In the midst of the sale of Univision Music Group, the company’s president and CEO, Jose Behar, has filed a lawsuit against parent company Univision Communications and against Univision Music, alleging unfair business practices, promissory fraud and breach of fiduciary duty.
The suit was filed in Los Angeles Superior Court on Nov. 21 and alleges, among other things, that parent company Univision Communications reneged on an agreement reached on the terms of purchase of Behar’s stake in Univision Music once that label and publishing group was sold off.
Behar headed EMI Latin and was brought into Univision in 2001 to create the company’s music division from scratch. Part of the incentive for his coming in included the promise of advertising spots on the Univision network for Univision artists, as well as an equity stake for Behar in the new label, according to the suit.
The documents show he had as much as a 10% ownership interest in the label group.
Behar’s suit alleges that, beginning in 2005, Univision breached its fiduciary duty by slashing the TV advertising the Univision networks give to the music division, and by refusing to allow Behar to reduce overhead and enter into favorable long-term contracts with artists. Such steps would reduce the value of Behar’s stake in the music division, and thus lower the price Univision would be obligated to pay him for that stake in the company, the suit alleges.
Univision Music’s alleged breaches of fiduciary duties to Behar’s minority interest have caused damages “believed to exceed $30 million,” the suit says.
Behar’s employment contract extends to 2009, when his remaining ownership stake is scheduled to fully vest. His attorney declined comment, and a Univision spokesperson did not respond to a request for comment as of press time.
Thanks to the combined clout of its labels — Univision Records, Fonovisa, Disa and La Calle — Univision Music Group is the leading Latin music label in the country, with a roster of acts that includes Marco Antonio Solis, Olga Tañón, Ivy Queen, Los Tigres del Norte and Conjunto Primavera.
The sale of Univision’s music division is expected to close very shortly, according to sources close to the negotiations. Contenders to buy the company include Universal Music Group, which already distributes Univision, and Warner. Sources confirm published reports that the selling value of the company has dropped from the initial price of up to $300 million.
Univision has also been hit with payola-alleging lawsuits by ex-promotions VP Daniel Mireles and Platino Records owner Alberto Mitchell.
Additional reporting by Leila Cobo.