[Federal Register: November 28, 2003 (Volume 68, Number 229)]
[Notices]               
[Page 66854-66873]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr28no03-94]                         


[[Page 66854]]

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DEPARTMENT OF JUSTICE

Antitrust Division

 
Response to Public Comments on the Proposed Final Judgment in 
United States v. Univision Communications Inc.

    Pursuant to the Antitrust Procedures and Penalties Act, 15 U.S.C. 
16(b)-(h), the United States hereby publishes the two public comments 
on the proposed Final Judgment in United States v. Univision 
Communications Inc., Civil No. 1:03V00758, filed in the United States 
District Court for the District of Colombia, together with the 
responses of the United States to the comments. On March 26, 2003, the 
United States filed a Complaint alleging that Univision Communications 
Inc.'s proposed acquisition of Hispanic Broadcasting Corp. would 
substantially lessen competition in the sale of advertising time on 
Spanish-language radio stations in many geographic markets, in 
violation of Section 7 of the Clayton Act. The proposed Final Judgment, 
filed at the same time as the Complaint, requires Univision to exchange 
its Entravision shares for a nonvoting equity interest, divest a 
substantial portion of its ownership in Entravision, give up its seat 
on Entravision's Board of Directors, eliminate certain rights Univision 
has to veto important Entravision actions, and restrain certain conduct 
that would interfere with the governance of Entravision's radio 
business. The proposed Final Judgment particularly requires Univision, 
presently owning approximately thirty percent of Entravision, to divest 
down to fifteen-percent ownership within three years, and ten-percent 
ownership within six years. Public comment was invited within the 
statutory 60-day comment period. The public comments and the repsonses 
of the United States thereto are hereby published in the Federal 
Register, and shortly thereafter these documents will be attached to a 
Certificate of Compliance with Provisions of the Antitrust Procedures 
and Penalties Act and filed with the Court, together with a motion 
urging the Court to enter the proposed Final Judgment. Copies of the 
Complaint, the proposed Final Judgment, and the Competitive Impact 
Statement are currently available for inspection in Room 200 of the 
Antitrust Division, Department of Justice, 325 Seventh Street, NW., 
Washington, DC 20530 (telephone: 202-514-2481) and at the Clerk's 
Office, United States District Court for the District of Columbia, 333 
Constitution Avenue, NW., Washington, DC 20001. (The United State's 
Certificate of Compliance with Provisions of the Antitrust Procedures 
and Penalties Act will be made available at the same location shortly 
after they are filed with the Court.) Copies of any of these materials 
may be obtained upon request and payment of a copying fee.

J. Robert Kramer II,
Director of Operations, Antitrust Division.

In the United States District Court for the District of Columbia

Civil Action No. 1:03CV00758; Judge: Hon. Rosemary M. Collyer

United States of America, Plaintiff, v. Univision Communications Inc., 
and Hispanic Broadcasting Corporation, Defendants, Response to Public 
Comments

    Pursuant to the requirements of the Antitrust Procedures and 
Penalties Act, 15 U.S.C. Sec.  16(b)-(h) (``Tunney Act''), the United 
States hereby responds to the public comments received regarding the 
proposed Final Judgment in this case. After careful consideration of 
these comments, the United States continues to believe that the 
proposed Final Judgment will provide an effective and appropriate 
remedy for the antitrust violation alleged in the Complaint. The United 
States will move the Court for entry of the proposed Final Judgment 
after the public comments and this Response have been published in the 
Federal Register, pursuant to 15 U.S.C. 16(d).
    On March 26, 2003, the United States filed the Complaint in this 
matter alleging that the proposed acquisition of Hispanic Broadcasting 
Corporation (``HBC'') by Univision Communications, Inc. (``Univision'') 
would violate Section 7 of the Clayton Act, as amended, 15 U.S.C. 18.
    Simultaneously with the filing of the complaint, the United States 
filed a proposed Final Judgment and a Stipulation signed by the United 
States and the defendants consenting to the entry of the proposed Final 
Judgment after compliance with the requirements of the Tunney Act. 
Pursuant to those requirements, the United States filed a Competitive 
Impact Statement (``CIS'') in this Court on May 7, 2003; published the 
proposed Final Judgment and CIS in the Federal Register on May 21, 
2003; and published a summary of the terms of the proposed Final 
Judgment and CIS, together with directions for the submission of 
written comments relating to the proposed Final Judgment, in the 
Washington Post for seven days on May 23, 2003, through May 29, 2003. 
The 60-day period for public comments, during which two comments were 
received as described below, expired on July 23, 2003.\1\
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    \1\ On September 22, 2003, the Federal Communications Commission 
announced that it granted Univision's and HBC's applications for 
transfer of control that were required in order for the transaction 
to proceed. See Memorandum Opinion and Order, FCC 03-218 (located at 
http://hraunfoss.fcc.gov/edocs&_public/attachmatch/FCC-03-218A1.pdf.
). Univision and HBC closed their merger the same day.
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I. Background

    As explained more fully in the Complaint and CIS, this transaction 
raised competitive concerns relating to the sale of advertising time on 
Spanish-language radio stations in several geographic markets. HBC is 
the nation's largest Spanish-language radio broadcaster. Univision, the 
largest Spanish-language media company in the United States, owns a 
significant equity interest, and possesses governance rights, in 
Entravision Communications Corporation (``Entravision''), another 
Spanish-language media company that is HBC's principal competitor in 
Spanish-language radio in many markets. The Complaint alleges that, due 
to Univision's substantial equity interest and governance rights in 
Entravision, Univision's proposed acquisition of HBC would 
substantially lessen competition in provision of Spanish-language radio 
advertising time to a significant number of advertisers in several 
geographic markets in the United States.
    The proposed Final Judgment, if entered, would require Univision to 
reduce its equity interest in Entravision to 15 percent of the 
outstanding shares within three years from the filing of the proposed 
decree and to 10 percent within six years of such filing. The proposed 
decree would also require Univision to convert all of its Entravision 
equity into a nonvoting class of stock; to relinquish its right to 
place directors on Entravision's Board of Directors; to eliminate 
certain of Univision's rights to veto important Entravision actions; 
and to refrain from certain conduct that would interfere with the 
governance of Entravision's radio business.
    Entry of the proposed Final Judgment would terminate this action, 
except that the Court would retain jurisdiction to construe, modify, or 
enforce the provisions of the proposed Final Judgment and to punish 
violations thereof.

[[Page 66855]]

II. Legal Standard Governing the Court's Public Interest Determination

    Upon the publication of the public comments and this Response, the 
United States will have fully complied with the Tunney Act and will 
move the Court for entry of the proposed Final Judgment as being ``in 
the public interest.'' 15 U.S.C. 16(e). The Court, in making its public 
interest determination, should apply to deferential standard and should 
withhold its approval only under limited conditions. Specifically, the 
Court should review the proposed Final Judgment in light of the 
violations charged in the complaint and ``withhold approval only if any 
of the terms appear ambiguous, if the enforcement mechanism is 
inadequate, if third parties will be positively injured, or if the 
decree otherwise makes `a mockery of judicial power.' '' Mass. School 
of Law v. United States, 118 F.3d 776, 783 (D.C. Cir. 1997) (quoting 
United States v. Microsoft Corp., 56 F.3d 1448, 1462 (D.C. Cir. 1995)).
    It is not proper during a Tunney Act review ``to reach beyond the 
complaint to evaluate claims that the government did not make and to 
inquire as to why they were not made.'' Microsoft, 56 F.3d at 1459; see 
also United States v. Archer-Daniels-Midland Co., 272 F. Supp. 2d 1, 6-
7 (D.D.C. 2003) (rejecting argument that court should consider effects 
in markets other than those raised in the complaint); United States v. 
Pearson PLC, 55 F. Supp. 2d 43, 45 (D.D.C. 1999) (noting that a court 
should not ``base its public interest determination on antitrust 
concerns in markets other than those alleged in the government's 
complaint''). Because ``[t]he court's authority to review the decree 
depends entirely on the government's exercising its prosecutorial 
discretion by bringing a case in the first place,''\2\ it follows that 
``the court is only authorized to review the decree itself,'' and not 
to ``effectively redraft the complaint'' to inquire into other matters 
the United States might have but did not pursue. Microsoft, 56 F.3d at 
1459-60; see also United States v. Western Elec. Co., 993 F.2d 1572, 
1577 (DC Cir. 1993) (noting that a Tunney Act proceeding does not 
permit ``de novo determination of facts and issues'' because ``[t]he 
balancing of competing social and political interests affected by a 
proposed antitrust decree must be left, in the first instance, to the 
discretion of the Attorney General'' (citations omitted)).
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    \2\ It is the United States' responsibility to investigate a 
transaction and decide what allegations to raise in any challenge it 
may bring. See Heckler v. Chaney, 470 U.S. 821, 831-32 (1985) 
(``[A]n agency's decision not to prosecute or enforce, whether 
through civil or criminal process, is generally committed to an 
agency's absolute discretion.'').
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    Moreover, the United States is entitled to ``due respect'' 
concerning its ``prediction as to the effect of proposed remedies, its 
perception of the market structure, and its view of the nature of the 
case.'' Archer-Daniels-Midland Co., 272 F. Supp. 2d at 6 (citing 
Microsoft, 56 F.3d at 1461).

III. Summary of Public Comments

    The United States received comments from two entities, the American 
Antitrust Institute (``AAI,'' comment attached as Exhibit 1) and 
Spanish Broadcasting System, Inc. (``SBS,'' comment attached as Exhibit 
2).
    AAI takes the position that the United States' CIS fails to address 
and evaluate ``the consequences of this merger in conventional terms in 
an overall market consisting of Spanish-language media, examining such 
traditional criteria as advertising effects [and] the consumer interest 
in diversity of sources of political and cultural information.'' AAI 
cmt. at 1. AAI also states that the United States' CIS fails to explain 
why the proposed Final Judgment does not require the elimination of all 
rights Univision currently possesses in Entravision and the divestiture 
of all stock Univision holds in Entravision. AAI cmt. at 1 n.2. These 
points are similar to SBS's comments on these issues and are addressed 
below. Additionally, AAI argues that the Division should have 
considered indicia of harm to non-price competition, such as quality 
and innovation.
    SBS, a Spanish-language radio company that competes in many markets 
with HBC and Entravision, states that the United States should have 
alleged harm in its Complaint based on purported effects of the 
transaction on a ``Spanish-language broadcasting market.'' SBS cmt. at 
1-2. SBS further claims that the transaction will increase Univision's 
incentives (1) to refuse to deal with or discriminate against Spanish-
language radio competitors who seek to advertise through Univision and 
(2) to force advertisers who wish to advertise through both radio and 
television to purchase time from both Univision and HBC. Id. at 3. In 
addition, SBS argues that the United States' remedy fails to solve the 
competitive concerns in the Spanish-language radio markets raised in 
the Complaint because, according to SBS, Univision will be able to 
exercise undue influence over Entravision. Id. at 1, 4-6.

IV. The United States' Response to Specific Comments

    Because both comments raise the general issue of whether the 
effects of the merger should be analyzed in light of an ``overall'' 
Spanish-language media market, the United States will first respond to 
that issue. It will then respond to the specific points AAI and SBS 
raised concerning whether the remedy addresses the competitive harm 
raised in the Complaint.

A. Allegations Not Raised in the Compliant Are Irrelevant to Whether 
the Proposed Final Judgment Is in the Public Interest

1. SBS's Proposed Market and Alleged Harm Are Extraneous to the 
Competitive Issues Raised in the Complaint
    The Complaint alleges that the relevant market consists of the 
provision of advertising time on Spanish-language radio stations to the 
significant number of advertisers that consider Spanish-language radio 
advertising to be a particularly effective advertising medium. See  
Complaint ]]12-15. SBS, however, takes the position that the complaint 
should have raised additional allegations of harm based on purported 
effects in a combined Spanish-language radio and television market. SBS 
cmt. at 1-2.
    The Complaint's market definition does not extend to the issues 
raised by SBS, nor should it. The market definition analysis in the 
Complaint properly begins by examining how advertisers individually 
negotiate transactions with radio broadcasters such as Entravision and 
HBC. The resulting price for advertising time reflects the 
circumstances of these individual negotiations and the preferences of 
each advertiser. The Complaint's market definition reflects these 
individualized negotiations by looking at the options available to 
individual advertisers. The Complaint alleges that a significant number 
of advertisers exist who do not have reasonable alternatives to 
advertising on Spanish-language radio; in other words, these 
advertisers cannot effectively switch to other media in the face of a 
small but significant increase in the price of advertising time on 
Spanish-language radio. This set of advertisers forms the relevant 
market alleged in the Complaint.
    SBS does not appear to take issue with the theoretical framework 
underlying the Complaint's market definition. Rather, it alleges that 
there is another market to consider; namely, a purported market 
consisting of a set of advertisers that are dependent on

[[Page 66856]]

Spanish-language television and radio. The Complaint, however, makes no 
such factual allegation. The proposed market differs significantly from 
the one alleged in the Complaint and would require markedly different 
supporting facts to be justified. Moreover, market definition is but 
one step toward the ultimate goal of determining competitive effects. 
The Complaint alleges that the transaction would likely cause 
anticompetitive effects with regard to Spanish-language radio 
(Complaint ]] 24-27); it makes no such allegations regarding a combined 
television and radio market. So, SBS asks not only that the court 
redraft the complaint to include an additional market but also that the 
court impose a competitive effects analysis based on that new market to 
find cognizable harm.
    As discussed above, the United States is entitled to deference as 
to the case it brings, and, as Microsoft makes clear, it is not proper 
during a Tunney Act review ``to each beyond the complaint to evaluate 
claims that the government did not make and to inquire as to why they 
were not made.'' Microsoft, 56 F.3d at 1459. The Tunney Act does not 
authorize the Court to consider allegations not raised in the Complaint 
based on concerns raised by a member of the public. Accordingly, SBS's 
suggestion that the Complaint is defective for failing to allege harm 
in a combined Spanish-language television and radio market should be 
rejected as a matter of law.
The CIS Properly Addresses the Market Effects Relevant to the 
Allegations in the Complaint
    AAI takes the position that the United States has not satisfied its 
requirements under the Tunney Act because the CIS fails to identify the 
competitive effects of the transaction in an ``overall'' Spanish-
language media market and fails to justify the United States' decision 
not to challenge the transaction based on those purported effects. This 
position is not valid. Not only is the Court's review limited to the 
case actually brought by the United States, there is no requirement 
that the United States disclose its decision-making as to cases it 
chooses not to initiate. Rather, the Tunney Act provides that the 
United States must inform the public about the case it did initiate and 
explain how the proposed decree serves to resolve the competitive 
effects alleged in the Complaint.
    The purpose of a CIS is to provide the public with ``basic data 
about the decree'' to allow for informed comment. See generally United 
States v. Microsoft Corp., 215 F. Supp. 2d 1, 14-15 (D.D.C. 2002) 
(describing legislative history relating to CIS) (quoting 119 Cong. 
Rec. at 3452 (1973) (statement of Senator Tunney)). To that end, the 
Tunney Act provides that the CIS shall ``recite'' the following:
    (1) The nature and purpose of the proceeding;
    (2) A description of the practices or events giving rise to the 
alleged violation of the antitrust laws;
    (3) An explanation of the proposal for a consent judgment, 
including an explanation of any unusual circumstances giving rise to 
such proposal or any provision contained therein, relief to be obtained 
thereby, and the anticipated effects on competition of such relief;
    (4) The remedies available to potential private plaintiffs damages 
by the alleged violation in the event that such proposal for the 
consent judgment is entered in such proceeding;
    (5) A description of the procedures available for modification of 
such proposal; and
    (6) A description and evaluation of alternatives to such proposal 
actually considered by the United States.
15 U.S.C. 16(b). The United States' CIS has satisfied all of these 
requirements. More specifically, the CIS explains the nature and 
purpose of the proceeding (at 1-3), describes the events that gave rise 
to the alleged violation of the antitrust law (at 3-9), explains the 
proposed Final Judgment (at 9-15), explains the remedies available to 
potential private litigants (at 15), explains the procedures available 
for modifying the proposed Final Judgment (at 15-16), and describes and 
evaluates alternatives to the proposed Final Judgment (at 16-17). There 
is simply no requirement that the Government identify purported effects 
it did not allege in the Complaint or explain why it did not make 
certain allegations in the Complaint. Accordingly, AAI's challenge to 
the sufficiency of the CIS fails.
3. The Government's Investigation Did Not Demonstrate the Likelihood of 
Substantial Harm in an ``Overall'' Spanish-Language Media Market
    Although the United States has no legal obligation to address 
matters raised in the Complaint, we note that the United States 
conducted an extensive inquiry into the issue of whether the 
combination of Univision's Spanish-language television stations with 
HBC's Spanish-language radio stations in geographic regions where both 
are located was likely to cause significant anticompetitive effects. 
The inquiry included numerous interviews of a wide range of advertisers 
and review of over a million pages of documents provided by the 
defendants and other entities. In the end, the evidence did not support 
the claims proffered by the comments.
    a. The evidence did not justify a combined media market for 
advertisers. The United States has traditionally treated radio and 
television as separate antitrust markets. Past investigations involving 
general-market (English-language) media mergers revealed that few 
advertisers consider the two media to be close substitutes; rather, 
most advertisers viewed the two media as separate or complementary 
products given the qualitative differences between the two media.\3\ In 
examining whether this ``separate market'' conclusion applied in this 
transaction, the United States recognized that Univision has a strong 
presence in Spanish-language television and that, in certain geographic 
markets, there are a limited number of other Spanish-language 
television stations with ratings that would be attractive to 
advertisers trying to reach Spanish-language viewers. Nevertheless, the 
evidence garnered in this investigation showed the same qualitative 
differences between television and radio that exist for general-market 
advertisers also exist for Spanish-language advertisers. In the end, 
the investigation did not produce sufficient evidence to support the 
proposition that a significant number of advertisers considered 
Spanish-language television and Spanish-language radio to be 
sufficiently interchangeable to support the ``combined'' market 
proposed by the comments.\4\
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    \3\ See, e.g., Complaint ]] 11-14, United States v. Clear 
Channel Communications, No. 1:00CV02063 (D.D.C. filed Aug. 29, 
2000); Complaint ]] 34-41, United States v. Chancellor Media 
Company, Inc., No. CV-97-496 (E.D. N.Y. filed Nov. 6, 1997); 
Complaint ] 12, United States v. EZ Communications, Inc., No. 
1:97CV00406 (D.D.C. filed Feb. 27, 1997).
    \4\ SBS's submission does not provide a basis to establish a 
combined Spanish-language television and radio market. The letters 
that SBS attached to its comment as Exhibit A for the most part 
discuss how certain advertisers depend on Spanish-language media (a 
point with which the United States does not disagree). Only two of 
the letters, however, discuss the interchangeability of Spanish-
language television and radio (May 27, 2003 letter from Castor A. 
Fernandez; May 27, 2003 letter from Caballero TV & Cable sales); the 
rest are silent on the issue.
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    b. The United States considered non price competition. AAI also 
argues that the United States should examine indicia of harm other than 
price, such as quality and innovation. AAI cmt. at 4-5. The United 
States, in fact, considered such indicia during this

