Business

LEGAL SNAFUS IMPERIL UNIVISION MUSIC SALE

Univision Communications’ plan to sell its music business by year end might unwind from mounting legal problems at the company.

The Spanish-language broadcaster, already fending off a pair of payola-related lawsuits involving its music division, is now being sued by division President Jose Behar for more than $33 million in a spat over the value of his minority stake.

Sources said the latest legal headache, which caught a number of parties in the bidding process for Univision Music off guard, may lead to a delay of the sale amid valuation concerns.

Prior to the Behar suit, potential bidders were already shaving their offers by almost $100 million due to concerns over artist contracts, access to advertising on the television network and issues related to a payola investigation.

The asking price was initially as much as $300 million, but people close to the bidders said the range now tops out at $200 million.

Opinions are said to be split within Univision on whether it should back away from its sale plans until the negative publicity blows over or soldier on.

Behar’s suit, filed recently in Los Angeles Superior Court, alleges that Univision failed to execute an amendment to his contract that would spell out how much the company would pay him for his 10 percent stake in the event of a sale.

Behar further alleges that Univision breached its fiduciary responsibility to the division by cutting TV ad time – a move that he claims led to a drop in sales and deflated both the value of the record company and his stake.

Access to advertising on Univision’s main TV network for the music division’s artists is a big concern for potential buyers. One source said what were thought to be guaranteed commercial spots in prime time, in fact, are not.