Univision Communications is preparing for a public offering of its shares, which would enable owners of the Spanish language media giant to begin their long-planned exit.
This week, Moody’s Investors Service issued an upgrade in the rating outlook for Univision, helping clear the way for a public offering that is expected to occur in 2015, according to people close to the company who asked not to be identified discussing sensitive matters.
The New York company’s ownership group — which includes Los Angeles billionaire Haim Saban, several private equity firms and the Mexican entertainment juggernaut Grupo Televisa — has not completed plans for an IPO.
However, several of the owners have concluded that a public offering of stock representing less than 50 percent of the company would be the best route to recoup some of their investment, according to sources.
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The owners have been weighing a public offering in mid to late 2015 in an effort to capitalize on the strength of the stock market and Univision’s improved balance sheet. They want to sell the stock in advance of the 2016 presidential election cycle, which is expected to produce a bounty of campaign cash for Univision as politicians turn to Spanish language media in an effort to win Latino voters.
The media giant, which owns the fifth largest TV network in the U.S., has long been considered a jewel on Wall Street because of the growing influence of Latinos in the U.S.
Univision, which was owned by Kansas City-based Hallmark Cards from 1986 until the early 1990s, boasts two leading Spanish language broadcast networks, several cable channels, television stations and a chain of popular Spanish language radio stations.
Until now, Univision’s debt of roughly $9.7 billion — a legacy of the company’s 2007 leveraged buyout — was seen as an obstacle to a strong offering in the public markets.
But on Monday, Moody’s changed Univision’s outlook to “positive” from “stable,” based on the company’s increased revenue and its ability to pay down some debt. Univision’s management has spent the last three years wrangling carriage fees from pay-TV distributors as well as launching TV networks including an English language channel called Fusion, a joint venture with Walt Disney Co.’s ABC.
“They have been doing well,” said Carl Salas, a vice president and senior credit officer for Moody’s. “We looked at their ability to service the debt comfortably and carry out their plans, including a possible IPO.”
The positive rating outlook reflected Moody’s view that Univision should be able to increase its earnings and reduce debt, setting it up for an IPO.
A representative of Univision declined to comment.
The ownership group, which includes Saban Capital Group and private equity firms Providence Equity Partners, Madison Dearborn Partners, Thomas H. Lee Partners and Texas Pacific Group, has spent the last few years considering various exit strategies, including an IPO.
Univision generated $2.9 billion in revenue for the 12 months that ended Sept. 30. Last summer, the company brought in $174 million in advertising revenue for its broadcasts of the soccer World Cup. Revenue in 2015 is expected to be down slightly, but 2016 is expected to set a record for the company.