[[Page 66857]]

investigation. In this case, the market is comprised of the competitive 
alternatives for certain advertisers seeking to purchase commercial 
time on Spanish-language radio stations. Market participants compete on 
the basis of both price and service (or ``quality'' or ``innovation''). 
See, e.g., Complaint ] 14 (relevant product market defined in terms of 
options available to certain advertisers facing ``a small but 
significant increase in the price of advertising time on Spanish-
language radio, or a reduction in the value of services provided'') 
(emphasis added). As the Complaint and CIS state, Entravision and HBC 
heavily promote their stations against each other in an effort to gain 
high ratings; they program and format their stations in an effort to 
attract listeners away from each other; they aggressively seek to 
acquire stations; and they closely monitor each other's competitive 
positions. Complaint ] 19; CIS at 6. As explained in the CIS, the goal 
of the proposed Final Judgment is to protect such vigorous price and 
nonprice competition between Entravision and HBC by foreclosing the 
ability of a combined Univision/HBC to improperly influence 
Entravision's strategic decision making with regard to its radio 
business. See CIS at 9-11. Contrary to AAI's assumption, the United 
States considered the many ways in which advertisers benefit from 
competition--not just price competition--in crafting its remedy.
    c. The consideration of political and cultural viewpoints are 
extraneous to antitrust enforcement. AAI also asserts that the United 
States should take into account under its antitrust analysis ``consumer 
interest in diversity of sources of political and cultural 
information'' within a combined Spanish-language television and radio 
market. AAI cmt. at 1, 3-4. It is not the role of the United States to 
use the antitrust laws to regulate actual content or to establish 
quotas for the types of programming that media stations must broadcast. 
Accordingly, we do not seek to ensure in the context of a merger review 
that media companies provide a balance of political views or a proper 
mix of cultural issues as part of their programming. The United States 
does seek to ensure that content is determined in a competitive 
marketplace, however. The relevant product identified in the Complaint 
is the provision of advertising time on Spanish-language radio 
stations; the customer is an advertiser purchasing that time. In order 
to supply this product, media stations compete to gain audience 
ratings, as it is audience access that is being sold to the 
advertisers. That competition benefits advertisers as discussed above. 
It also benefits individual audience members (listeners of radio 
stations) because stations will compete for their attention by offering 
high quality content. In this way, the relief in the Final Judgment 
that protects advertising competition also serves to protect individual 
audience members by maintaining vigorous competition between the 
Spanish-language radio stations owned by Univision/HBC and those owned 
by Entravision.
    d. The allegation that Univision may refuse to deal with certain 
advertisers or impose tying arrangements does not warrant condemning 
the transaction. SBS alleges that the merger will provide Univision an 
enhanced incentive to refuse to deal with or discriminate against 
Spanish-language radio competitors who seek to advertise on Univision 
and will also provide Univision the ability to ``tie'' radio and 
television advertising time for advertisers who seek to use both 
mediums. (SBS Cmt. at 3). The United States did not find evidence upon 
which to base a cause of action pursuant to SBS's theory. If Univision 
engages in the alleged conduct in the future, and if the conduct 
satisfies the requirements of an antitrust violation, then the United 
States (or a private plaintiff with standing) could challenge the 
conduct at that time. The mere speculation that Univision will violate 
the antitrust laws, however, does not justify enjoining this 
transaction.

B. SBS's Assertions That the Proposed Final Judgment Will Not Remedy 
the Competitive Concerns Raised in the Complaint Are Unfounded

    SBS asserts that the remedy will not address the competitive harms 
raised in the Complaint because Univision will still have the ability 
to improperly influence Entravision's actions to the detriment of radio 
competition between Entravision and Univision/HBC. Specifically, SBS 
contends that (1) the existence of the television affiliation agreement 
between Univision and Entravision will cause Entravision to mitigate 
its radio competition with a combined Univision/HBC; (2) Univision's 
continued retention of limited shareholder ``veto'' rights in 
Entravision might foreclose competition-enhancing transactions; (3) the 
time period to complete the stock divestitures called for in the 
proposed Final Judgment is too long; and (4) Univision's ability to 
hold 10 percent of Entravision's stock will cause Univision/HBC to 
compete less aggressively against Entravision. SBS cmt. at 1, 4-6.\5\
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    \5\ As noted above, AAI asserts that the CIS fails to explain 
why Univision was not forced to relinquish all its shareholder 
``veto'' rights in Entravision and to divest all its Entravision 
equity. AAI cmt. at 1 n.2. These points are addressed in this 
response to SBS's comments.
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    Contrary to SBS's assertions, the proposed Final Judgment will 
preserve competition between Entravision and HBC by restricting 
Univision's ability to control or influence Entravision's radio 
business and by significantly reducing Univision's equity stake in 
Entravision. See CIS at 9-13 (describing specific means by which the 
proposed Final Judgment will preserve competition).
    Addressing SBS's first contention, as stated in the CIS, Univision 
and Entravision have a long-standing television relationship in which 
Entravision broadcasts Univision programming on television stations 
owned by Entravision. This relationship is embodied in a pre-existing, 
long-term affiliation agreement that assigns rights and 
responsibilities to both parties and also provides for Univision to act 
as Entravision's national sales representative for television 
advertising. In addition to the fact that this vertical integration may 
yield certain efficiencies and consumer benefits, there is nothing in 
this affiliation agreement that allows Univision to control any 
Entravision radio decision, including decisions regarding the 
acquisition of radio stations. Moreover, the decree itself mandates 
that the two companies act as independent entities and there s no 
reason to believe that Univision will violate the terms of the decree 
(and thereby subject itself to contempt of court proceedings) by using 
its television relationship to influence any Entravision strategic 
decision. The Division found no evidence to suggest that the mere fact 
that a television affiliation agreement exists between them enables 
Univision to unduly influence Entravision's decisions with respect to 
its radio business, the only area in which the combined Univision/HBC 
will compete with Entravision. Finally, Entravision has every incentive 
to operate its radio stations in a fully competitive manner.
    As to SBS's second contention, although Univision will maintain a 
few limited governance rights in Entravision that it held prior to the 
contemplation of this merger, the proposed Final Judgment eliminates 
Univision's ability to exercise these rights over Entravision radio 
decisions. The rights that are retained relate to the two entities' 
television relationship, which is not a basis of concern alleged in the

[[Page 66858]]

Complaint. Univision will retain a modified right to veto a merger or 
transfer of ownership of Entravision. Although this right does impact 
ultimate ownership of Entravision, it cannot be used to veto or 
influence day-to-day decisions relating to radio competition or 
strategic decisions such as the buying or selling of individual radio 
stations.
    With respect to SBS's third contention, while the United States 
traditionally requires defendants to divest business assets as 
expeditiously as possible to maintain their value and ongoing 
capabilities, the relief sought here is for divestiture of stock, the 
retention of which does not raise the same spoliation concerns as the 
retention of business assets raises. Moreover, based on our 
investigation, we concluded that a forced divestiture of equity within 
a short amount of time could cause material hardship to Entravision's 
vitality as a significant competitor (for example, a ``fire-sale'' of 
Univision's stock holdings in Entravision could depress Entravision's 
stock price to the point that it would not be able to issue equity to 
fund potential acquisitions). Such hardship should be avoided or 
minimized if at all possible so as to maintain Entravision as a strong 
competitor to the unified Univision/HBC. The time period relfects a 
balancing designed to minimize the potential harms to competition that 
might arise from a divestiture that proceeds either too slowly or too 
rapidly.
    Finally, responding to SBS's fourth contention, under the 
circumstances of this case, Univision's ability to hold no more than 10 
percent of Entravision's equity will not give it control or even 
significant influence over Entravision's business decisions. The decree 
significantly restrains Univision's ability to participate in 
Entravision's governance. For example, Univision will not be allowed: 
To suggest or nominate any candidate for Entravision's board of 
directors; to have Univision employees serve as Entravision employees; 
to participate in any Entravision board of directors meeting ; to vote 
its equity; and to have access to any of Entravision's competitively 
sensitive information. See Final Judgment, Section VI. Moreover, 
Univision's reduced equity stake in Entravision is not sufficiently 
large to affect competition between them given the market structure of 
the relevant geographic markets at issue.\6\
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    \6\ Cf. Archer-Daniels-Midland, 272 F. Supp. 2d at 8 (crediting 
the Government's statement in Tunney Act proceeding that factual 
investigation showed that two companies operated as independent 
competitors notwithstanding one company's partial equity ownership 
in the other).
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V. Conclusion

    After careful consideration of these public comments, the United 
States has concluded that entry of the Proposed Final Judgment will 
provide an effective and appropriate remedy for the antitrust violation 
alleged in the Complaint and is, therefore, in the public interest. 
Pursuant to Section 16(d) of the Tunney Act, the United States is 
submitting these public comments and this Response to the Federal 
Register for publication. After these comments and this Response are 
published in the Federal Register, the United States will move this 
Court to enter the Proposed Final Judgment.

    Dated this 31st day of October, 2003.

     Respectfully submitted,

------/s/----
William H. Stallings,
Litigation III Section, Antitrust Division, United States Department 
of Justice, 325 7th Street, NW., Suite 300, Washington, DC 20530.

Certificate of Service

    The undersigned certifies that a copy of the foregoing Response to 
Public Comments was served on the following counsel, by electronic mail 
in PDF format, this 31st day of October, 2003:

John M. Taladay, Howerey, Simon, Arnold & White L.L.P., 1299 
Pennsylvania Avenue, NW., Washington, DC 20004-2402;

Neil W. Imus, Vinson & Elkins L.L.P., The Willard Office Building, 1455 
Pennsylvania Avenue, NW., Washington, DC 20004-1008;

and on the following entities by facsimile and U.S. Mail, on this same 
date:

Albert A. Foer, The American Antitrust Institute, 219 Ellicott Street, 
NW., Washington, DC 20008, (202) 276-6002 (phone), (202) 966-8711 
(facsimile);

Claudia R. Higgins, Counsel for Spanish Broadcasting Systems, Kaye 
Scholer LLP, 901 15th Street, NW., Suite 1100, Washington, DC 20005, 
(202) 682-3653 (phone), (202) 682-3580 (facsimile).

------/s/------------------------
William H. Stallings

June 12, 2003

James R. Wade
Chief, Litigation III Section, Antitrust Division, United States 
Dept. of Justice, 325 7th Street, N.W., Suite 300, Washington, DC 
20530

Ce: Chairman Michael Powell, Federal Communications Commission

Re: U.S. v. Univision Communications, Civ. Action No. 1:03CV00758

    Dear Mr. Wade: These constitute the Tunney Act comments of the 
American Antitrust Institute (``AAI'') in regard to the acquisition 
of Hispanic Broadcasting Corporation (``HBC'') by Univision 
Communications Inc. (``Univision'').\1\
---------------------------------------------------------------------------

    \1\ The AAI is an independent 501(c)(3) research, education, and 
advocacy organization described at http://www.antitrustinstitute.org.
---------------------------------------------------------------------------

    The Competitive Impact Statement (``CIS'') in this case appears 
to reflect an unduly narrow interpretation of the Clayton Act. We 
have only minor quarrels with the standard analysis embodied in the 
CIS insofar as it identifies horizontal overlaps in the Spanish-
language radio industry and seeks to eliminate these overlaps 
through divestitures.\2\ Our principal concern is with what the CIS 
fails to address. It should evaluate the consequences of this merger 
in conventional terms in an overall market consisting of Spanish-
language media, examining such traditional criteria as advertising 
effects. In addition, it should evaluate the consumer interest in 
diversity of sources of political and cultural information within 
this more general market.
---------------------------------------------------------------------------

    \2\ For example, we are puzzled by the CIS's failure to explain 
why the Proposed Final Judgment does not require elimination of all 
shareholder rights that Univision currently possesses in Entravision 
and for failing to explain why it allows Univision to retain any 
stock in Entravision. If these are simply the best compromises the 
Division could get, why not say so?
---------------------------------------------------------------------------

I. The CIS Ignores the Elephant in the Room

    The CIS states that HBC is the nation's largest Spanish-language 
radio broadcaster and that Univision is the largest Spanish-language 
media company in the U.S.
    Univision is described as having two Spanish-language broadcast 
networks, Univision and Telefutura, one cable channel, Galavision, 
and several other Spanish-language media operations, including 
Internet sites and services, music recording, distribution, and 
publishing. Univision also has a 30-percent equity share in 
Entravision, which owns or operates 55 mostly-Spanish radio stations 
and 49 television stations that broadcast Univision programming. We 
are not informed of Univision's market share in Spanish-language 
television.
    HBC owns or operates more than 60 radio stations, virtually all 
broadcasting in Spanish. We are not informed of HBC's market share 
in Spanish-language radio. And, of course, we are not informed of 
market shares in any combined Spanish-language media market.
    The Complaint is limited to the provision of advertising time on 
Spanish-language radio stations to advertisers that consider 
Spanish-language radio to be a particularly effective medium. This 
is the only product market deemed relevant. Six metropolitan areas 
are designated as the relevant geographic markets.
    The ``elephant in the room'' whose presence has been mentioned 
in the CIS but given no antitrust importance, is television. We 
recognize that the Antitrust Division has traditionally treated 
radio and television as

[[Page 66859]]

separate markets, in that there are so many sources of information 
for English-speakers that diversity of sources has not appeared to 
rise to an antitrust concern. But here we are potentially face with 
a different situation. Should television and radio directed at a 
Spanish-speaking audience be deemed a relevant market, not on the 
basis of competition for advertising but on the basis of competition 
for the consumer's attention? Even though the merger, after the 
divestiture of overlap radio markets, will arguably not increase 
concentration in either the television or the radio market, will it 
reduce in a significant way the diversity of sources of political 
and cultural information available to the Spanish-speaking consumer? 
This also raises the question of the role of other aspects of 
Spanish-language media, such as newspaper publishing and the 
Internet, which are not discussed in the CIS. An appropriate larger 
Spanish-language market should be analyzed not only in traditional 
(advertising) terms but also in terms of diversity of content 
sources.\3\
---------------------------------------------------------------------------

    \3\ It is true that for much of radio and TV, the consumer is 
not directly charged for consuming the product, although higher 
advertising costs may be passed on to the consumer in product prices 
and the consumer has opportunity costs that represent a kind of 
price to be paid for consumption. Nonetheless, producers of, e.g., 
news, are in competition with one another not only to gain 
advertisers, but to gain the consumer's business. Compare this with 
doctors who compete with one another for their patient's business, 
even though the medical bill may be paid by a third party. Would not 
the importance of consumer choice in medical care justify an 
antitrust case if the only two medical practices in a community were 
to merge, even if the merger would be guaranteed by the doctors not 
to affect the fees charged to health insurers?
---------------------------------------------------------------------------

II. The Hypothetical of the Dominating Voice

    Consider the following hypothetical. There is a substantial 
group of Americans who only speak Spanish and whose sources of 
information are limited to Spanish-speaking TV, Spanish-speaking 
radio, and Spanish-speaking newspapers. A single corporation by 
acquisition gains control over all three media. The head of that 
corporation would be in the position to wield enormous political and 
economic influence by determining what the Spanish-speaking 
community will know and believe. He or she could determine what 
political candidates will gain exposure to the Spanish-speaking 
electorate and whether that exposure will be positive, negative, or 
neutral. Being able to sway a substantial part of the Hispanic vote 
could determine the outcome of local, state, and national elections 
and the owner of this political power would be in position to make 
deals with a political party and with an Administration. The same 
corporation could dramatically influence within the Spanish-speaking 
community which cultural trends, products and services will be 
ignored, denigrated or positively portrayed, thereby having a 
significant impact on the economy. This is the Hypothetical of a 
Dominating Voice.
    Are the assumptions of this hypothetical far removed from the 
reality of the present acquisition?\4\ Aside from the distinction 
that the present merger does not involve newspapers, one can not 
tell from the CIS because the implications of putting the leading 
Hispanic radio and TV stations under the same corporate control is 
not addressed. In the section on Alternatives to the Proposed Final 
Judgment, we are only told that the Department considered a full 
trial on the merits and a proposal by the defendants for placing 
Entravision stock into a long-term trust.
---------------------------------------------------------------------------

    \4\ According to various sources, at least 9% of Hispanics do 
not speak English at all, and at least 15% do not speak the language 
well. Spanish is said to be the language most frequently spoken by 
nearly 75% of adults in the top ten Hispanic metropolitan areas. If 
these figures are approximately correct, there appears to be reason 
to believe that at least a significant section of the Spanish-
speaking community in the U.S. is highly dependent on information it 
receives in Spanish and that English is in these situations an 
inadequate substitute. There are also studies demonstrating that 
commercial information conveyed in Spanish is far more persuasive to 
this group than information conveyed in English, even among those 
who are bilingual. Arguably, the same would be true of political 
information.
---------------------------------------------------------------------------

    Having advised the public that the leading Spanish-language TV 
conglomerate was acquiring the leading Spanish-language radio 
company, the DOJ has the Tunney Act obligation to explain why it has 
made the determination that this highly suggestive scenario is of no 
antitrust concern. The fact that there are relevant antitrust 
markets for Hispanic radio and Hispanic TV does not perclude the 
possibility that in certain circumstances there may also be a larger 
relevant antitrust market, depending on what types of 
anticompetitive effects one is concerned about. There is no 
inconsistency in being concerned both with advertising rates in 
radio markets and diversity of producers/editors of content in a 
more general market for information or specifics categories of 
information.
    Let us be more precise about what information is lacking.
    1. What proportion of Spanish-speaking consumers in the U.S. are 
completely or highly dependent upon Spanish-language sources of 
information? (Call this the ``highly dependent consumer market.'')
    2. What proportion of the highly dependent consumer market pre- 
and post-merger depend on the merging parties as a principal source 
of information?
    3. What options apart from Univision and HBC are available to 
the highly dependent consumer market, pre- and post-merger?
    4. Using a variety of measures (e.g., advertising dollars, 
number of message recipients, contact hours), how substantial are 
these options in comparison to Univision and HBC? What are the 
relevant market shares and HHI's?
    We recognize that these are not easy questions to answer, and 
that the answers will depend on the assumptions made about such 
matters as the definition of `highly dependent'. Nevertheless, with 
answers to these questions and explicitness about the assumptions 
used, one can begin to evaluate whether the Hypothesis of a 
Dominating Voice represents a realistic threat.

