UPDATE: Mexico's Televisa 2Q Profit Flat On Year At MXN1.8 Billion
July 11 2011 - 11:48AM
Dow Jones News
Mexican broadcast and telecommunications concern Grupo Televisa
SAB (TV, TLEVISA.MX) said Monday its net profit in the second
quarter was unchanged from a year earlier at 1.8 billion pesos
($154 million) as higher royalties from U.S. network Univision
Communications Inc. (UVN) and stronger sales from pay TV businesses
offset a drop in broadcast-advertising revenue.
Sales in the quarter rose 4.7% to MXN15.13 billion. Royalties
from Univision were 63% higher at $60.2 million following an
agreement last year in which Televisa acquired a stake in the U.S.
broadcaster and extended its program licensing agreement.
Televisa Executive Vice President Alfonso de Angoitia said
during a conference call with analysts that the company expects
royalties from Univision to reach $220 million this year.
Sales at satellite-TV business Sky Mexico rose 10% to MXN3.12
billion, as the unit added 274,000 subscribers for a total of just
under 3.6 million.
Cable TV and telecommunications sales rose 15% to MXN3.33
billion.
The company also benefited from a decrease in financing costs as
the Mexican peso appreciated 1.5% against the U.S. dollar during
the quarter compared with a 4.1% depreciation in the like-2010
quarter.
The quarterly sales increases were offset by a 5.9% drop in
broadcast advertising revenue, to MXN5.48 billion, as companies
controlled by billionaire Carlos Slim pulled advertising with
Televisa in a dispute over rates.
Televisa said that, excluding the effect of the Slim companies,
broadcast revenue was 1% lower than a year ago.
Slim controls Mexico's two largest phone companies, fixed-line
operator Telefonos de Mexico SAB (TMX, TFONY) and wireless carrier
Telcel, a unit of America Movil SAB (AMX.MX, AMX, AMOV), among
other firms.
Jose Baston, president of television and content at Televisa,
said the company has begun to compensate for the loss of revenue
from Slim's companies via advertising from other clients and cost
controls.
Baston added that Televisa is open to negotiate with Slim's
companies to bring them back on board "whenever they are
ready."
Televisa also received revenue from the soccer World Cup in the
second quarter of 2010 which didn't reoccur in the most recent
quarter. Baston said that Televisa will encounter another difficult
comparison base in the third quarter because World Cup revenue
spilled into that period of 2010 as well.
Operating profit in the quarter slipped 0.6% to MXN4.21
billion.
Televisa plans to invest $1.6 billion for half of Mexican
wireless carrier Grupo Iusacell, which is owned by the controlling
shareholder of rival broadcaster TV Azteca SAB (AZTECA.MX).
De Angoitia dismissed concerns that Mexico's communications
regulator Cofetel may not approve the transaction, saying that the
deal should go through because Televisa doesn't have a presence in
the wireless market.
He welcomed recent regulatory efforts to increase competition in
telephony, saying that the reduction in termination rates for calls
to mobile phones will likely benefit the end-consumer and act as an
incentive for Televisa's fixed-line customers to complete more
calls.
"We have not seen this type of change in Mexico in a long
time--we are very happy," De Angoitia said.
-By Anthony Harrup and Amy Guthrie, Dow Jones Newswires;
5255-5890-5176; mexico@dowjones.com
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