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Even by the sometimes turbulent deal-making standards of the media business, it's hard to match the disaster that the auction of Hispanic broadcasting giant Univision Communications (UVN) has become. How does one of the hottest media companies on the planet become such an object of scorn that three of the best-heeled private equity firms bolt from one group of bidders and the only other bidder lobs an offer that is so much lower than anticipated that Univision more or less rejects it out of hand? And where, for goodness sake, are the so-called strategic investors? Companies like News Corp. (NWS), Disney (DIS), or CBS (CBS) perhaps could use a company that lures more than 12% of the 18-49 Hispanic viewing audience each night, often beating the old-line English language broadcasters.



In short, the auction process for Univision has become the media world's latest Gong Show. Offer up a bid, get sent packing. As for Univision getting close to the $40 a share bid that its chief executive officer, legendary dealmaker Jerry Perenchio, had set as a threshold? Forget it. That would have valued the company at close to $12 billion, lower still than the $13 billion he had hoped to get. Now insiders say he'd likely take a bid in the $38-a-share range, something closer to $11.5 billion. The only bid on the table, from a group headed by media dealmaker and one-time Power Ranger maestro Haim Saban, is for $35.50 a share, or about $11 billion. In a phone call on June 21, Perenchio asked Saban to consider raising the bid and Saban refused, say sources with knowledge of those negotiations.



TOO PRICEY.

This is a fine mess for a company that owns the largest media propertiesincluding the Univision and Telefutura networks, and the Univision Radio Networkin the fastest-growing segment of the U.S. media industry. It's a debacle that started earlier this year when Perenchio put the company on the block after owning it for more than 13 years. Perenchio, a poker-playing buddy of, among others, CBS Chief Executive Leslie Moonves, at one point talked with CBS' then-parent Viacom (VIA) about a deal. Moonves, at the time, thought the deal too pricey. News Corp. CEO Rupert Murdoch also backed out, telling analysts that it was priced too high.



That left Perenchio to deal with private equity groups, the latest wave of money that has been pouring into the media industry, snapping up legendary properties such as the MGM film studios and the Warner Music Group (WMB). And there was plenty of interest from just about every quarter. They all wanted to ally themselves with the anticipated winner, Mexican broadcasting company Grupo Televisa (TV), a long-time Perenchio partner which provides a slug of Univision's daily supply of telenovelas and which also owns 11% of Univision.



THE TELEVISA DRAMA.

But Televisa was picky. The company joined up with heavyweight private equity partners like Kohlberg Kravis, Roberts, but turned away perhaps the most adept media buyer on the market these days, Providence Equity Partners. One well-placed insider says that the dealmakers at Televisa didn't agree with the long-range plans Providence had for Univision, which included keeping open the possibility of a sale to a larger media conglomerate.



Televisa, whose execs are renowned as hard-ball negotiators, turned away potential partners, including Saban, who joined a separate group where he thought he could get a better deal. Eventually, he allied with Providence and other private equity firms, including Texas Pacific Group and Thomas H. Lee Partners. They were prepared at one point to bid as much as $38 a share, say insiders, before the rise in interest rates made the deal too expensive. At one point there were talks about the two private equity groups allying to make a joint bid, say those with knowledge of those talks. But warring interests between the money men squelched that.



BREAKDOWN.

Meanwhile, the Televisa group was fast breaking down. First, the Carlyle Group backed out, citing the hefty $39 initial price that Televisa wanted to pay. KKR and Blackstone, another Televisa member, backed out as well over price, wanting to keep their bid at around $35 a share. That didn't sit well with Televisa, which had been warring for months with Univision's management and desperately wanted to expand its role in the U.S. When two more of Televisa's partners walked, the Mexican broadcaster was left scrambling. Most likely, Bill Gates's private equity fund, Cascade Investments, will pony up an additional $1 billion to cover the lost investments from the departed firms, say other insiders.



Has the process been so botched that Perenchio will pull Univision off the auction block? Those with knowledge of how he works figure he is on the verge of doing just that, especially if he can't get his price. That will leave him with a bunch of headaches, including a still-simmering legal battle with Televisa, which has alleged that Univision breached its programming agreement. As for Perenchio, a one-time boxing promoter, he could battle back and cut a deal with one of the bidders. CBS or News Corp. may even reemerge as potential bidders. Stranger things have happened. This auction has become so weird and wild that now almost nothing would be a surprise.