III. Protecting the Public Interest Requires Analysis of the Impact of 
This Acquisition on Consumer Choice

    Based on what is said in the CIS, there is no evidence that the 
DOJ has considered anything other than the probability of short-term 
price increases. Why no discussion of such other traditional 
antitrust concerns as the effect on consumer choice? \5\ There have 
been many antitrust cases in which non-price factors were 
considered.\6\ As one example, in United States v. Philadelphia 
National Bank, the Court expressed a concern with possible adverse 
effects of a bank merger on ``price, variety of credit arrangements, 
convenience of location, attractiveness of physical surroundings, 
credit information, investment advice, service charges, personal 
accommodations, advertising, miscellaneous special and extra 
services* * *'' \7\
---------------------------------------------------------------------------

    \5\ Although the Federal Communications Commission has the 
opportunity to stop this merger on ``public interest'' grounds, this 
possibility would not relieve the Department of Justice from fully 
considering legitimate antitrust theories of competitive harm that 
coincidentally have the benefit of protecting First Amendment 
values.
    \6\ See Robert H. Lande, ``Consumer Choice and Antitrust,'' 62 
U. Pitt. L. Rev. 503, 508-512, and cases cited therein.
    \7\ 374 U.S. 363, 368 (1968).
---------------------------------------------------------------------------

    Theories of possible antitrust liability in First Amendment-
related cases come from many reputable sources. For example, Robert 
H. Lande and Neil W. Averitt have argued that consumer choice is no 
less a goal of antitrust than competitive pricing.\8\ Maurice E. 
Stucke and Allen P. Grunes, two DOJ attorneys, have argued that it 
is proper to look beyond price effects to ``the marketplace of 
ideas'' in order to consider non-price dimensions of economic 
competition, such as diminished quality and choice.\9\ Joseph 
Farrell, a former Chief Economist for the Antitrust Division, argued 
that price is merely a synecdoche (a part representing the whole) 
for what we desire from competition (i.e., innovation, quality, and 
price), and that it does not always adequately represent the package 
of desirables.\10\ Robert Pitofsky has argued that non-economic 
political values such as the First Amendment can be relevant and may 
justify a higher degree of scrutiny in certain cases.\11\ FTC 
Commissioner Thomas Leary has argued that diversity is an 
appropriate goal of antitrust.\12\
---------------------------------------------------------------------------

    \8\ ``Consumer Sovereignty: A Unified Theory of Antitrust and 
Consumer Protection Law,'' 65 Antitrust L.J. 713, 715 (1997).
    \9\ ``Antitrust and the Marketplace of Ideas,'' 69 Antitrust 
L.J. 249 at 297 (2001).
    \10\ ``Thoughts on Antitrust and Innovation,'' Speech to the 
National Economists Club, Washington, DC (Jan. 25, 2001), at http://www.usdoj.gov/atr/public/speeches/7402.pdf
.
    \11\ Robert Pitofsky, The Political Content of Antitrust, 127 U. 
PA. L. REV. 1051 (1979).
    \12\ See Thomas B. Leary, ``The Significance of Variety in 
Antitrust Analysis,'' based on a speech delivered at the Steptoe & 
Johnson 2000 Antitrust Conference, on May 18, 2000, and available at 
http://www.ftc.gov/speeches/leary/atljva4.htm:
    ``It does not make sense to simply ignore the issue, however, 
because for many consumers variety may be a more significant issue 
than price. Consider the example of two chains of bookstores (or 
video rental stores) that compete in myriad neighborhoods, with a 
largely local clientele. One of the chains features best sellers or 
the most popular films, the other chain has a more eclectic 
offering; including a wider range of special interest and 
``artistic'' selections. If the first chain were to acquire the 
second, there might well be some local price effects, but the most 
important effect on most consumers (but, not all) is likely to be 
the effect on variety if the combined store adopts the buyer's 
business model.
    ``This reality does not mean that the merger should be attacked 
on that account. It might well be, for example, that it is a lot 
easier for a potential new entrant to provide variety competition 
for the merged enterprise than it would be to provide price 
competition. What it does mean is that an initial focus on a 
hypothetical price effect, according to traditional Guidelines 
analysis, might miss the most important questions.''

---------------------------------------------------------------------------

[[Page 66860]]

    We are told in the CIS that the Court may only review the remedy 
in relation to the violations that the U.S. has alleged in its 
Complaint. It might be argued that the DOJ decision not to include a 
general Spanish-language media market in its complaint is the end of 
the story. But, as the CIS quotes the Ninth Circuit, ``The court's 
role in protecting the public interest is one of insuring that the 
government has not breached its duty to the public in consenting to 
the decree. The court is required to determine not whether a 
particular decree is the one that will best serve society, but 
whether the settlement is ``within the reaches of the public 
interest.'' United States v. Bechtel Corp., 648 F.2d 660, 666 (9th 
Cir. 1981).'' Because in practice a complaint is drawn up by the DOJ 
at the same time as a settlement order is drafted, the complaint is 
to some degree, in reality, not merely the cause of the settlement, 
but the result of the settlement. Although we do not want courts to 
displace the DOJ role of determining what goes into a complaint, a 
settlement that does not deal with obvious antitrust issues should 
not be approved until the CIS adequately explains what is going on.
    In this acquisition, the Complaint includes facts about the two 
companies that would suggest to many observers that there may be 
critically important competitive issues that go beyond the radio 
market. If the Tunney Act is to protect the public interest, 
including the perception that antitrust settlements are not based on 
political considerations, both the public and the court must be 
provided with sufficient information to determine whether the 
complaint itself was unreasonably limited.
    The legislative genesis of the Tunney Act was concern that 
settlements might be made on the basis of political rather than 
strictly professional analysis. To expand the Hypothetical of a 
Dominating Voice, if the ownership of the merging parties happened 
to be of the same political party as a particular national 
Administration, allowing the merger to proceed, subject only to a 
mild radio divestiture, with the potential of political gain for the 
political party, this would be the type of politicization of 
antitrust that the Tunney Act was intended to remove.
    We certainly do not charge that this specific merger is being 
approved for political gain, but are trying to make a larger point. 
In order to protect antitrust from perceptions of political 
influence, it is essential that the Tunney Act's public interest 
oversight be fully informed, with all relevant major antitrust 
theories fully ventilated in the CIS.

     Sincerely,

Albert A. Foer
President.

July 18, 2003

James R. Wade
Chief, Litigation III Section, Antitrust Division, U.S. Department 
of Justice, 325 Seventh Street, NW., Suite 300, Washington, DC. 
20530

Re: United States v. Univision Communications Inc., Civ. Action No. 
1:03CV00758

    Dear Mr. Wade: Pursuant to the Antitrust Procedures and 
Penalties Act, 15 U.S.C. Sec. Sec.  16(b)-(h), Spanish Broadcasting 
System, Inc. (``SBS'') respectfully submits its comments on the 
proposed Final Judgment filed on March 26, 2003, by the Antitrust 
Division of the U.S. Department of Justice (``Department'') in 
connection with the proposed acquisition of Hispanic Broadcasting 
Corporation (``HBC'') by Univision Communications Inc. 
(``Univision'').
    A Univision and HBC combination raises serious antitrust issues 
that the Department's proposed Final Judgment fails to address. The 
draft decree leaves unremedied significant harm to competition and 
consumers that surely will result from the combination of the 
dominant firm in Spanish-language radio (HBC) with the dominant firm 
in Spanish-language television (Univision). Even if, as the 
Department of Complaint posits, Spanish-language radio and 
television belong in separate markets, the remedy the Department 
selected fails to solve the competitive problem it identified: 
Univision's significant influence over one of HBC's closest 
competitors in Spanish-language radio, Entravision Communications 
Corporation (``Entravision''). The settlement only partially and 
incompletely disentangles Univision and Entravision. Moreover, the 
inadequate remedy the Department selected requires six years to 
implement, a period during which the transaction will continue to 
harm competition and consumers. Accordingly, the Court should reject 
the proposed Final Judgment as not within the reaches of the public 
interest.
    1. SBS initially notes its disagreement with the Department's 
decision to confine its analysis to the product market for the 
``provision of advertising time on Spanish-language radio'' (Compl. 
] 14). The Department defined this market because ``[m]any local and 
national advertises'' would ``not turn to other media, including 
radio that is not broadcast in Spanish, if faced with a small but 
significant increase in the price of advertising time on Spanish-
language radio'' or its equivalent (Id. emphasis added. The 
Department, however, provides no justification for ignoring the many 
other advertisers for whom Spanish-language radio and television are 
good substitutes.\1\ From the perspective of these advertisers, an 
HBC/Univision combination is effectively a merger to monopoly, for 
it combines the dominant Spanish-language radio broadcaster (HBC) 
with the dominant Spanish-language television broadcaster 
(Univision).\2\ This Spanish-language broadcasting market (defined 
from the perspective of advertisers for which Spanish-language 
television and radio are good substitutes) easily coexists with a 
Spanish-language radio-only market (defined form the perspective of 
other advertisers). The Department's Complaint and Competitive 
Impact Statement are entirely silent on why the Department has 
chosen to ignore the interests of advertisers who are vulnerable to 
the enhanced market power HBC and Univision will enjoy as a result 
of their combination.
---------------------------------------------------------------------------

    \1\ Letters expressing the views of such advertisers can be 
found in a number of letters filed with the Federal Communications 
Commission. See, e.g., Letter from Phillip L. Verveer et al., 
Attorneys Willkie Farr & Gallagher to Marlene H. Dortch, Secretary, 
Federal Communications Commission (June 2, 2003) (attachments), 
available at http://gullfoss2.fcc.gov/prod/ecfs/comsrch_v2.cgi 
(proceeding No. MB02-235) (attached hereto as Exhibit A). These 
letters demonstrate that there are many advertisers for whom the 
relevant market for analyzing this transaction is not properly 
confined to Spanish-language radio.
    \2\ HBC's 2003 10-K explains that it ``is the largest Spanish-
language radio broadcasting company.'' Hispanics Broadcasting Corp. 
Form 10-K (Mar. 31, 2003), available at http://www.sec.gov/Archives/edgar/data922503/000104746903011344/a2107188z10-k.htm.
 Univision 
``is the dominant broadcaster of Spanish-language television in the 
United States, capturing an approximate 81% audience share.'' 
Entravision Communications Corporation Annual Report for 2001, at 
25, available at http://www.entravision.com. HBC's and Univision's combined 
dominance is illustrated by letters and charts filed with the 
Federal Communications Commission. See Letter from Phillip L. 
Verveer et al., Attorneys Willkie Farr & Gallagher to Marlene H. 
Dortch, Secretary, Federal Communications Commission (June 11, 2003) 
(attached as Exhibit B) and Letter from Andres Jay Schwartzman, 
President and CEO, Media Access Project to Marlene H. Dortch, 
Secretary, Federal Communications Commission (June 9, 2003) 
available at http://gullfoss2.fcc.gov/prod/ecfs/comsrch_v2.cgi 
(proceeding No. MB02-235) (attached as Exhibit C).
---------------------------------------------------------------------------

    Even accepting that Spanish-language radio and Spanish-language 
television belong in separate markets, SBS disagrees with the 
Department's conclusion that the only competitive harm from this 
acquisition flows from Univision's ownership of a significant stake 
in both Entravision and HBC. Specifically, Univision's acquisition 
of the dominant Spanish-language radio broadcaster, HBC, will give 
Univision, the dominant Spanish-language television broadcaster, an 
enhanced inventive to refuse to deal with or discriminate against 
Spanish-language radio competitors (such as SBS) who seek to 
advertise through Univision. Advertising on television is important 
for promoting Spanish-language radio stations and thus for 
surmounting the high entry barriers in Spanish-radio language that 
the Complaint identifies (Compl. ]27).
    Moreover, after the merger, Univision/HBC will have the power to 
insist that Spanish-

[[Page 66861]]

language advertisers who wish to advertise through both radio and 
television purchase time from both Univision and HBC rather than 
from the merged firm's rivals, including SBS. Such difficult-to-
detect and subtle tying arrangements or refusals to deal--realistic 
possibilities here--impair competition. See, e.g., Lorain Journal 
Co. v. United States, 342 U.S. 143 (1951). It is unrealistic to 
expect that, following the acquisition, advertisers will stand up to 
the HBC/Univision colossus and challenge such practices themselves. 
The Clayton Act properly is invoked to restrain these restraints in 
their incipiency.
    The Department's failure to grapple with any of the competitive 
problems posed by combining the dominant Spanish-language radio 
broadcaster with the dominant Spanish-language television 
broadcaster should cause this Court to conduct an especially careful 
Tunney Act review. To be sure, that review is largely confined to 
determining whether the remedy the Department selected is a 
reasonable one for the competitive problem identified in the 
Department's Complaint. See United States v. Microsoft Corp., 56 
F.3d 1448, 1461-62 (D.C. Cir. 1995). But when as here, the 
Department has exercised its prosecutorial discretion to tailor its 
Complaint narrowly to the remedy selected, the Court must pay 
special attention to ensure that the fit between remedy and 
Complaint is indeed within the reaches of the public interest. As 
explained below, the fit here is very poor indeed.
    2. The competitive problem the Compliant identifies is that 
Univision's significant control over, and its equity stake in, 
Entravision will cause HBC and Entravision to pull their competitive 
punches once HBC falls under Univision's control. The proposed Final 
Judgment seeks to preserve HBC/Entravision competition by requiring 
Univision to reduce its equity stake in Entravision and to 
relinquish certain rights Univision holds to control or influence 
Entravision's competitive activities. For a number of reasons, the 
proposed Final Judgment will not adequately protect purchasers of 
radio advertising from the adverse consequences of Univision's 
proposed acquisition of HBC.
    First, the Department's requirement that Univision surrender 
certain rights and dilute its stock holding in Entravision fails to 
address the most significant way in which Univision influences 
Entravision: through the Univision/Entravision affiliate agreement. 
As the Department's Complaint explains, pursuant to this ``long-
term'' agreement, ``Extravision broadcasts Univision programming 
from Univision's two networks on 49 television stations. As part of 
this affiliation agreement, Univision serves as Entravision's sole 
representative for the sale of television advertisements sold on a 
national basis'' (Compl. ] 23). This agreement is Entravision's 
lifeblood. From it, Entravision obtains key programming and 
significant advertising revenue. As Entravision's 2001 Annual Report 
explains, ``Entravision has benefited enormously from a close 
relationship with Univision'' which is ``the dominant broadcaster of 
Spanish-language television in the United States.'' \3\ A recent 
Entravision securities filing also strikingly illustrates the 
importance of the affiliate agreement: Of an overall increase of 
$1.5 million in revenue for Entravision over the prior year, ``$1.4 
million was attributable to our Univision stations and 0.1 million 
was attributable to our Telfutura stations [a Univision 
network].''\4\
---------------------------------------------------------------------------

    \3\ Entravision Communications Corporation Annual Report for 
2001, at 25, available at http://www.entravision.com.
    \4\ Entravision Communications Corporation 10-Q, at 7 (May 12, 
2003), available at http://www.entravision.com.
---------------------------------------------------------------------------

    The affiliate agreement plainly will give Entravision 
significant reason to pull its competitive punches against HBC once 
HBC is acquired by Univision. The Department recognizes this; for 
the proposed Final Judgment prohibits Univision from ``using or 
attempting to use any rights or duties'' under the affiliate 
agreement ``to influence Entravision in the conduct of Entravision's 
radio business'' (Proposed Final Judgment Sec.  VI.A.5). This 
remedy, however, is a mirage. Univision need not actually use the 
affiliate agreement to influence Entravision's behavior. The mere 
fact that Univision might deny Entravision rights under the 
agreement, or even create disputes under the agreement, will cause 
Entravision to compete less vigorously with HBC.\5\ Strikingly, the 
Department has rejected such ``behavioral'' remedies in other 
circumstances, even when punishable by contempt if violated.\6\ The 
Competitive Impact Statement provides no basis for believing that a 
``behavioral'' remedy relating to the affiliate agreement will be 
effective here. By contrast, blocking Univision's acquisition of HBC 
will preserve competition.
---------------------------------------------------------------------------

