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Ending an eight-month antitrust review, Univision Communications Inc. agreed Thursday to reduce its investment in a rival broadcaster in exchange for regulatory approval to acquire Hispanic Broadcasting Corp. The announcement comes the day before shareholders for both companies are scheduled to vote on the $3 billion deal. The consent agreement reached with the Department of Justice’s antitrust division requires Univision to loosen its grip on Entravision Communications Corp. But the decree does not require it to divest any HBC radio stations, including those that compete directly against stations owned by Entravision. Univision expects to close the deal March 14. A Justice Department spokeswoman declined to comment. Los Angles-based Univision, a major owner of TV stations, agreed in June 2002 to acquire Dallas-based HBC, a leading radio station operator, in an all-stock deal initially valued at $3.5 billion. Rivals opposed the deal on grounds that the merged company would control a dominant share of the Spanish-language broadcasting market. The antitrust agreement appears to be a victory for Univision because it retains the radio assets and keeps an investment in Entravision, which is the largest owner of television stations that broadcast Univision’s network programming. Yet Univision did have to significantly alter plans for its 27 percent stake in Entravision. The company agreed to reduce its holdings to 15 percent within three years and 10 percent within six years. It also agreed to convert its shares to nonvoting stock, though it retained the right to vote on any mergers, liquidation plans or sale of any television stations that carry Univision network programming. This is a significant departure from Univision’s initial proposal, which it made to the Federal Communications Commission, which called for the company to retain all of its shares, though they would be converted to nonvoting stock. In addition to the conditions it eventually agreed to, Univision also wanted to require Entravision to get its permission before buying or selling assets valued at more than $25 million, incurring debts greater than five times Ebitda or issuing new shares. A Univision spokeswoman did not return a call for comment. In its announcement, the company did not indicate if the agreement would have any financial impact on the combined entity. While Univision unveiled the agreement, the Department of Justice has yet to release any details. This suggests the consent decree has not been finalized, though it appears unlikely that Univision would announce terms unless it was confident it had a deal with regulators. The merger requires approval by the FCC, which must conclude that the transaction is in the public interest. Sources have said that the FCC finished its review more than a month ago and was only waiting for the antitrust division to act before clearing the deal. Despite the regulatory clearance, the merger is not completely out of the woods. Arthur V. Belendiuk, a partner at law firm Smithwick & Belendiuk in Washington who represents the New York-based National Hispanic Policy Institute, said his client is likely to challenge FCC approval in court. “I don’t see how Entravision can now compete against Univision-owned radio stations,” Belendiuk said. The government should have required Univision to either sell its entire Entravision stake or divest all of the HBC radio stations that compete in the same market as Entravision stations, he said. Belendiuk said he is scheduled to meet next week with FCC commissioner Kevin Martin to discuss the deal. “I get one more bite at the apple,” he said. If unable to convince a majority of the FCC’s five commissioners to oppose the deal, Belendiuk said he expects first to petition the agency to reconsider its ruling. Then he will ask a federal appeals court in Washington to review the decision. Still, Belendiuk acknowledged it will be an uphill fight. “We are at par for the course,” he said. “It is coming out pretty much about where we expected.” Copyright �2003 TDD, LLC. All rights reserved.

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