Top Mexican broadcaster Televisa and its U.S. licensee Univision on Friday rested their cases in a lawsuit to determine if Televisa can transmit its TV shows to U.S. markets on the Internet.
U.S. District Judge Philip Gutierrez, who is hearing the case without a jury, ordered the parties to return to his Los Angeles courtroom for closing arguments on July 8, at which time he may issue a tentative ruling.
Gutierrez gave no sign of how he would rule in the case, but told Televisa attorney Herbert Wachtell earlier this week that the common sense thing that has been bothering me is that (former Univision Chairman and Chief Executive Jerry) Perenchio would allow Televisa to become a competitor ... that there was this giant loophole in the program licensing agreement.
The lawsuit centers on how to interpret a clause in a 1992 program license agreement (PLA) that originally dealt with the spillover of Televisa's broadcast signal across the U.S.-Mexico border into Univision's licensed territory.
Televisa executives say the 1992 contract did not contemplate Internet distribution, and subsequent amendments and technological advances allow it to transmit programing via satellite into the U.S. as long as it originates in Mexico.
Basically (the contract says) that if we were transmitting in any electronic form from Mexico, we would do it (and) the Internet is electronic, Televisa Chief Executive Emilio Azcarraga Jean testified.
Univision's Perenchio testified that the PLA gives it exclusive rights to distribute the Televisa-made shows in U.S. markets, and that a breach of the agreement could destroy or severely wound the network.
As part of a truce over the issue, neither company offers the popular programing, including daily telenovelas, on U.S.-facing websites, but Televisa said the programs would continue to be widely pirated until the disputed contract expires in 2017 if viewers have no Internet option.
Both companies concede that potential ad revenue from Internet streaming of programs is not significant at this point. But a PriceWaterhouseCoopers study shows that Internet advertising is expected to grow by double-digit percentages over the next four years to about $40 billion in U.S. markets.
Julio Rumbaut, U.S. Hispanic media consultant, said a loss would probably hurt Univision more than Televisa in the short-run, revenue considerations aside.
Theoretically, Televisa could send new media here before Univision runs it, Rumbaut said. It may not be a revenue problem today but could be an audience attrition problem.
(Reporting by Gina Keating; Editing by Gary Hill)