    \5\ See, e.g., Letter from Arthur V. Belendiuk, Counsel to 
National Hispanic Policy Institute, Inc., to W. Kenneth Ferree, 
Esq., Chief, Media Bureau, Federal Communication Commission (July 
11, 2003) (attached as Exhibit D).
    \6\ For instance, the Department rejected Northwest Airline's 
suggestion that creating a voting trust for the stock it acquired in 
Continental Airlines would prevent a diminution of competition 
between the two airlines. The Department explained: ``Courts are 
understandably loathe to rely on `behavioral rules' as a substitute 
for divestiture, even where the rules are court-ordered.'' Trial Br. 
of the United States at 18, United States v. Northwest Airlines 
Corp. (No. 98-74611, filed Oct. 24, 2000) (emphasis added), 
available at http://www.usdoj.gov/atr/cases/f7200/7288.htm.
---------------------------------------------------------------------------

    Second, the proposed Final Judgment would allow Univision to 
retain shareholder rights to veto major strategic decisions of 
Entravision, including any plans i) to merge, consolidate or 
reorganize all or substantially all of its assets; ii) to transfer a 
majority of its voting power; iii) to dissolve, liquidate or 
terminate itself; as well as iv) to dispose of any interest in any 
FCC licenses relating to television stations that are Univision 
affiliates (Competitive Impact Statement (``CIS'') at 11). Each of 
these actions that Univision can veto may have significant 
competitive impact. If, for example, Entravision wanted to sell a 
radio station to, or merge with, a rival, the proposed Final 
Judgment leaves Univision with the power to prevent possible 
competition-enhancing transactions. It plainly harms rather than 
benefits competition to require Entravision to obtain its rival's 
approval to undertake such actions. The Department should not hinder 
the competitive activities of third parties through consent 
judgments.
    Third, the proposed Final Judgment would require Univision to 
reduce its equity stake in Entravision over a very lengthy period: 
to no more than 15 percent by March 2006 and to no more than 10 
percent by March 2009. The Department acknowledges that this 
divestiture is necessary to preserve competition; for Univision's 
significant stake in Entravision means that Univision/HBC ``would 
receive some significant benefit even on sales it loses to 
Entravision'' (CIS at 12). The Department nonetheless is willing to 
tolerate the lessened competition and consumer harm for as long as 
six years. Although the rapid sale of stock may be difficult to 
accomplish and impose costs upon Univision, the costs of 
accomplishing the transaction should not be borne by consumers. If 
owning the stock is competitively harmful, Univision should be 
required to sell the stock as expeditiously as possible. The 
Department's explanation for its unprecedented six-year divestiture 
period--that requiring a faster sale by Univision protects against 
``adversely affecting Entravision's ability to raise capital'' (CIS 
at 12)--fails to persuade. If the Department's reasoning were valid, 
it would always permit divestitures to be made over the course of 
several years; but that is obviously not the Division's policy. And 
with good reason: The longer the merging parties hold assets that 
must be divested to preserve competition, the longer the period 
during which competition and consumers suffer. The speculative fear 
that Entravision's ability to raise capital will be harmed by 
requiring a shorter divestiture period is no warrant for inflicting 
competitive harm on advertisers and others.
    Fourth, the divestiture the Department negotiated is 
insufficient to preserve competition. If the proposed Final Judgment 
is approved, Univision will continue to hold a ten percent stake in 
Entravision. Moreover, the Complaint alleges that Entravision and 
HBC have combined market shares ranging from 70 percent to as much 
as 95 percent in the several geographic markets (Compl. ] 21). It is 
plain that Univision will still financially benefit from every 
advertising dollar HBC loses to Entravision and, therefore, that 
Univision/HBC will compete less vigorously than if Univision's 
equity interest were divested completely. The Competitive Impact 
Statement fails to explain why a complete divestiture is 
inappropriate here.
    Thus, for several reasons, the proposed Final Judgment leaves 
Entravision entangled with Univision in ways that will seriously 
harm competition. The Court accordingly should find that the 
Department's proposed Final Judgment is not within the reaches of 
the public interest.
     Respectfully submitted,
Claudia R. Higgins
Kaye Scholer LLP
901 15th Street, NW., Suite 1100, Washington, DC 20005, (202) 682-
3653, Counsel for Spanish Broadcasting System, Inc.


[[Page 66862]]


    Dated: July 18, 2003.

    Exhibits Attached.

United States v. Univision Communications, Inc., Civ. Action No. 
1:03CV00758, Comments on Behalf of Spanish Broadcasting Inc., July 18, 
2003, Exhibits A-D

Exhibit A

June 2, 2003

Marlene H. Dortch
Secretary, Federal Communications Commission, 445 12th Street, SW., 
Washington, D.C. 20554

Re: Applications for Transfer of Control of Hispanic Broadcasting 
Corp., and Certain Subsidiaries, Licensees of KGBT (AM, Harlingen, 
Texas et al. (Docket No. MB 02-235, FCC File Nos. BTC-20020723ABL, 
et al.)
    Dear Ms. Dortch: Spanish Broadcasting System, Inc. (``SBS'') has 
asked more than twenty advertising agencies and advertisers with 
special knowledge of the Hispanic community to address the nature 
and extent of the media marketplace in which they conduct their 
business. Their responses are attached.
    All of the responses indicate that English-language broadcasting 
and Spanish-language (Hispanic) broadcasting constitute separate 
markets. Many of them observe that the Spanish-language broadcasting 
market includes both radio and television.
    These propositions are fundamental to the Commission's analysis 
of the proposed Univision Communications, Inc.--Hispanic 
Broadcasting Corp. merger. The agency and advertiser perspectives on 
the market address both competition and diversity, just as the 
Commission must in connection with its public interest determination 
on the permissibility of requested transfers.
    The conclusions of the agency and advertiser executives conform 
with those the Commission has reached in other contexts. The 
Commission often and recently has recognized the existence of a 
separate Spanish language broadcasting market. It also has 
recognized that television and radio are part of the same product 
market for fundamental Communications Act purposes.
    The separate nature of the Hispanic broadcasting market means 
that the FCC may not rely exclusively on its cross-ownership and 
multiple ownership rules in making its public interest 
determination. These heuristic devices may be a sufficiently 
reliable basis for decision where transfers implicate majority-
language broadcasting. Their reliability cannot be assumed where 
minority-language broadcasting is concerned. In this case, the 
proposed merger moves the Hispanic market very decidedly in the 
direction of monopoly. Both the statute and ordinary prudence 
require that the decision in this matter be the product of careful 
analysis of record evidence and that it be reflected in a reasoned 
explanation.
    In this regard, SBS will respond to the many factual assertions 
contained in the May 14, 2003, Univision submission shortly. 
Unsurprisingly, we do not find Univision's propositions probative of 
the substantive issues nor do we find Univision's legal and policy 
points relevant to the resolution of this important matter. (We note 
that the submission, inexplicably, is not posted on the ECFS site 
and thus remains unavailable to anyone seeking to follow the 
proposed transaction through the Commission's Web site).
    Finally, we note the unusual circumstance presented by today's 
Commission vote fundamentally changing its principal media ownership 
regulations (following the most exhaustive and comprehensive review 
of [the] broadcast rules ever undertaken'') and the pendency of this 
major broadcasting transfer application. As we are able to learn the 
details of the new ownership rules, we will submit our analysis of 
their significance for the Univision proposal.
     Respectfully submitted,
/s/ Philip L. Verveer
Philip L. Verveer
Sue D. Blumenfeld
Michael G. Jones
David M. Don
WILLKIE FARR & GALLAGHER, 1875 K Street NW, Washington, DC 20006, 
Telephone: (202) 303-1000, Facsimile: (202) 303-2000

and

Bruce A. Eisen
Allan G. Moskowitz
KAYE SCHOLER FIERMAN HAYS & HANDLER, LLP, 901 15th Street NW, Suite 
1100, Washington, DC 20005
Attorneys for Spanish Broadcasting System, Inc.

cc: Chairman Powell, Commissioner Abernathy, Commissioner Copps, 
Commissioner Martin, Commissioner Adelstein, Susan Eid, Stacy 
Robinson, Jordan Goldstein, Catherine Crutcher Bohigian, Johanna 
Mikes, Ken Ferree, David Brown, Scott R. Flick, Counsel for 
Univision Communications, Inc., Roy R. Russo, Counsel for Hispanic 
Broadcasting Corp.

May 27, 2003

To Whom It May Concern

    Dear Sir or Madam: I have been involved in the Hispanic Market 
USA since 1966 and have owned my own firm for over 31 years.
    During that time, I have placed national and local ads for a 
very wide variety of companies, government agencies, and other 
public and private institutions, large and small including Coca 
Cola, McDonald's, Procter & Gamble, General Motors, Anheuser Busch, 
Castrol, Pizza Hut, Burger King to mention just a few. I am also the 
single largest individual receiver of Creative Awards in the 
industry, and was placed in the Hispanic Market Hall of Fame (only 4 
recipients so far), in 2002.
    I have been asked to address two issues:
    First: Is there a separate advertising product market defined by 
the Spanish language? In other words, are Spanish language media and 
English language media substitutable for one another?
    The answer is an unequivocal: NO! English language media and 
Spanish language media are NOT substitutable. There definitely is a 
separate advertising product market defined by the Spanish language.
    Let Me explain: One could safety say that for the first time in 
U.S. History, there has been a CATERING to Spanish language, not so 
much out of a sociological sense of responsibility, but out of the 
dire necessity of the large and small American corporations to open 
new markets to replace maturing ones in the U.S. They do this by 
attracting an ever growing group of people (the largest single 
minority in the U.S.) which could not be otherwise addressed. There 
are 27 Latin American countries with endless political and economic 
travails, which only serve to increase the CONTINUOUS, NON-STOPPING 
Immigration WAVE to the LAND of opportunity.
    Second: Are Spanish language video (television and cable) and 
radio substitutes for one another?
    I have no doubt that Spanish and English language media are in 
different markets from the perspective of advertising buys. A small, 
but significant non-transitory increase in price in English language 
media will not induce the advertisers with whom I am familiar to 
shift their advertising to Spanish language media. Instead, they 
will absorb the price increase.
    The reverse also is true. The reason is that for many products 
the target audience simply cannot be reached unless it is addressed 
in their familiar language. Among other obvious bits of evidence, 
the major television networks virtually never present a commercial 
in Spanish (or any language other than English, for that matter).
    Spanish language video and radio are substitutes for many 
advertisers. Many advertise on both. Many sponsors are quite willing 
to allocate and reallocate percentages of their ad budgets to video 
or to radio depending upon shifts in the price and ratings of one or 
the other. A small, but significant increase in price in one will 
shift purchases to the other for many products.
    It is very common in negotiations over advertising rates, for 
agencies and clients to make the claim, for example, that if 
concessions in price are not made, the advertising will be placed on 
the other medium, video or radio as the case may be.
    I hope that you find this information helpful. I would be happy 
to discuss it at greater length if you would find it useful.
    Sincerely,
Castor A. Fernandez,
President/Creative Director, Castor

May 27, 2003

The Honorable Michael K. Powell
Chairman, Federal Communications Commission, Washington, DC 20554

    Dear Mr. Chairman, My name is Eduardo Caballero, President/CEO 
of Caballero TV & Cable Sales, an independent-Spanish TV stations 
sales representative.
    I started selling Spanish Media in February of 1962, as a local 
salesman for Radio Station WBNX, New York City. I became its General 
Sales Manager that same year.
    I resigned in March of 1968 to become General Sales Manager of 
Spanish TV Station WXTV, Channel 41, New York Market (licensed to 
Paterson, NJ).
    Also in 1968, I became a VP and Director of National Sales for 
Spanish International

[[Page 66863]]

Network (S.I.N., the predecessor of Univision), with affiliate 
stations in San Antonio, Los Angeles, Fresno, New York, Miami, San 
Francisco and Chicago.
    In 1973 I resigned that position, as the first--and only--
Hispanic to be in charge of national sales for any ``national 
network'' in U.S., to start the first Spanish Radio National Sales 
Representative in this Country (Caballero Spanish Media, Inc.), 
representing over 140 Spanish radio stations.
    Amongst stations represented by CSM were those owned and 
operated by Heftel Broadcasting, Tichenor Broadcasting Co. (both of 
these Companies were the predecessors of the actual Hispanic 
Broadcasting Company--HBC), Spanish Broadcasting System, Liberman 
Broadcasting, Excel Broadcasting, the Z Network, etc.
    CSM was sold in 1995 to the Interep Company (a General Market--
English language--radio representative). Interep has kept CSM, to 
this day, as a separate Spanish division.
    I remained with the Company until 1998, when I undertook the 
creation of a TV (low power stations) Network--MasMusica TeVe--to 
broadcast Spanish music, 24/7. At the present moment this 
programming is broadcast over 21 Spanish TV stations within the U.S.
    Most recently, since there is no any advertising sales 
organization representing independent TV stations--including mine 
and others--I have started a new--and only--independent Spanish TV 
representative sales organization, Caballero TV & Cable Sales.
     I have been selling time for Spanish Media in United States 
(both radio and TV), for the last 42 years, uninterruptedly. I can 
say, unequivocally and based on my professional experience, the 
following:
     Unless an advertiser makes the decision to promote its products 
or services to the Hispanic consumer, in Spanish and, subsequently, 
creates a ``Hispanic Budget'', there will not be schedules placed on 
any Spanish Media.
     Unfortunately, that ``Hispanic Budget'', when it does exist, 
amounts, at best, to a 1 to 3% of the ``general market budget'' 
(although Hispanic consumers represent about 14% of the total U.S. 
population, according to the Census Bureau). That brings, as a 
result, the situation where many of those advertisers' Hispanic 
budgets cannot afford both television and radio schedules.
     Many of those advertisers are willing to allocated and 
reallocate parts of their Hispanic budgets to TV or to radio, 
depending on changes of rates and the ability of a particular medium 
to negotiate those rates. The fact is that Spanish language TV and 
radio are substitutes for many advertisers.
     Every advertiser in the U.S. considers this to be a SEPARATE 
AND DISTINCTIVE MARKET. In fact, most, if not all, of the still very 
few advertisers who have decided to advertise in the Spanish 
language have, first, funded a SPANISH ADVERTISING BUDGETS, then 
created a SPANISH MARKETING DEPARTMENT and, lastly, chosen a SPANISH 
ADVERTISING AGENCY. Without those three elements, the Spanish 
speaking consumer does not play any role in the marketing plans of 
ANY of the hundred of national advertisers who are NOT advertising 
in the Spanish language, simply because the Spanish market is not 
integrated in their general market strategy, and as they say, ``it 
has to be treated differently'', language and otherwise.
     Many times we were confronted with situations when general 
market agencies placed schedules on some of our represented 
stations; when they found out that we were broadcasting in Spanish, 
they canceled that schedule because, according to them, they were 
buying ``radio'' not ``Spanish radio'' or they were buying 
``television'' not ``Spanish television''.
     Still, today, we confront many situations where most national 
(or general market) advertisers do not buy any Spanish language 
media because they (the advertisers) are not ``prepared'' to go into 
the Spanish market.
     Another point I want to make is the following. A General Market 
Network (radio or television), to be considered as such, has to 
guarantee advertisers to cover about 80% of the total U.S. 
population. In the case of Spanish Networks, they are required to 
cover ONLY ABOUT 80% OF THE HISPANIC POPULATION. Certainly, those 
Hispanic ADIs where about 80% of the National Hispanic population 
resides do not even get close to cover 80% of the General Population 
of the U.S. This marks another very clear separation between the 
General and the Spanish Markets.
     If I can be of any help to this Commission, please, do not 
hesitate to have any of your associates to contact me.
     Sinceramente,

Eduardo Caballero, Personal Bio

     Eduardo Caballero was born in the Oriente Province, Cuba. Went 
to school in Sagua de T[aacute]namo and Havana, where he obtained a 
Degree as Doctor in Law from the Jose Marti University.
     Started his own law firm with his wife, Raquel Miller-
Caballero, also a lawyer, and practiced that profession in Havana, 
until the end of 1961, when, in view of the political situation in 
his country, decided to come to the United States as a political 
refugee.
     Under a program of relocation sponsored by the U.S. Government, 
he and Raquel went, first, to Dallas where he worked, 
simultaneously, at a restaurant, as a host, and at a department 
store, as a salesman; later on, they went to New York where, in 
1962, Eduardo started his career in broadcasting, landing a job as a 
salesman for a local Spanish radio station (WBNX), through the 
offices of a client of his former law firm in Cuba.
     Soon he became the first Hispanic in USA to hold the position 
of General Sales Manager of a radio station.
     In 1968 he helped to create what was known as Spanish 
International Network (SIN), today Univision. He was appointed first 
General Sales Manager for WXTV, Channel 41, New York and soon after 
that, in 1969, he became an Executive VP and Director of National 
Sales for the Network.
     In March of 1973 he resigned his position, and, again, together 
with wife Raquel, started Caballero Spanish Media Inc., the Spanish 
media sales representative in this country.
     His company started representing four Spanish TV stations (all 
of the independent Spanish stations existing at that time), and 
fourteen Spanish radio stations (out of less than 35 existing 
stations). Eduardo also syndicated a weekly Spanish movie, which ran 
in twenty-nine television stations, almost all of them general 
market stations, using Ricardo Montalban as the presenter, and with 
the sponsorship of the Bristol Myers company.
     In 1976 Eduardo decided that he should be involved exclusively 
in radio, where he saw the greatest potential for C.S.M. His company 
grew to represent over 140 Spanish radio stations from coast to 
coast, covering over 95% of the Hispanic consumers in the country, 
opening opportunities for new radio operators and hundreds of jobs 
for both, Hispanics and non-Hispanics.
     In 1995, Eduardo sold C.S.M. to Interep, and remained with the 
Company until the beginning of 1999, when he left work on his new 
project, Caballero Television, owner and operator of twelve LP 
television stations, all of them located in Central California and 
Texas. He created his own network--Mas M[uacute]sica Teve-
broadcasting 24 hours of music videos. Caballero Television has 
offices in Dallas, New York Miami and Bakersfield, CA. Recently, the 
Broadcasters' Foundation presented to Eduardo, The American 
Broadcast Pioneer Award, as the first Hispanic to receive this 
award.
     In September 2002, Eduardo was honored by the American 
Advertising Federation with the Mosaic Award.
    Eduardo lives with his wife of 41 years, Raquel, in Miami, 
Florida. They have a daughter, Rosamaria, also a lawyer, who 
graduated from Georgetown Law School. Married, with two daughters, 
Sofia and Paloma, she lives, with husband P.J. Stafford, in New York 
City.
    Eduardo is, or has been, involved in the following 
organizations:
    Chairman-founder of the Hispanic arm of the Media Partnership 
for a Drug Free America.
    Member of the U.S. Postal Service Marketing Advisory Board.
    Founder of the Spanish Radio Association of America.
    Former Member of the Board of the Stations Representative 
Association (S.R.A.).
    Former Member of the Board of Directors of the Advertising 
Counsel.
    Former Member of the Arbitron Bi-lingual Advisory Committee.
    Founder of the Association of Hispanic Advertising Agencies 
(A.H.A.A.).
    Former Member of the Board of Trustees of the National Hispanic 
University (San Jose, CA).
    Former Member of the Board of the National Drop-out Prevention 
Foundation.
    He is also a proud member of the N.A.B. and of the Pioneer 
Broadcasters, among many other organizations.

