The Work

January 23, 2009 5:27 PM

Bingham, Keker Trade Barbs Over Televisa-Univision Settlement

Posted by Brian Baxter

After three weeks of trial in federal court in Los Angeles, Grupo Televisa and Univision agreed to a settlement ending their almost four-year-old legal battle on Thursday.

But the history of bad blood between the two Spanish-language media companies has apparently spilled into the relationship between their respective law firms.

Depending on whom you ask, the trial ended either because of the nearly $600 million in concessions Bingham McCutchen's Marshall Grossman won for Televisa from Univision or because Televisa executives said 'no mas' when faced with the prospect of being cross-examined by Univision's top-notch trial lawyer, John Keker of Keker & Van Nest.

As with any settlement, the truth probably lies somewhere in the middle.

A quick history lesson: Televisa, Mexico's largest media company, filed suit against Univision in U.S. district court in Los Angeles in May 2005, seeking over $100 million in damages. Televisa claimed that Univision, the leading Spanish-language network in the U.S., was unfairly profiting from a 16-year-old program license agreement (PLA) that gave it exclusive broadcast rights to Televisa programming, including its enormously popular telenovelas.

Univision stated that it had already paid Televisa $1 billion in royalties and was on the hook for another $2 billion more before the PLA was due to expire in 2017.

But when the case finally went to trial earlier this month, The Am Law Daily reported, both sides had turned to some high-priced legal talent to litigate the matter.

Univision dropped Munger, Tolles & Olson in January 2008 in favor of Keker and a team from his firm that included partners Susan Harriman, Elliot Peters, and R. James Slaugher. (The company's change in counsel was prompted by new ownership; Univision was acquired for $13.7 million in June 2006 by a private equity group led by media magnate Haim Saban.)

In Televisa's corner: Bingham's Grossman, assisted by partners Stacy Weinstein Harrison, Jonathan Loeb, and James Snell. Grossman, who merged his 40-lawyer L.A. litigation boutique Alschuler Grossman with Bingham in May 2007, took over the case from Boies, Schiller & Flexner at the end of 2005. (At the time of the merger with Bingham, Grossman told sibling publication The Recorder that his book of business was $15 million.)

While the telenovela wars may finally have ended with Thursday's announced settlement--which kept the current PLA with slight modifications by both sides--the lawyer wars are apparently just getting going.

Grossman kicked things off when he told reporters that the concessions granted by Univision as part of the agreement could be worth more than $600 million to Televisa.

"From our vantage point, the core issue was the manner in which Univision was calculating royalties due to Televisa on the programs our client was providing," Grossman says. "There was significant gamesmanship in the way those royalties were being calculated."

Grossman comes to his $600 million figure by pointing to a disputed $21.5 million already paid by Univision to Televisa under protest, which Televisa will be allowed to keep along with an additional $3.5 million chipped in by Univision as part of the settlement.

Then there's the $65 million in free ads for Televisa programs that Univision is to broadcast during each year remaining on the PLA. Grossman pegs the total value of that ad time at $585 million.

Grossman says that keeping the PLA alive is critical to debt-laden Univision because it is one of the network's few surviving revenue streams. 

"Each side got something as part of this deal but Univision should be glad to dodge a bullet," Grossman says. "The issues that gave rise to this lawsuit have all been resolved in Televisa's favor under the new PLA."

The WSJ reported that a Univision representative claims that Grossman is exaggerating the value of the settlement.

Keker, who was not immediately available for comment, apparently agrees.

"[Televisa] tried to terminate the [PLA], and didn't," Keker said in a statement released by his firm. "They tried to collect huge royalties, and didn't get them."

According to the Keker & Van Nest statement, Televisa chairman Emilio Azc√°rraga Jean was set to testify on Thursday morning and subsequently be cross-examined by Keker.

The statement notes that the two companies happened to reach their settlement that same morning, after which Televisa "dismissed its case" against Univision and "[abandoned] its claims to terminate a key agreement" with the New York-based network.

Keker wasn't the only one ticked by Grossman's victory lap. His partner, Peters, echoes Keker's position that Bingham's aggressive strategy to terminate the PLA was ultimately unsuccessful--as was the plaintiff's claim for millions in damages.

"They could have done this deal almost two years ago," says Peters, noting that the PLA was successfully renegotiated and survived while Televisa got none of the additional $93 million in damages it was seeking. (Univision only chipped in an additional $3.5 million to bring the total royalties figure to $25 million.)

As for the $65 million in advertising time for Televisa, Peters adds, that money isn't being taken out of any Univision accounts, but merely free ad time that was already included as part of the pre-existing PLA.

Meanwhile, as the lawyers squared off, the two companies issued a joint statement in which they said were pleased the settlement "concludes this time-consuming litigation."

Had Televisa won the case, it's likely the two sides would have had to have further discussions about royalties programming. Rather than continue spending millions on legal bills, it appears, both parties came to see the business sense in coming to an agreement before putting complex communications contracts before a jury.

Azc√°rraga Jean seemed to indicate as much to the Los Angeles Times on Thursday.

"This is good, good for everyone," the billionaire told reporters while leaving the courtroom after the settlement was announced.

According to the settlement, Televisa agreed to drop its case, meaning the deal won't have to be approved by U.S. district court judge Philip Gutierrez.

If Keker and his colleagues are chomping at the bit for another shot at Televisa in court, they don't have to wait long.

The two companies are due back before Gutierrez in March for a bench trial over disputed Internet rights under the PLA. This time, though, Bingham won't be involved.

Televisa is being represented by Herbert Wachtell, litigation partner Jonathan Moses, and litigation counsel Andrew Cheung of Wachtell, Lipton, Rosen & Katz in that proceeding. The firm also does corporate work for the company.

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