcs on some shows from 120 episodes to as few as 30 or 60.
If propping up the traditional TV network was Davis’s first act, the future of this combined company is on the internet. The company introduced Vix last year as a free, advertising-supported streaming service. The $7-a-month paid version debuted in July. Customers can watch live news, sports talk, the occasional sporting match and the Televisa library for free. They must pay to watch the service’s full complement of live soccer and dozens of original series.
It’s too early to know if Vix is a success. The vast majority of its customers don’t pay for the service, which has yet to launch officially in most of Latin America. It has only marketed itself in the US and Mexico. Among customers who do pay, the rate of cancellation, or churn, is elevated. Recent history is littered with local competitors that struggled to compete with global streaming services.
But Davis is confident he has the right strategy. The free tier appeals to the majority of potential customers in a region where people are used to watching TV for free and credit cards aren’t ubiquitous. The paid tier appeals to diehard sports fans and wealthier customers willing to pay for original series. Vix received a boost in the final months of last year thanks to the World Cup, which it carries in Mexico, and the company will produce more than 60 original programs in its first year.
Unlike a service in Germany or South Korea, Vix can speak to more than 500 million Spanish speakers across more than 40 countries. Vix offers more than 300,000 hours of Spanish-language TV thanks to the Televisa library. “It’s essentially the definitive Spanish language library in the world,” Davis said.
Netflix is the only global streaming service investing in Spanish-language programming at a scale that compares to TelevisaUnivision and most of its programming is still in another language. “All we do is Spanish language,” Davis said. “All we’ll ever do is Spanish language.”
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