    Hi Albert, as per your request, following are my thoughts on why 
the Hispanic market should be treated separately from the general 
market. As you know, I have over 15 years in the industry. Most of 
these years have

[[Page 66864]]

been with agencies specializing in Hispanic marketing and 
advertising. I am currently with Diario Las Americas, South 
Florida's first Hispanic daily newspaper.
    The U.S. Hispanic media market should be treated separately from 
the non-Hispanic media market. Hispanics differ in many ways from 
non-Hispanics:

[sbull] Larger households 3.4 vs. 2.5.
[sbull] Hispanics are younger 27.6 vs. 37.2.
[sbull] More HH with children 18 58% vs. 34%.
[sbull] Religion is more important in their lives, 80% vs. 46%.
[sbull] Language preference--over 90% of Hispanics speak some 
Spanish, over 70% prefer to speak Spanish at home and over 50% 
prefer to speak Spanish on social occasions.

    Sources: Nielsen Universe Estimates 2002, Strategy Research, 
Yankelovich 2000, Center for Media Research 10/7/02.
    Advertising in Spanish-language is proven to be far more 
effective with Hispanics. According to the Roslow 2000 study on 
advertising effectiveness among U.S. Hispanics: ad recall rises 61% 
for those viewing in Spanish, communication is 57% more effective 
and persuasion is 5 times greater.
    Marketing to Hispanics should not only be in Spanish-language 
but should also be culturally relevant. Translation of general 
market copy is not an effective or efficient approach for delivering 
the target. Advertising should be culturally relevant and dialect 
sensitive. Agencies specializing in Hispanic advertising and 
marketing understand that accents and terminologies differ based on 
country of origin. They exercise sensitivities to these differences 
when creating an advertising message. Important, as well, is not to 
stereotype this market.
    Spanish language preference has not decreased throughout the 
years as many had predicted. It has actually increased. One 
contributor to the increase could be the increasing acceptance of 
Spanish-language, as well as, what many are calling `retro-
acculturation.' Latinos are feeling more comfortable with their 
culture and the use of Spanish-language. Great contributions by 
Latinos in the areas of sports, entertainment, and business have 
laid out a new dynamic for Latino youths. They are more proud to be 
a part of the Hispanic community and to be considered Latinos.
[GRAPHIC] [TIFF OMITTED] TN28NO03.004

    The Hispanic market is separated from general market by language 
and culture. Hispanics have different viewing and listening 
patterns. That is why the top rated programs (overall--Hispanic & 
general market--source Nielsen Hispanic Station Index) on television 
for Hispanics are `novelas' on Univision; and why the top radio 
stations in major Hispanic markets are Hispanic stations. Some 
Hispanics can be reached through general market advertising efforts 
(spill), but the effectiveness and impact of the message is not the 
same (per Roslow 2000). Hispanics are more likely to buy brands that 
advertise to them in Spanish-language. Many advertisers have become 
saver to the fact. In November Burger King Inc. set aside swathes of 
aisle space in nearly 1,000 of its stores for videos dubbed in 
Spanish. In December, Kmart Corp. announced the launch of an apparel 
line named after Mexican pop star Thalia. P&G created a magazine-
style direct mail piece specific to Hispanics.
    Some companies early to see the potential are cashing in Sales 
of Ford brand cars and light trucks to the Hispanic market grew 40% 
in the past five years. After the company started using Mexican 
bombshell Salma Hayek to market its Lincoln brand last year, 
Hispanic purchases of Lincoln Navigators grew 12%, while sales to 
non-Hispanics were flat, says a Ford Motor Co. spokeswoman. At Honda 
Motor Co.'s American arm, Latino purchases grew to 8.4% of all 
vehicles sold last year from about 7% five years ago.
    With the nation's economy as a whole stagnating, the U.S. 
Hispanic population is emerging as one of the most promising motors 
for growth. Driving the growth is the population's higher-than-
average birth rate and immigration. Additionally, Hispanic household 
incomes are starting to catch up with national averages. The Global 
Insight report estimates that Hispanic household incomes should grow 
from 77% of the national average in 2000 to 82% by 2020. The Selig 
Center for Economic Growth at the University of Georgia says 
Hispanic disposable income will reach $926 billion in 2007, up some 
60% from $580.5 billion last year. Meanwhile, non-Hispanic buying 
power will grow less than 28%, to $8.9 trillion. The Selig Center 
estimates that in five years Hispanics will account for 9.4% of the 
nation's disposable income, up from 5.2% in 1990.
    Both television and radio have seen the growth. Advertising on 
Spanish-language TV grew 16.5% last year, over twice the 7.6% growth 
by all broadcast TV, estimates Gordon Hodge of investment bank 
Thomas Weisel Partners. Today there are 8 times the number of 
Hispanic radio stations than there were 20 years ago.

1980: 67 Hispanic Radio Stations
2002: 600 Hispanic Radio Stations

    Get the picture? It seems some major companies have, and it sell 
$$$. They understand the importance of the Hispanic market. They see 
it as a separate market, and so should we.
     Sincerely,
Leticla R. Pelaez
Director of Advertising

May 22, 2003

Federal Communications Commission
445 Twelfth Street South, Washington, DC. 20554

    To Whom It May Concern, My name is Raquel Tomasino, I am Media 
Director of Castells & Associados and have been asked to comment on 
whether the U.S. Hispanic media market is a separate market for the 
purpose of assisting the FCC in its ongoing review and analysis of 
the pending merger of Univision Communications and Hispanic 
Broadcasting Corporation.
    From a marketing standpoint the US Hispanic market is a separate 
marketplace. Marketing to Hispanics requires understanding of the 
cultural differences that exist versus the General Consumer, 
understanding that creatively Spanish-language commercials need to 
reflect Latino cultural nuances and queues to be fully effective in 
producing similar results versus the General English-language 
commercials.
    More than 50% of the US Hispanics are Spanish-dominant. In the 
West Coast that number is closer to 60%. While long time residents 
and US born Latinos speak English so that they can function in 
mainstream America, various factors which include, the growing 
population, strong Hispanic communities, and immigration keep 
fueling the desire for Hispanics to hang on to their culture, their 
language and entertainment preferences.
    The Hispanic market is not one Monolithic segment of the 
population, it is a complex group comprised of many segments with 
different cultural nuances and origins, united by one language.
    Spanish-language media plays a very big part in reaching out to 
the different segments of the population by continuing to supply 
programming that feature relevant content that speak to the Latino 
preferences.
    In the case of Spanish-language TV, Experience has shown that 
original productions with familiar content such as Latino 
entertainers, International dramas and Futbol/Soccer is a formula 
for success. The English-TV programming, such as ``Charlie's

[[Page 66865]]

Angels'' and ``Reyes Y Ray'' (Starsky & Hutch) remakes in Spanish 
that some networks tried to reproduce and run on Spanish-TV proved 
to be unsuccessful.
    Radio has become the optional source of information and news not 
only about our homeland but our communities, with commercials that 
we can actually understand and follow in our language. Radio also 
offers the variety in programming needed to finely target the 
different segments of the Hispanic communities.
    Like the Central American who listen to Cumbias, the Caribbean's 
who prefer Salsa, the South American's like Spanish-Rock and the 
Mexican Community who love their Rancheras and traditional sounds of 
Mexico.
    As an agency it is important for us to educate our clients on 
the most effective way to reach the Hispanic consumer. We are 
responsible for creating advertising that is compelling, that builds 
awareness and consumer loyalty and at the end of the day we need to 
deliver these through the various, relevant forms of media vehicles.
    That's why we have a list of ten things to avoid when marketing 
to Hispanics. Below is a top line of the top ten things not to do by 
Liz Castell-Heard, President of Castells & Asoicado:

10. Approaching the Market as if It Were a Monolithic Segment

    ``One-Size Fits All'' Approach No Longer Works, Unless It's just 
the Start. Hispanic marketing has evolved from the `70's ``orphan'' 
to the ``childish'' `80's regional efforts; the post-pubescent 90's 
of homogenization; and now to bicultural segmentation, as 
``Hispanic'' grows up as an adult rich with complexities. It's 
beyond country of origin--one generic ``broadcast'' Spanish can be 
effective. It's knowing what makes us tick; foreign-born (58%) or US 
born; Spanish-dominants (58%) or reaching bilinguals/English-
dominants with culturally-relevant English ads (like African-
American). It's targeting various age targets and influencers. 
Companies like McDonald's who do this well, have very strong 
Hispanic positions.

9. Not Understanding Your ``Hispanic'' Category

    Category Dynamics Don't Automatically Apply. Know & Embrace The 
Differences. Your ``Hispanic'' category is not at the same point of 
its lifecycle development; and Latinos are often behind on the 
learning curve. Cultural and lifestyle differences affect 
perceptions, needs, motivations and advertising. Demographic 
barriers may not exist; but perceptual barriers need to be 
addressed, like in cable or banking.

8. Not Having a Long-Term Hispanic Market Plan

    Have a Consistent & Integrated Hispanic Strategic Branding and 
Retail Plan. You need to have bilingual training, people, 
operations; multi-media advertising, promotions and PR. Some believe 
you don't need a Hispanic branding campaign due to the myth of 
Hispanic brand loyalty. Hispanics will respond and brand-switch. You 
can't assume your established General Market or Latin American 
efforts will bleed over. Classic examples are Colgate-Palmolive left 
behind by P&G, or Toyota topping Chevrolet. Continual short-term 
messages lead to poor brand perception, discounting and brand 
erosion. You need a branding campaign with ``legs'' and a multi-
media mix, beyond TV to radio, OOH, DR, on-line, print, etc.

7. Consistently Opting for General Market ``Transactions''

    Stay True To The Brand, Seek Synergies With Hispanic Consumer 
Relevance. Look for synergies and commonalities between General and 
Hispanic consumer segments, but don't force-fit. Transcreating GM 
strategies or creative may work when the concept transcends 
ethnicities or for short-term promotions, but consistently employing 
this approach becomes ineffective. Just think about all the GM money 
you spend to identify that key consumer nugget, or that breakthrough 
ad. Know the cultural nuances that affect your direction and define 
ad relevance.

6. Oversimplifying and Underestimating the Potential of the HCM

    Quantify the Hispanic Business Potential With Sound Research and 
Analysis. Put the stats to work and figure out the actual potential, 
by market, by account. Once you assess the huge potential, 
``package'' it internally. Call it a profitable ``division'' or 
establish a multi-discipline Hispanic committee to facilitate its 
viability.

5. Inadequate Allocation of Company Resources to ``Hispanic''

    Proper Allocation of Hispanic Marketing Budgets and Resources Is 
Key. Inadequate pre-planning, sub-standard concepts, limited ``test 
efforts,'' poor tactical executions and lack of performance metrics 
devalue Hispanic potential. Don't say, ``This is all we have for 
Hispanic this year.'' Hispanic should be an integral part of the 
budget pre-planning process. Assess Hispanic share vs. the GM; and 
weigh the trade-offs of where you spend. The $2.4 Billion spent in 
Spanish is still less than 4% of all ad dollars--But it's changing 
quickly as companies spend more; traditional categories like 
packaged goods, newer categories like telecomm, health, travel, 
entertainment, or high-tech.

4. Thinking Hispanics Are Effectively Reached Via English Media

    Spanish Ads are Critical; English-language Spillover Is Not 
Necessarily Effective. Don't say, ``Half of Hispanics see our spots, 
they're the ones with the money.'' Spanish media continues to grow; 
70% of Hispanic TV viewing goes to Spanish, up from 45% in 1995. 
Spanish broadcast gets the majority of share even among bilinguals. 
To know what to spend, apply a systematic budget formula that 
accounts for Nielsen spill, Roslow comprehension, population and 
CPP's. Nationally, 10% of total dollars should go to Spanish, 4% to 
English-Hispanic; in L.A., 30% to Spanish, 11-18% to English-
Hispanic. Hispanic median income is $49K (85 index vs. GM), so it's 
highly likely Hispanics can afford your product.

3. Recruiting a Native Spanish Speaker To Critique Your Agency's 
Creative

    Just Like the General Market, Let the Hispanic Consumers Be The 
Judge. Please don't say, ``Juanita Garcia says the words are not 
right.'' Regis & Kelly are not asking you to write their monologue, 
so don't rely on your housekeeper to critique the work done by a 
creative with a Masters and 15 years experience. Do the same type of 
copy research as the GM, qualitative or quantitative, it all exists. 
Assure your Hispanic ads deliver the strategic and communication 
goals.

2. Hispanic Programs Must Pay Out in Incremental Volume

    Have a Measurable, Realistic and Agreed-Upon Hispanic ROI and 
Report Card. There is a base cost for customer retention and 
maintaining brand share, and the Hispanic program should not payout 
solely on incremental sales. The reprt card should be based on 
cumulative measures; Hispanic sales tracking, field surveys and pre/
post quantitive tracking studies. Don'trelegate Hispanic research to 
the back shelf. Employ the proper research size and methodology to 
ensure the Hispanic sub-segments are well defined and represented.

1. Not Allowing Your Hispanic Agency To Challenge Status Quo

    Demand High Performance From Your Hispanic Agency. Demand the 
same level of excellence as your General Market agencies. Be 
inclusive with your agency and set clear goals and expectations. 
Think of your agency as a marketing partner, as the more knowledge 
shared, the better the work. Allow Hispanic programs to evolve, 
flourish and increase. Hire a true Hispanic agency, not a Hispanic 
``division,'' or one--like Castells & Asociados.
 Sincerely,
Raquael Tomasino,
EVP, Director of Media Services

The Honorable Michael Powell, Chairman
Federal Communications Commission, 445 12th Street, Southwest, 
Washington, D.C. 20554

    Dear Chairman Powell: My name is Linda Lane Gonz[aacute]lez, 
president of The VIVA Partnership, Inc., a Miami-based advertising 
agency specializing in the U.S. Hispanic market. My professional 
experience over the past 15 years has been almost exclusively in the 
U.S. Hispanic market, having worked with some of the greatest 
pioneers of our field, Lionel Sosa, Carlos Montemayor, Paul Castillo 
and others over the years on a variety of accounts including 
Chrysler, Builder's Square, Cuervo, CBS, Verizon Wireless, Uniroyal, 
Meow Mix, and Entenmann's.
    I have been asked to comment on whether or not I believe the 
U.S. Hispanic media market is actually a separate market. My answer 
is an emphatic yes. To which could be added an emphatic of course! 
Hispanics are different in many ways: be it culture, language, or 
the numerous customs and traditions. Research shows that in-language 
programming is more impactful to the Hispanic target when it 
connects on a deeper level, in language and culturally relevant.

