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Investors wondering how to play the torrid growth of the Hispanic American demographic can do little wrong by turning to Spanish media collossus Univision (UVN).

In an 8-K filed earlier last month, Univision said it was putting itself up for sale. We'd like to see GE (NYSE:GE) come in an acquire it (GE already owns UVN rival Telemundo), but Univision partner Televisa will most likely bid and win.

Univision holds an attractive portfolio of assets (radio, internet, and TV programming), and its penetration in Spanish-speaking households is truly to die for. Univision's competitive advantage is the exclusive set of rights it holds with key international content providers like Venevision. We don't see any poachers on the periphery swooping in and sticking their nose in Univision's cookie jar anytime soon.

Univision also knows how to play its cards as efficiently as possible -- execs scrap projects the moment it becomes evident to them that these won't bear fruit. Univision, in other words, tests out programming overseas before it hits US homes. A potential acquirer, perhaps threatened by faster-than-expected assimilation among Hispanic Americans, would most likely look favorably upon such "a risk cushion."

Besides its massive market share, Univision still has tremendous growth ahead of it. The US Census Bureau thinks Hispanic Americans will number 66 million by 2022 -- impressive in and of itself, but even more alarming when coupled with the fact that consumer spending among Hispanic Americans is growing faster than any other segment of the population. Global Insight estimates that Hispanic consumer expenditures will more than double from $456 billion in 2000 to over $985 billion in 2010.

One way Univision has been increasing customer captivity is via broadband: we like the prospects for the company's nascent internet business. Notice management's tone on Friday's conference call:

The internet has the potential to grow extremely fast...its great operating leverage is probably the best operating leverage of any one of our businesses and we’re really very, very bullish on it right now. It’s a big focus of advertisers and we’re well positioned, so we think it potentially will be a really nice size business for us over time.

...broadband is still a very immature market. The Hispanic internet penetration rates are in around 40% which are levels existent in 1998 or 1999. It’s still a very young, virgin market which is why we are so bullish on the future for that business.

In a word, demographic changes favor the Hispanic segment and we greatly anticipate that Hispanic broadcasters will continue to grow faster than the rest of the industry. Univision has a vise grip on eyeball count. We feel advertisers looking to tap into this segment's mushrooming purchasing power will inevitably pay top dollar. Patient investors can capitalize on this trend, as well as enjoy the upside Univision shares will see once the firm gets swallowed.


UVN 1-yr Chart

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Source: Univision Reflects Torrid Growth of Hispanic American Demographic (UVN)