Founders of Disa Records File Major Lawsuit Against Univision

19 July 2006

The founders of Disa Records, the most successful Mexican regional music label in the music business, announced they have filed a breach of contract lawsuit against the music division of Univision Communications Inc.

The lawsuit, filed in United States District Court, Central District of California, says that Univision has employed heavy-handed legal tactics to obstruct a five-year-old agreement under which Univision is obliged to purchase the half of Disa Records that it doesn't already own. Univision acquired in 2001 a 50% interest participation in Disa Records from the Chavez family of Monterey, Mexico, which founded the record label and continues to manage the partnership.

"We've been good partners for five years and we're mystified at Univision's bullying tactics," said Patricia Chavez, CEO of Disa Records. "My family and I are taking this step with great reluctance only because we see no alternative."

The lawsuit seeks nothing more than the value of the transaction Univision is obligated to complete.

"Univision's inexplicable and irrational avoidance of its obligations to complete the sale of Disa LLC has left Empresas Chavez II B.V. and the Chavez family members no choice but to file this action," states the lawsuit filed on their behalf.

In a tactic described as reminiscent of the "Twilight Zone," Univision recently insisted that the noncompetition agreements reached back in 2001 with the Chavez family be replaced by new non-compete undertakings subject to New York rather than California law and venue. Univision effectively said it wouldn't move forward on the Disa LLC acquisition unless the Chavez family changed the previously executed agreements.

Attorney Peter Paterno of King, Holmes, Paterno and Berliner noted that the matter could be easily resolved. "Univision made a commitment," he said. "All they have to do is follow through on their obligations. Frankly, I'm surprised that a well run company like Univision would allow its relationship with such a valued partner to founder over what appear to be extremely minor issues."

Based in Los Angeles, Univision Communications Inc. (NYSE: UVN) is the dominant Spanish-language media company in the United States. Univision's 2001 acquisition of 50% of Disa LLC gave the company its entry into the music business. It was reported last month that a consortium of investors reached an agreement to acquire Univision.

Over its 30-year history, Disa has evolved from a regional company to a successful global record label under the direction of Domingo, German, Patricia and other members of the Chavez Moreno family. The company has demonstrated a long record of discovering and developing new artists and music genres, including the extremely successful Durangense style popularized by Disa's platinum artist, Grupo Montez de Durango. The Chavez family has been a loyal, professional and successful partner to Univision during their common venture, as evidenced by Disa's 100% growth in sales in the last five-years. The Chavez family continues to manage Disa Records under the partnership agreement.

"We hope this can be resolved quickly," said Chavez. "In any case we will continue to run a great record company and work with our artists to achieve outstanding results for the partnership as we have done it in the past."

Source: prnewswire

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