[[Page 66866]]

    The Hispanic media market and its numerous vehicles are a 
separate, relevant entity. From Nielsen to Arbitron--media is 
adapting and adjusting to the ever-growing Hispanic population. 
Nielsen has adjusted the way it measures audience levels due to the 
exploding Hispanic numbers. Arbitron continues to be challenged and 
is currently modifying their methodology on how to accurately 
measure Hispanic audience levels.
    I hope my comments will be useful in the commission's 
consideration of the U.S. Hispanic media market as a separate and 
relevant entity and in its review of the Univision/HBC merger.
     Very sincerely yours,
Linda Land Gonz[aacute]lez,
President, The VIVA Partnership, Inc., 4141 N.E. 2nd Avenue, Suite 
203E, Miami, FL 33137

May 27, 2003

The Honorable Michael K. Powell
Federal Communications Commission, 445 12th Street, SW, Washington, 
20024

    Dear Chairman Powell: My name is Tere Zubizarreta, President & 
CEO of Zubi Advertising.
    I have been asked to comment on whether the U.S. Hispanic media 
market is a separate market. There's no doubt that the Hispanic 
media market is an entity completely separate from the ``general 
market''.
    As will be shown below, there is ample evidence and factual 
corroboration to conclude that the U.S. Hispanic media market is a 
separate market.
    The Hispanic media market stands alone since it caters strictly 
to those U.S. residents (33 million by 2000 census). In their native 
language, taking into account cultural idiosyncrasies and family 
values.
    The media availability to address this market is professional in 
its programming and formats are according to the demographics in 
each of the major Hispanic markets.
    This fact is particularly important when looking at the radio 
and TV networks as the primary source of communication with this 
fast growing market.
    I hope the information provided will be useful in the 
consideration of the U.S. Hispanic media market as a separate 
relevant market.
     Sincerely,
Tere A. Zubizarreta

May 21, 2003

    To Whom It May Concern, I'm Richard Cotter, Senior Partner and 
Director of Local Broadcast for Mindshare. We're one of the largest 
buyers of time on radio and television stations in America.
    I've been asked to weigh in on the question if Hispanics in the 
United States represent a discreet market. The question is important 
because it's being used in the analysis by the F.C.C. concerning the 
proposed merger of Univision Communications and Hispanic 
Broadcasting Corporation. There's ample evidence and factual 
corroboration to conclude that the U.S. Hispanic media market is a 
separate market.
    First, the Hispanic media market is separated from the rest by 
it's own radio and television stations broadcasting in their own 
language. The Spanish language radio and TV stations serve a 
distinct consumer base with different brand awareness, tastes and 
preferences. To be sure it's a separate population with different 
growth rates.
    As the F.C.C. reviews the Univision/HBC merger I hope the 
information highlighted here will help provide direction and the 
right decision to this important question.
     Sincerely.
Richard Cotter
Senior Partner, USA Director of Local Broadcast

May 2003

    As a media executive, I've been asked to comment on whether the 
US Hispanic media market is a separate market from the general 
market. There is no question that the Hispanic market is indeed 
separate and should always be considered as such.
    There is ample evidence and factual corroboration to conclude 
that this to be true. The language of preference for many Hispanics, 
whether they are recent arrivals or US born, is Spanish. The 
importance of the culture to Hispanics is such that parents instill 
pride in language, customs, music and dance to their children. In 
the mid seventies, the US had about 50 Spanish-language radio 
stations in the entire country. Today over 600 radio stations dot 
the landscape with stations cropping up in markets where just 10 
years ago no one would have guessed the need for Spanish formats 
would be.
    The same holds true for Spanish-language TV. We've seen the 
growth in the number of networks and independent stations 
everywhere. Some markets, such as Chicago, Miami and Los Angeles 
have at least five Spanish-language TV options.
    The bottom line is, if you don't speak Spanish, chances are you 
ignore Spanish-language media. Similarly, if you don't speak 
English, or just simply prefer Spanish, chances are you ignore 
English-language media. So if you're not speaking to me in the 
language I prefer, I'm not listening to your message. Few 
advertisers can afford to ignore this market.
    There is no question as to the relevance of this market, and 
ample evidence exists that it reached through Spanish-language 
media.

Emma Moya
VP/Client Services, Amistad Media Group, 815 Brazos Street, Austin, 
Texas 78701

May 21, 2003

    Ladies and Gentlemen: I am the Marketing Director for the 
Historical Museum of Southern Florida. My career in marketing and 
advertising expands more than twenty years of experience in TV, 
radio and major publications in the Caribbean and United States.
    I have been asked to offer some observations about whether 
Hispanic media in the United States should be considered a separate 
market venue from that of the general market. My answer is a 
definite, si, por surpuesto.
    For the last two decades, major U.S. corporations have debated 
whether or not to consider Hispanics just a minority group who will, 
in time, assimilate to the American culture or a growing consumer 
powerhouse loyal to their ethinicity. Time has proven that the 
latter is the correct assessment of this market. Almost everyday, 
articles are published in major newspapers throughout the United 
States confirming the importance of reaching Hispanics in their own 
language, showing sensitivity to their particular customs.
    The Hispanic market has evolved into a rich mosaic of cultures. 
Each segment with its own set of goals, music preferences and 
interests. There are two common denominators: Language and pride of 
culture.
    Endless research has shown time and time again that Hispanics 
respond better when approached in espa[ntilde]ol. The message is 
even more effective if it is tailored to their particular cultural 
background. Hispanic media, particularly radio and TV play a key 
role in the success of any promotional effort targeted to this 
important market. Hispanics depend on radio and TV for their news, 
entertainment and lifestyle trends. Hispanic radio and TV are their 
emotional link to their roots.
    Hispanic media, in particular radio and TV, has evolved into a 
market in itself. Using the most efficient technology and combing it 
with the characteristics of the Hispanics' simpat[iacute]a, makes it 
stand out and be different from any other mass communication venue.
    I trust that the views offered here may be useful in the 
consideration of the U.S. Hispanic media market as a separate and 
relevant venue.

May 27, 2003

    To Whom it May Concern: My name is Pat Delaney. I am President 
of DMA and have been in the advertising industry for over 27 years. 
I have planned and purchased all mediums throughout the US for 
clients such as: Reebok, Wendy's International, BMW, AutoNation, 
Terminix, Rite Aid Drugs, Toys R Us, just to name a few.
    I have been asked to comment on whether the US Hispanic media 
market is a separate market. Also, whether there is ample evidence 
and factual corroboration to conclude that the US Hispanic media 
market is a separate market:
    The US Hispanic market is a separate market. Hispanics listen 
and watch various mediums differently than Anglos. With the 
available research on Hispanics, it clearly shows that while many 
Hispanics are bilingual, they still speak Spanish at home and do 
listen or watch Hispanic radio or TV. It's also substantiated by 
research that the number one radio or tv station in a given market 
(eg. Los Angeles, Miami, etc.) is Hispanic. This reflects all 
stations in a market, not just Hispanic and indicates to an 
advertiser that a large percentage of their potential customers are 
being missed if Hispanic media is not being purchased. In many 
markets, Hispanics account for over 50% of the market.
    Over the years I have found that with the available research an 
advertiser can effectively reach their potential customers by using 
both Hispanic and Anglo mediums. The research provides duplicated 
and unduplicated listenership/viewership of the media purchased to 
assure full coverage of

[[Page 66867]]

both Hispanics and Anglos. Without this research it would be a shot 
in the dark.
    I hope this information provided will be useful in the 
consideration of the US Hispanic media market as a separate relevant 
market.
     Sincerely,
Pat Delaney

May 23, 2003

To: Federal Communications Commission, Honorable Michael Powel


    I am Mike Herrera. My experience is Florida Distributor 
Coordinator. I have worked in the Florida Market for 17 years in the 
beer Industry. Fourteen years with Anheuser Busch and the last three 
with Presidente U.S.A. Presidente Beer is one of the leading beers 
in the U.S. that markets to Hispanic consumers across the country.
    I have been asked to comment on whether the U.S. Hispanic media 
market is a separate market.
    There is ample evidence and factual corroboration to conclude 
that the U.S. Hispanic media market is a separate market. Research 
companies such as Simmons measures media habits, product and service 
usage, demographics and psychographics of Hispanic consumers across 
the country.
    In addition to the Nielsen media research is one of the market 
leaders in terms of providing quality measurement of Hispanic TV 
audiences.
    When Presidente Beer commences its marketing planning and 
forecast our strategic approach is to identify the key markets 
within our Demographic group and separate within each market the 
hispanic and general market. This strategic marketing approach is 
used in all of our key markets across the United States.
    I hope the information provided will be useful in the 
consideration of the U.S. Hispanic media market as a separate 
relevant market.
     Sincerely,
Mike Herrera
Presidente U.S.A.
To: Ana Figueroa
From: Nelson Quintero
Date: May 22, 2003
Re: Hispanic Survey
    In reference to your questions regarding the Hispanic media 
survey my personal opinion is that Hispanic media should be 
maintained separate from the general market. The Hispanic market is 
a different segment and should be targetted differently. In the beer 
industry we face these challenges everyday trying to cross over to a 
complex ethnic market with such a Latin American influx and 
diversity. We are struggling trying to convey the same message.
    In reference to Radio, the audience of most listeners are 
probably working people or traveling in vehicles. During the most 
busy traffic hours and lunch time most people are listening to the 
radio. This is a key time for messages and commercials to get 
across. For example; lunch hour at any restaurant, bar or 
caf[eacute] usually has a radio station playing. I think today's TV 
viewer's are looking for specific shows, movies or the nightly news.
    Ana, I hope this information helps you with your survey and 
please understand this is my opinion and not of Labatt USA.
     Sincerely Yours,
Nelson Quintero
District Manager Southeast Florida

May 21, 2003

Federal Communications Commission
445 Twelfth St. South, Washington, DC 20554

    To Whom It May Concern: My name is Marci Neill I am the 
advertising coordinator for Glendale Nissan/Infiniti.
    I have been asked to comment on whether the U.S. Hispanic media 
market is a separate market, for the purpose of assisting the FCC in 
its ongoing review and analysis of the pending merger of Univision 
Communications and Hispanic Broadcasting Corporation.
    The first and most obvious example would be separate languages. 
From there the list goes on and on to include the following, 
separate location, population, growth rate, income level, brand 
preferences, and cost basis, to name just a few of the reasons why 
as an advertiser it is critical to able to target Hispanic media, 
both TV and Radio as a separate market.
    I hope the Commission will take these factors into consideration 
when reviewing the Univision/HBC merger.
     Sincerely,
Maric Neill
Advertising Coordinator.

    To Whom It May Concern, my name is Jaime Amoroso, general 
manager of Toyota of Manhattan. I've been in automotive sales for 
over 15 years.
    I've been asked to give my opinion on the question, ``Do 
Hispanics in United States represent a unique market?'' The question 
is been used in the consideration of the pending merged between 
Univion Communications and Hispanic Broadcasting.
    The answer is clearly ``YES''. While we are Americans we are 
also Hispanics with so many different things that make us unique 
such as the foods we eat, our traditions, our culture and so much 
more. We have our own separate language with our own tastes, 
preferences and brand awareness. We have our own population with 
it's own unique growth rate.
    We have distinct radio, television stations, and programs that 
appeal specifically to us. These stations and programs broadcast 
directly to our community in our language with it's own cost base, 
discreet demographics and targets. It is unique and separate.
    As the F.C.C. reviews the Univision/HBC merger I hope the 
information highlighted here will help provide direction and the 
right decision to this most important question.
    Sincerely,
Jaime Amoroso

June 2, 2003

    To Whom It May Concern: I've owned and operated a radio and TV 
buying service in New York City for many years.
    I'd like to share my thoughts with you concerning the Hispanic 
market in the hopes my comments will be useful in the Commissions 
consideration as it reviews the Univision/HBC merger. The central 
point is the US Hispanic media market is a separate entity. First, 
the radio and TV stations which make up this market deal a separate 
consumer base and communicate to it in a different language. 
Secondly, the markets population base differs as does its brand 
awareness and cost structure.
    Turn the channel-tune your radio. Your eyes and ears should 
convince your mind and heart this truly is a distinct market.

Sid Paterson

Miami, May 21, 2003
    To Whom it may concern: I am Gonzalo J. Gonzalez, Managing 
Officer at BVK/Meka in Miami. My experience in the advertising 
industry includes over 15 years working with most product categories 
in the United States, Spain and Latin America.
    BVK MEKA is one the leading Hispanic advertising and Public 
Relations marketing firms, and the Hispanic Division of BVK in 
Milwaukee, ranked among the top 50 Advertising Agencies in the 
United States.
    Our current client list for the US Hispanic market include 
SouthWest Airlines, Sprint PCS, Pfizer, South East Toyota, 
Samsonite, Samsung and the Florida Anti-Tobacco campaign among 
others.
    I have been asked to comment on whether the U.S. Hispanic media 
Market should be considered as a separate market. Not only for the 
proven effectiveness of the Spanish Language in communicating 
messages, but also because of the different media habits and 
cultural relevance of programming, the Hispanic media is and should 
be considered separate when planning, buying and evaluating 
broadcast media.
    This fact has been proven by numerous research developed by the 
most prestigious research companies, such as Nielsen, Roslow 
Institute, Scarborough, Strategy research, among others.
    As a result of this, companies that measure and monitor 
broadcast media, such as Nielsen and Arbitron, has adapted their 
methodology in term of measuring Hispanics across the country, 
publishing separate Hispanic books with the results of their 
surveys.
    I hope the Point of View will be useful in the consideration of 
the U.S. Hispanic media market as a separate relevant market, and 
feel free to contact me should you need to further discuss this 
matter.
    Sincerely,
Gonzalo J. Gonzalez,
Managing Officer.

May 21, 2003

Federal Communications Commission
445 12th Street, SW., Washington, DC 20554

    To Whom It May Concern: It is with great concern that our firm 
has approached you regarding the proposed merger between HBC and 
Univision.
    As a boutique firm in Coral Gables providing counsel in the 
areas of Advertising, event marketing and public relations, we 
foresee the ramifications of this proposed merger. We are a young 
firm, comprised of individuals who have been active in the 
advertising industry in the South Florida

[[Page 66868]]

marketplace for over a decade, particularly in Hispanic media. We 
live in this market, and understand the unique elements it's 
comprised of including how cyclical it is. The South Florida market 
will severely suffer if this merger happens.
    Our philosophy rests on the shoulders of innovation and we stand 
strong in our focus on providing unique and cost effective methods 
for our clients to achieve their marketing goals. However, we 
believe that the uniting of the nation's number-one Spanish-language 
television operator and the number-one Spanish-language radio owner 
resembles the Clear Channel model. Formulas such as this have truly 
made it difficult for agencies and local businesses such as ours to 
thrive in a marketplace where as it relates to placing media, there 
are very few competitors.
    We are convinced that with such a merger taking effect, many 
areas of our industry will be directly affected. Our concerns are 
the strong negative effects on both the general as well as the 
Hispanic market. We are specifically concerned about the business 
practices and methodology that will ultimately impact the consumer.
    We would also like to comment on the issue of whether the 
Hispanic media market is a separate one. Our firm firmly believes it 
is. Just to begin, this is a market that has its own consumer base 
that possess their own tastes, brand awareness, brand preferences, 
media, cost basis, population and language. How can one ignore the 
facts listed above? Including both television and radio, it is 
evident that this market has its own unique set of separate 
characteristics, its own buying power, and its own consumer 
psychographics.
    We implore the Commission to consider the ample evidence 
aforementioned. My firm could not feel more strongly about this 
matter. We respectfully seek your assistance in protecting the 
industry comprised of agencies and advertisers alike who realize how 
critical this matter is and how this proposed merger will affect the 
future of our industry. We trust in the judgment of the Commission 
and rely on its plight to protect the overall public's interest. 
Please take our plea into consideration. If need be, our firm is at 
your disposition as it relates to the Commission's consideration of 
the U.S. Hispanic media market as a autonomous market and its review 
of the Univision/HBC merger.

     Sincerely,

Liza M. Santana,

President, Creativas Group Inc.

May 22, 2003

    To Whom It May Concern: As an advertising agency in the South 
Florida market for over 7 years, and as an advertising professional 
for over 13 years, I am always asked the same question from many of 
my advertisers: ``How can I reach the Hispanic market?''
    The question would seem to have a simple answer: ``Just through 
some budget dollars to a couple of Hispanic stations, translate our 
current spot (some advertisers actually use their English spot in 
Spanish language stations), and go with it!''
    The more I see the situations occur, the more I realize that 
there are still many people in South Florida and the U.S. that still 
don't get it.
    The Hispanic market is more than just a true and separate market 
from the general market. It has several ``sub-markets'' within 
itself. It is more suffice to think that with just one campaign, or 
one spot, or one theory, we can reach the entire Hispanic market. 
Hispanics in the U.S. are truly diverse. South Florida alone has 
possibly the most diverse Hispanic market in the country, comprised 
mostly of people from the Caribbean, Central and South America.
    Unquestionably, the same applies to all the Hispanic markets 
across the U.S. Hispanics have become an important part of our 
population with their rapid growth, as well as their increasing 
buying power as consumers. This is a market with different cultures, 
ideas, values and customs.
    Therefore, it is critical that Hispanics be considered as a 
separate market in order to reach them effectively and allow 
prospective advertisers to communicate with their powerful and 
evolving segment of our country.

     Thank you

Tony Garcia

President, The Menda Group

    To Whom It May Concern, I'm Helane Naiman. I have worked in 
media in New York City for over twenty five years and have for the 
past five years owned my own ad agency/buying service, HN Media & 
Marketing, Inc.
    I've been asked to comment on whether the U.S. Hispanic media 
market is a separate market for the purpose of assisting the F.C.C. 
in its ongoing review and analysis of the pending merger between 
Univision Communications and Hispanic Broadcasting Corporation. In 
my opinion it certainly is. Here are just a few reasons why. The 
Hispanic population has separate tastes. It differs in brand 
awareness with a uniquely different consumer base. Hispanics in the 
United States have their own media. The market includes both radio 
and television stations that broadcast in the Spanish language.
    I hope this information is useful to the Commission in their 
consideration of this issue. As the FCC reviews the question of 
whether Hispanics in the United States are a separate market the 
answer is clearly-yes.
     Yours Truly,
Helane Naiman,
President

    Note: The letter dated May 27, 2003 from Accentmarketing was not 
able to be published in the Federal Register but a copy can be 
obtained from the U.S. Department of Justice, 601 D Street, NW., 
Room 10-013, Washington, D.C. 20530 or you may call and request a 
copy at (202) 514-2558.

May 23, 2003.

Mr. Raul Alarcon Jr.
Chairman, Spanish Broadcasting System, 2601 South Bayshore Drive, 
Penthouse II, Coconut Grove, FL 33133

    Dear Raul, enclosed is a synopsis of my position paper on the 
U.S. Hispanic market. I have delivered this or very similar 
presentations on numerous occasions to a broad spectrum of general 
business and Hispanic marketing audiences. The most recent was at 
the Central Florida Hispanic Chamber of Commerce.
    I have edited out only my personal (humorous) anecdotes; 
actually, they were the best part.
     Best regards,

A COUNTRY WITHIN A COUNTRY

    The U.S. Hispanic market is frequently referred to as ``a 
country within a country * * * larger than Canada * * * the fourth 
largest Spanish speaking country in the hemisphere larger than Peru, 
Venezuela, Chile or Ecuador.''. 42.6 million strong (including 
Puerto Rico), the population is expected to grow by more than 1.7 
million per year. That's 100,000 people every three weeks or 5,000 
every day.
    Hispanic purchasing power exceeded $630 billion in 2002. In and 
of itself, it represents the 9th largest economy in the world, 
larger than the GDP of Brazil, Spain and even Mexico. All indices 
and economic measurement standards reflect growth and increased 
prosperity. In the decade between 1979 and 1999, the number of 
Hispanic families reaching the middle class (defined as those 
earning between $40,000 and $140,000) increased 71.3% to 2.5 
million, fully one-third of the total.
    The numbers get even more interesting in terms of business 
ownership. According to American Demographics Magazine, Hispanics 
now account for the largest share of minority entrepreneurs in the 
United States, owning 40% of all such businesses. The Census 
Bureau's last economic census reported 1.2 million Hispanic owned 
businesses with aggregate revenue in excess of $1.86 billion. The 
2002 estimate put the figure at 2.3 million with $380 billion in 
sales. In 2001, the census also reported Hispanic labor-force 
participation at 80.4% (FYE 2000), higher than non-Hispanic white 
males as a whole
    It is evident that even official agencies consider this market a 
discrete entity within the larger marketplace measured and reported 
accordingly. And while other minority markets are similarly measured 
in a number of areas, the Hispanic market stands alone as a self-
contained, differentiated, ``country-like'' entity within U.S. 
borders; one from which specialized disciplines, professions, 
governmental institutions, NGOs and even foreign policy initiatives, 
have arisen and will continue to arise well into the foreseeable 
future. This is not a matter of opinion. It is a matter of fact 
extremely well grounded in logic, as we shall see:
    1. Let's consider the other two large minority segments in the 
United States, African-Americans (excluding Haitian-Americans) and 
Asian Americans. African-Americans speak English almost exclusively. 
There are few direct linkages to African countries of origin. Non-
African Americans may easily communicate and participate in this 
sub-segment at will. They are tied to the mainstream culture by 
language if not by color.
    2. The Asian-American segment is composed by a multiplicity of 
cultures

[[Page 66869]]

divided by language--Chinese (Mandarin and Cantonese), Japanese, 
Korean, Vietnamese, Hindi, Bengali, Urdu, Malay, Punjabi--the 
influence and economic advantages (cost-effectiveness) that spring 
from critical mass are elusive if not impossible. Therefore, other 
than grassroots marketing or media outlets serving small enclaves, 
any Pan-Asian network or national print vehicle would be either 
highly fragmented in a multiplicity of languages or require English 
as the common denominator.
    3. Language is the single most important characteristic of 
culture and Hispanics in the United States are united by a common 
language traced to Spanish colonizers regardless of whether these 
are viewed as ruthless conquistadors (Mexico) or brothers from the 
mother country (Cubans). If this were not the case, neither national 
broadcast networks nor national print media would be viable business 
models. This isn't to say that there aren't English dominant 
Latinos, but rather that for marketing and communications purposes 
we include them in the mainstream universe just as we exclude non-
Spanish speakers from the Hispanic consumer pool. Spanish dominant 
Latinos then, by necessity, must rely on Spanish language media even 
to exercise their right to vote; bilingual Latinos may choose either 
language based on content or self-identification. Considering that 
Latinos are basically absent from general market media, being 
depicted as less than 2% of all characters (while more than 12% of 
the population) and often in the most negative roles, bilingual 
Hispanics are practically compelled to turn to Spanish language 
media to see and/or hear themselves.
    4. This cultural phenomenon known as Hispanic-America, and its 
need for in-language communications that respects and embraces our 
multiracial identities, musical preferences and folkloric richness 
created the Hispanic advertising industry. The Association of 
Hispanic Advertising Agencies was organized in recognition that ours 
is a marketing sector that could not and would not be well served by 
general market entities; the very same who for more than 30 years 
had been predicting with almost evangelical fervor our assimilation 
and demise. The truth is that Hispanic advertising and media 
professionals constitute a unique business specialty. As managers, 
we must have as thorough an understanding of the disciplines as our 
monolingual, general market counterparts and communicate in English 
with our clients, bankers, the IRS and the 21 year old brand manager 
who has never traveled outside of Indiana, yet transcreate, 
transform, interpret and connect with our consumers in Spanish, the 
language most likely to produce the sales and economic benefits 
sought by our clients. ``Compre nuestro auto, nuestro jugo y traiga 
su dinero a nuestro banco.'' It's the American way. Consumer 
spending is the backbone of our economy. And let's be realistic, the 
mainstream population base is experiencing negative birth rates. All 
U.S. population growth is directly attributable to minority and 
immigrant sub-segments. The Census says so.
    5. The wave of Hispanic agency acquisitions by general market 
firms shows that they were wrong about assimilation (which did not 
and will not take place), were wrong to remain intransigently 
monolingual as if it were a badge of honor and thus, with very few 
exceptions and these only in the multi-national arena, incapable of 
creating Hispanic divisions organically. Ultimately, they had to buy 
the agencies. Most were motivated by profit potential others to keep 
the market in check and under control.
    6. The increasing acceptance of Mexican Matriculas, the 
strengthening of Radio Marti's signal, NAFTA and the proposed FTAA, 
point to Hispanic interests influencing the national agenda well 
beyond the Congressional Hispanic Caucus. This is understandable as 
Hispanics represent the country's largest pool of bilingual, 
transnational citizens. It may be a small percentage of the vast 
United States of America, but a critical component of the country's 
hemispheric--perhaps global--aspirations. A country within a country 
indeed.

Exhibit B

May 20, 2003
    To Whom it May Concern: I am Julio Amparo. I have worked in the 
Hispanic market as an owner of an independent advertising agency for 
over 15 years.
    I have been asked to comment on the pending merger between 
Univision Communications and Hispanic Broadcasting Corporation. An 
important question the F.C.C. is facing is whether or not the U.S. 
Hispanic market is separate market.
    First, we speak a different language. We have our own consumer 
base, our own and separate tastes. As an owner of an ad agency I can 
tell you Hispanics have their own brand awareness for our own 
products. Our population growth is different, the cost structure of 
media is separate--we are a separate consumer base.
    The Hispanic Media market--radio and TV combined--is a separate 
and distinct market. Listen and you will hear with your ears we are 
a separate market.
    I hope my comments will be useful in the Commission's 
consideration of the U.S. Hispanic media market as a separate 
relevant entity and in it review of the Univision/HBC merger.

Julio Ampara,
President.
June 11, 2003

Marlene H. Dortch
Secretary, Federal Communications Commission, 445 12th Street, SW., 
Washington, DC 20554

Re: Applications for Transfer of Control of Hispanic Broadcasting 
Corp., and Certain Subsidiaries, Licensees of KGBT (AM, Harlingen, 
Texas et al. (Docket No. MB 02-235, FCC File Nos. BTC-20020723ABL, 
et al.)

    Dear Ms. Dortch: Spanish Broadcasting System, Inc. (``SBS'') has 
submitted several filings for the record of this proceeding 
demonstrating that Spanish-language media does not compete with 
English-language media. In other words, Enligh-language and Spanish-
language broadcasting constitute separate markets for competition 
and diversity purposes. The proposed Univision/HBC merger threatens 
to create substantial market power in numerous geographic markets 
for Spanish-language broadcasting to the detriment of advertisers, 
consumers, competition, and diversity. This letter submits data 
demonstrating the severity of that threat in the ten metropolitan 
areas with the largest Hispanic populations.
    Attached hereto is a chart for each of the top ten Spanish-
language broadcast markets displaying the market share of each 
participant in terms of combined television and radio advertising 
revenues for 2002.\1\ In seven of the top ten markets, the combined 
entity's (Univision + HBC) post-merger market share will equal or 
exceed 60%, and in two of the top ten markets the combined entity's 
market share will exceed 70%. Indeed, in San Antionio, the combined 
entity will control a striking 80% of the market. Only in 
Brownsville/McAllen (13%) and New York (48%) will the combined 
entity have a market share below 50%. When Entravision's market 
share is included (Univision + HBC + Entravision), the combined 
entity's market share ranges from 48% in new York to 84% in Phoenix. 
For convenience, the table below summarized the distribution of 
revenue shares for the combined entity, with and without 
Entravision. As illustrated by the data in this table, the combined 
entity would account for a large majority of advertising revenues in 
8 (or 9) of the top ten markets.
---------------------------------------------------------------------------

    \1\ The charts were prepared using the following methodology: 
The advertising data for both broadcast radio and broadcast 
television were obtained from BIA, In., through its Media Access Pro 
software (current as of June 5, 2003). BIA provides station-level 
revenue and ownership data for more than 13,000 radio stations and 
nearly 2,000 commercial television stations in the United States. 
Revenues from BIA are estimated using data from its proprietary 
survey of station managers and owners. For radio stations, BIA 
reports information on station format. These data were supplemented 
with information from the 2002 Television and Cable Factbook, 2002 
U.S. Hispanic Market (a publication of Strategy Research 
Corporation), and various internet websites, including 
http://www.100000watts.com.
    First, all of the radio and television stations broadcasting to 
the ten metropolitan areas with the largest Hispanic populations 
were identified. Using information from BIA as well as internet-
based research, each station's language format was determined. A 
radio station was classified as a Spanish-language station if a 
portion of the BIA format description was Spanish )BIA reports the 
current format, which may not necessarily correspond to the 
station's format in 2002, although we believe relevant changes, if 
any, to be minimal) or, alternatively, if it could be determined 
that a portion of the station's programming was in Spanish. 
Similarly, for television stations, a station was classified as 
Spanish-language if a portion of the station's programming was in 
Spanish. Because all Univision television stations broadcast in 
Spanish, this decision rule provides a conservative estimate of 
Univision's revenue share.

[[Page 66870]]



  Cumulative Distribution of 2002 Broadcast Advertising Revenue Shares*
------------------------------------------------------------------------
                                                             Univision +
                      Share                       Univision     HBC +
                                                    + HBC    Entravision
------------------------------------------------------------------------
80%..................................  .........          1
70%..................................         2           5
=60%.................................         7           7
50%..................................         8           9
40%..................................         9         10
------------------------------------------------------------------------
* Numbers may differ from those obtained from the charts due to
  rounding.

    These high market shares--including above 70% in several 
markets--demonstrate that the merger will enable the new Univision/
HBC to exercise substantial market or monopoly power to the 
detriment of both Spanish-speaking consumers and advertisers who 
seek to reach that audience. For ``a share above 70% is usually 
strong evidence of monopoly power'' and ``a share between 50% and 
70% can occasionally show monopoly power.'' Broadway Delivery Corp. 
v. United Parcel Service of Am., Inc., 651 F.2d 122, 129 (2nd Cir. 
1981). Even a share below 50% can support a finding of monopoly 
power when other indicia of such power--such as the high entry 
barriers present here--exist. See id. The consequences of a monopoly 
in Spanish-language broadcasting is not only higher rates for 
advertisers, but also a substantial loss in diversity of voices. 
Moreover, where, as here, the combined entity will control over 40% 
in all or virtually all of the major relevant markets, diminished 
economic performance is likely. See FTC v. Swedish match, 131 F. 
Supp. 2d 151, 166 (D.D.C. 2000) (``Without attempting to specify the 
smallest market share which would still be considered to threaten 
undue concentration, we are clear that 30% presents a threat.'' 
quoting United States v. Philadelphia National Bank, 374 U.S. 321, 
364 (1963)). In sum, the market shares shown here present a real 
risk of anticompetitive harm to Spanish-language advertisers, as 
well as a critical loss of diversity to Spanish-speaking Americans 
in these markets.
    Moreover, the merger threatens both competition and diversity 
whether or not Spanish-language television and radio compete in the 
same market. The reason is that the merger gives Univision/HBC the 
power to exclude competition even if Spanish-language TV and radio 
belong in different markets. First, the Univision/HBC merger would 
raise already high entry barriers into Spanish-language radio. 
Advertising on Spanish-language TV is important to a Spanish-
language radio station's ability to obtain significant audience. 
Indeed, several of SBS's stations only succeeded because of risky 
and expensive television advertising campaigns. However, after its 
acquisition of HBC, Univision--which dominates Spanish-language 
television--will have an incentive to refuse to deal with, or 
discriminate against, Spanish-language radio competitors (including 
SBS) who seek to advertise through Univision (and other properties) 
in order to advantage HBC. Second, after the merger, the combined 
entity will have the power to insist that Spanish-language 
advertisers who wish to advertise through both radio and television 
purchase time from both Univision and HBC rather than from the 
combined entity's rivals. Such difficult-to-detect and subtle tying 
arrangements or refusals to deal--realistic possibilities here--
impair competition. See, e.g., Lorain Journal Co. v. U.S., 342 U.S. 
143 (1951). The resulting harm to competitors, including SBS, that 
is sure to follow will not only harm advertisers, but also will 
impair diversity.
    To meet its obligations under the Communications Act, the FCC 
must undertake a detailed analysis of diversity and competition 
specific to a Spanish-language media markets implicated by this 
merger. In addition to the materials submitted last week and filed 
today, SBS intends to file shortly with the Commission further 
information demonstrating the severity of the threat to competition 
and diversity presented by the proposed merger.
     Respectfully submitted,
/ s / Philip L. Verveer
Philip L. Verveer
Sue D. Blumenfeld
Michael G. Jones
David M. Don
WILLKIE FARR & GALLAGHER, 1875 K Street, NW., Washington, DC 20006, 
Telephone: (202) 303-1000

and

Bruce A. Eisen
Allan G. Moskowitz
KAYE SCHOLER, LLP, 901 15th Street, NW., Suite 1100, Washington, DC 
20005
Attorneys for Spanish Broadcasting System Inc.

cc: Chairman Michael K. Powell, Commissioner Kathleen Q. Abernathy, 
Commissioner Michael J. Copps, Commissioner Kevin J. Martin, 
Commissioner Jonathan S. Adelstein, Susan M. Eid, Stacy R. Robinson, 
Jordan B. Goldstein, Catherine Crutcher Bohigian, Johanna Mikes, W. 
Kenneth Ferree, David Brown, Scott R. Flick, Counsel for Univision 
Communications, Inc., Roy R. Russo, Counsel for Hispanic 
Broadcasting Corp., Harry F. Cole, Counsel for Elgin FM Limited 
Partnership


          Spanish-Language Broadcast Advertising Revenues, 2002
            [Los Angeles: Hispanic Population of 7.0 million]
------------------------------------------------------------------------
                                                                Percent
------------------------------------------------------------------------
Univision....................................................         41
HBC..........................................................         19
Entravision..................................................          5
SBS..........................................................          6
Telemundo....................................................         13
Other........................................................        15
------------------------------------------------------------------------
 Notes: Advertising revenue-based satellite program services that also
  offer Spanish-language programming include services such as Galavision
  Cable Network, MTV Latin America and Viva Television Network.
 Sources: 2002 BIA, Inc.; 2002 Television and cable Factbook; 2002 U.S.
  Hispanic Market, Strategy Research Corporation.


          Spanish-Language Broadcast Advertising Revenues, 2002
             [New York: Hispanic Population of 4.0 million]
------------------------------------------------------------------------
                                                                Percent
------------------------------------------------------------------------
Univision....................................................         41
SBS..........................................................         28
Telemundo....................................................         18
HBC..........................................................          7
Other........................................................         6
------------------------------------------------------------------------
 Notes: Advertising revenue-based satellite program services that also
  offer Spanish-language programming include services such as Galavision
  Cable Network, MTV Latin America and Viva Television Network.
 Sources: 2002 BIA, Inc.; 2002 Television and cable Factbook; 2002 U.S.
  Hispanic Market, Strategy Research Corporation.


          Spanish-Language Broadcast Advertising Revenues, 2002
               [Miami: Hispanic Population of 1.7 million]
------------------------------------------------------------------------
                                                                Percent
------------------------------------------------------------------------
Univision....................................................         35
Telemundo....................................................         20
HBC..........................................................         20
SBS..........................................................         15
Other........................................................          9
Entravision..................................................      0.20
------------------------------------------------------------------------
 Notes: Advertising revenue-based satellite program services that also
  offer Spanish-language programming include services such as Galavision
  Cable Network, MTV Latin America and Viva Television Network.
 Sources: 2002 BIA, Inc.; 2002 Television and cable Factbook; 2002 U.S.
  Hispanic Market, Strategy Research Corporation.


          Spanish-Language Broadcast Advertising Revenues, 2002
              [Chicago: Hispanic Population of 1.6 million]
------------------------------------------------------------------------
                                                                Percent
------------------------------------------------------------------------
Univision....................................................         33
HBC..........................................................         30
SBS..........................................................         22
Telemundo....................................................          8
Entravision..................................................          4
Other........................................................         4
------------------------------------------------------------------------
 Notes: Advertising revenue-based satellite program services that also
  offer Spanish-language programming include services such as Galavision
  Cable Network, MTV Latin America and Viva Television Network.
 Sources: 2002 BIA, Inc.; 2002 Television and cable Factbook; 2002 U.S.
  Hispanic Market, Strategy Research Corporation.


          Spanish-Language Broadcast Advertising Revenues, 2002
              [Houston: Hispanic Population of 1.6 million]
------------------------------------------------------------------------
                                                                Percent
------------------------------------------------------------------------
Univision....................................................         32
HBC..........................................................         42
Other........................................................         19

[[Page 66871]]


Telemundo....................................................         6
------------------------------------------------------------------------
 Notes: Advertising revenue-based satellite program services that also
  offer Spanish-language programming include services such as Galavision
  Cable Network, MTV Latin America and Viva Television Network.
 Sources: 2002 BIA, Inc.; 2002 Television and cable Factbook; 2002 U.S.
  Hispanic Market, Strategy Research Corporation.


          Spanish-Language Broadcast Advertising Revenues, 2002
      [San Francisco/San Jose: Hispanic Population of 1.4 million]
------------------------------------------------------------------------
                                                                Percent
------------------------------------------------------------------------
Univision....................................................         48
Other........................................................         19
Entravision..................................................         17
HBC..........................................................         14
Telemundo....................................................         2
------------------------------------------------------------------------
 Notes: Advertising revenue-based satellite program services that also
  offer Spanish-language programming include services such as Galavision
  Cable Network, MTV Latin America and Viva Television Network.
 Sources: 2002 BIA, Inc.; 2002 Television and cable Factbook; 2002 U.S.
  Hispanic Market, Strategy Research Corporation.


          Spanish-Language Broadcast Advertising Revenues, 2002
         [Dallas/Ft. Worth: Hispanic Population of 1.3 million]
------------------------------------------------------------------------
                                                                Percent
------------------------------------------------------------------------
Univision....................................................         47
HBC..........................................................         22
Telemundo....................................................         20
Entravision..................................................          8
Other........................................................         3
------------------------------------------------------------------------
Notes: Advertising revenue-based satellite program services that also
  offer Spanish-language programming include services such as Galavision
  Cable Network, MTV Latin America and Viva Television Network.
Sources: 2002 BIA, Inc.; 2002 Television and cable Factbook; 2002 U.S.
  Hispanic Market, Strategy Research Corporation.


          Spanish-Language Broadcast Advertising Revenues, 2002
            [San Antonio: Hispanic Population of 1.2 million]
------------------------------------------------------------------------
                                                                Percent
------------------------------------------------------------------------
Univision....................................................         43
HBC..........................................................         37
SBS..........................................................         10
Telemundo....................................................          7
Other........................................................         3
------------------------------------------------------------------------
Notes: Advertising revenue-based satellite program services that also
  offer Spanish-language programming include services such as Galavision
  Cable Network, MTV Latin America and Viva Television Network.
Sources: 2002 BIA, Inc.; 2002 Television and cable Factbook; 2002 U.S.
  Hispanic Market, Strategy Research Corporation.


          Spanish-Language Broadcast Advertising Revenues, 2002
              [Phoenix: Hispanic Population of 1.0 million]
------------------------------------------------------------------------
                                                                Percent
------------------------------------------------------------------------
Univision....................................................         47
HBC..........................................................         22
Entravision..................................................         15
Telemundo....................................................          9
Other........................................................         7
------------------------------------------------------------------------
Notes: Advertising revenue-based satellite program services that also
  offer Spanish-language programming include services such as Galavision
  Cable Network, MTV Latin America and Viva Television Network.
Sources: 2002 BIA, Inc.; 2002 Television and cable Factbook; 2002 U.S.
  Hispanic Market, Strategy Research Corporation.


          Spanish-Language Broadcast Advertising Revenues, 2002
        [Brownsville/McAllen: Hispanic Population of 1.0 million]
------------------------------------------------------------------------
                                                                Percent
------------------------------------------------------------------------
Entravision..................................................         45
Other........................................................         30
HBC..........................................................         13
Telemundo....................................................        12
------------------------------------------------------------------------
Notes: Advertising revenue-based satellite program services that also
  offer Spanish-language programming include services such as Galavision
  Cable Network, MTV Latin America and Viva Television Network.
Sources: 2002 BIA, Incl; 2002 Television and cable Factbook; 2002 U.S.
  Hispanic Market, Strategy Research Corporation.

July 9, 2003

Marlene H. Dortch
Secretary, Federal Communications Commission, TW-A325, 445 12th 
Street, SW., Washington, DC 20554

Re: Notice of Ex parte Presentation, MB 02-235

    Dear Ms. Dortch: On July 8, Andrew Jay Schwartzman of the Media 
Access Project met with Susan Eid, Legal Advisor to the Chairman to 
discuss the proposed transfer of control of Hispanic Broadcasting 
Corporation.
    Mr. Schwartzman took the position that the Commission should 
treat Spanish language radio as a separate market for purposes of 
this case, and that leads to the conclusion that the transaction is 
contrary to the public interest. He made two specific points.
    First, Mr. Schwartzman discussed the extraordinary and 
insuperable barriers that any new entrant would face in trying to 
compete with the combined Univision/HBC entity. Unlike English 
language markets, a competitor would face great difficulty in making 
the audience aware of its service, as Univision would control the 
principal means of promoting and advertising a new radio station, 
i.e., Spanish language broadcasting. Moreover, Clear Channel, which 
would be one of the largest shareholders of the combined companies, 
is the largest owner of outdoor advertising, which is the second 
most important advertising medium used for this purpose.
    Mr. Schwartzman then turned to how the Spanish language market 
should be treated from a diversity perspective. He noted that under 
the FCC's 1981 radio deregulation decision, broadcasters were freed 
from the obligation to serve every enumerated audience segment in 
their community. They were, however, expected to demonstrate that 
they have met the problems needs and interests of whatever niche 
audience segment they might have chosen to serve. Plainly then, the 
Commission treated Hispanic other minority communities as distinct 
for this purpose as well.
    In response to questioning from Ms. Eid, Mr. Schwartzman 
explained that he thought it was entirely logical for the Commission 
to conduct an analysis of the impact of a transaction on particular 
segments of the community while still including the same stations in 
voice counts and other analyses of the entire market. Thus, the 
question of how many stations a particular broadcaster might own in 
a market would be a separate issue from whether it held excessive 
power within the Spanish language submarket.

     Sincerely,
Andrew Jay Schwartzman
President and CEO

cc. Susan Eid

July 11, 2003

W. Kenneth Ferree, Esquire
Chief, Media Bureau, Federal Communications Commission, 445 12th 
Street, NW., Room 3-C740, Washington, DC 20554

Re: Applications for Transfer of Control of Hispanic Broadcasting 
Corp., and Certain Subsidiaries, Licensees of KGBT(AM), Harlingen, 
Texas et al. (Docket No. MB 02-235, FCC File Nos. BTC-20020723ABL et 
al.).

    Dear Ms. Dortch: The National Hispanic Policy Institute, Inc. 
(``NHPI'') hereby replies to the June 25, 2003 letter filed by 
Univision Communications, Inc. (``Univision''). In its letter 
Univision again restates its contention that, if the proposed merger 
with Hispanic Broadcasting Corporation (``HBC'') is granted, 
Univision's interest in Entravision Communications Corporation 
(``Entravision'') will be non-attributable.
    In arguing for a ``bright-line'' attribution test, Univision 
claims that it demonstrated in a December 9, 2002 letter to the 
Media

[[Page 66872]]

Bureau that its interest in Entravision is below the 33% threshold 
equity/debt plus (``EDP'') ratio. In fact, Univision failed to make 
any such showing.
    Univision's December 9, 2002 letter was filed in response to a 
November 29, 2002 Commission request for further information. The 
Commission was responding to a NHPI showing, that Entravision had 
outstanding debts owed to Univision. Univision had previously 
represented to the Commission that ``Univision has no debt interest 
in Entravision.'' \1\ The Commission ordered Univision to ``explain 
the origin and nature of such accounts.'' It further ordered 
Univision to, ``[p]rovide an audited financial statement to support 
any factual assertion, and a detailed showing demonstrating 
compliance with the Equity/Debt Plus Rule.'' \2\
---------------------------------------------------------------------------

    \1\ Univision Opposition to Petition to Deny, at p. 11.
    \2\ FCC letter dated November 29, 2002.
---------------------------------------------------------------------------

    In response to the Commission's letter, Univision submitted 
certain documentation, which it claimed showed that it was in 
compliance with the Commission's EDP rule. However, the evidence 
Univision provided was incomplete and not audited.\3\ As NHPI stated 
in its December 16, 2002 letter:
---------------------------------------------------------------------------

    \3\ Univision letter dated December 9, 2003.
---------------------------------------------------------------------------

    ``Univision has again misled the Commission and has failed to be 
forthcoming and candid in its representations to the Commission. * * 
* Entravision's DEF 14A shows that ``Andrew Hobson, Executive Vice 
President of Univision, holds 211,136 Class A shares of Entravision. 
The DEF 14A also shows that Michael D. Wortsman, Co-President of 
Univision Television Group, Inc., holds 56,136 Class A shares of 
Entravision.
    ``Entravision's DEF 14A reports stock ownership of (1) persons 
or entities known to be the beneficial owners of more than 5% of the 
outstanding shares of stock, (2) each of its directors, and (3) 
certain key executives of the company. Mr. Hobson and Mr. Wortsman's 
share holdings were reported because, at the time, they were members 
of Entravision's board of directors. Entravision's DEF 14A does not 
require it to report shares held by Univision insiders unless their 
individual holdings exceed 5% of the outstanding shares. Thus, in 
addition to Mr. Hobson and Mr. Wortsman, it is quite possible that 
other Univision officers and directors hold Entravision shares. 
There may also be other Entravision debts owed to Univision that are 
not reported in SEC filings. Had an independent audit been 
conducted, an honest and complete answer could have been provided.''
    For the Commission to make a bright-line determination 
concerning compliance with the EPD rule, it must know the percentage 
of equity and debt a party holds. In this case, the commission knows 
that Entravision has outstanding debts owed to Univision. What the 
Commission does not know, is the amount and percentage of 
Entravision's debt owed to Univision. Also unknown, is how many 
shares of Entravision's stock are held by Univision's officers and 
directors. See, Section 73.3555, note 2. Here again Univision has 
refused to provide this information. Without knowing the extent of 
equity, and the extent of debt Univision, its officers and directors 
hold in Extravision, the FCC cannot determine whether Univision 
complies with the EDP rule.
    Univision's failure to produce information, which is easily 
obtained and uniquely within its control, permits the Commission to 
draw the negative conclusion that if the information were produced 
it would show that Univision, post-merger, will still have an 
attributable interest in Entravision. Tendler v. Jaffe, 203 F.2d 14, 
19 (D.C. Cir. 1953) (``The omission by a party to produce relevant 
and important evidence of which he has knowledge, and which is 
peculiarly within his control, raises the presumption that if 
produced the evidence would be unfavorable to his cause.''); 
International Union, UAW v. National Labor Relations Board, 459 F.2d 
1329, 1336 (D.C. Cir. 1972) (``the failure to bring before the 
tribunal some circumstance, document, or witness, when either the 
party himself or his opponent claims that the facts would thereby be 
elucidated, serves to indicate, as the most natural inference, that 
the party fears to do so, and this fear is some evidence that the * 
* * document, if brought, would have exposed facts unfavorable to 
the party.'') (quoting J. Wigmore, Evidence Sec.  284, 3rd ed. 
1940); United States v. Robinson, 233 F.2d 517, 519 (D.C. Cir. 1956) 
(``[u]nquestionably the failure of a defendant in a civil case to 
testify or offer other evidence within his ability to produce and 
which would explain or rebut a case made by the other side, may, in 
a proper case, be considered a circumstance against him and may 
raise presumption that the evidence would not be favorable to his 
position''); Washoe Shoshone Broadcasting, 3 FCC Rcd 3948, 3952-53 
(Rev. Bd. 1988); Thornell Barnes v. Illinois Bell Telephone Co., 1 
FCC 2d 1247, 1274 (Rev. Bd. 1965). Univision's failure to produce 
evidence permits the Commission to include that Univision's interest 
in Entravision is attributable as a matter of law.
    Univision does not meet the FCC's bright-line EDP test. Even if 
Univision could demonstrate that its interest in Entravision is 
below the 33% debt/equity threshold, its relationship with 
Entravision is such that it would still be able to continue to exert 
significant influence over key licensee deicsions. As the Commission 
has said:
    ``In adopting the EDP rule, we affirm our tentative conclusion * 
* * that there is the potential for certain substantial investors or 
creditors to exert significant influence over key licensee 
decisions, even through they do not hold a direct voting interest * 
* * which may undermine the diversity of voices we seek to promote. 
They may, through their contractual rights and their ongoing right 
to communicate freely with the licensee, exert as much, if not more, 
influence or control over some corporate decisions as voting equity 
holders whose interests are attributable.\4\''
---------------------------------------------------------------------------

    \4\ Review of the Commission's Regulations Governing Attribution 
of Broadcast and Cable/MDS Interests, Report and Order, 14 FCC Red 
12559, 12582-3 (1999) (``Attribution Order'').
---------------------------------------------------------------------------

    Univision's relationship with Entravision is significantly 
different from previous relationships that the FCC has found to be 
non-attributable. For this reason, the cases Univision cites in 
support of its claim that its interest in Entravision, will be 
nonattributable are inapposite.
    Univision debt and equity interests in Entravision have 
historically been attributable interest. Univision has a long 
relationship with Entravision as a business partner, program 
supplier, creditor and financial backer. In return for Univision's 
support, Entravision has granted Univision significant rights, 
including the right to appoint two directors to its board and the 
right to influence its core operations. As Entravision's SEC 10K 
acknowledges, ``Univision has significant influence over our 
business.'' Univision proposes to convert its voting shares into 
non-voting shares and to give up its rights to appoint directors, to 
Entravision's board. This, however, will not change the fundamental 
well-established relationship between Univision and Entravision.
    In none of the case Univision sites, did the Commission 
permitted an applicant to convert a long-standing attributable 
relationship with another party into a non-attributable interest. 
For example, General Electric's purchase of Telemundo fully complied 
with the multiple ownership rules without the need to convert 
previously held attributable interests into non-voting, non-
attributable interests.\5\ If, for example, General Electric's 
proposed purchase of Telemundo did not comply with the FCC's 
multiple ownership rules and General Electric proposed to convert 
its attributable interest in NBC into a non-voting interest, and 
further, if the FCC had permitted such a transaction, then Univision 
would have a case on point.
---------------------------------------------------------------------------

    \5\ Telemundo Communications, Group, Inc., 17 FCC Rcd 6958 
(2002). Telemundo II).
---------------------------------------------------------------------------

    Univision's letter has little to say about its plan to retain 
the exclusive right to make national sales on behalf Entravision. 
Section 73.658(i) prohibits a television network from representing 
individual stations, affiliated with the network, for the sale of 
non-network time. In the 1970s, Univision's predecessor entity 
argued that, as fledgling network, a waiver of this rule was 
required to enhance the development of Spanish language 
television.\6\ Univision's letter merely states that Telemundo was 
given the ``exact same waiver.'' Here again the situation is quite 
different. In Telemundo II, there was no issue concerning 
Telemundo's inappropriate exercise of control over its affiliates. 
In this case, the central question is, will Univision's exclusive 
right to make national sales on behalf of Entravision give Univision 
the right to influence Entravision's core operations, especially its 
radio station holdings?
---------------------------------------------------------------------------

    \6\ Amendment of Sec.  73.658(i) of the commission's Rules, 5 
FCC Rcd 7280 (1990).
---------------------------------------------------------------------------

    Univision's letter cites, with approval, the Commission's 
statement, ``[t]he mass media attribution rules seek to identify 
those interests in or relationships to licensees that confer on 
their holders a degree of influence or control such that the holders 
have a

[[Page 66873]]

realistic potential to affect the programming decisions of licensees 
or other core operating functions.'' \7\ The FCC, while granting a 
waiver of the national spot sales rule to Univision and Telemundo, 
maintained the rule for other, non-Spanish language television 
networks. The FCC reasoned that without the rule networks would be 
able to exert undue influence over affiliate programming decisions. 
The right to sell national spot advertising gives Univision 
significant rights to influence Entravision, including, as the 
Commission has stated, the power to influence programming decisions. 
At a minimum, the FCC should forbid Univision from making national 
spot sales on behalf of Entravision, if the proposed merger is 
approved.
---------------------------------------------------------------------------

    \7\ Univision, June 25, 2003 letter citing the Attribution Order 
at p. 12560, (emphasis added.
---------------------------------------------------------------------------

    Converting Univision's voting shares in Entravision into non-
voting shares will not fundamentally change the existing 
relationship. Entravision has been and will continue to be dependent 
on Univision for it continued survival. Univision, through its 
control of national sales and it absolute right to grant or deny new 
network affiliations, will be able to control financial decisions, 
programming and personnel at Entravision owned radio stations, thus 
ensuring that Entravision's radio stations will not compete with 
HBC's radio stations. Such influence will diminish diversity and 
stifle competition, two key aspects of the FCC local ownership 
rules.
     Sincerely,
Arthur, Belendiuk
Counsel to National Hispanic Policy Institute, Inc.

cc: Chairman Michael K. Powell, Commissioner Kathleen Q. Abemathy, 
Commissioner Michael J. Copps, Commissioner Kevin J. Martin, 
Commissioner Jonathan S. Adelstein, David Brown, Esquire (Media 
Bureau, FCC), Barbara Kreisman, Esquire (Video Division, Media 
Bureau, FCC), Lawrence N. Cohn, Esquire, (Counsel for The 
Shareholders of Hispanic Broadcasting Corp.), Scott R. Flick, 
Esquire (Counsel for Univision Communications, Inc.), Harry F. Cole, 
Esquire (Counsel to Elgin FM Limited Partnership)

[FR Doc. 03-28791 Filed 11-20-03; 8:45 am]

BILLING CODE 4410-11-M