Grupo Televisa reported mixed financial results for the third
quarter of 2014. Although the top-line improves year-over-year, the
bottom-line fell significantly below the Zacks Consensus Estimate.
We believe that the 2013 telecommunications industry reform bill of
the Mexican government will affect Televisa positively as well as
negatively. Presently, the company controls four free-to-air
broadcast channels, two of the largest satellite-based TV channels,
and three cable TV units offering triple-play TV, voice and
Internet services. A foothold in the lucrative mobile market will
make the company a highly integrated broadcasting and
telecommunication operator in Mexico. Meanwhile, the stock price
has soared nearly 32% in the last year. We, therefore, downgrade
our recommendation on Televisa to Neutral.
Grupo Televisa, S.A. (TV), incorporated in 1990, is the largest
media company in the Spanish-speaking world. It is a major player
in the global entertainment business. Televisa runs four television
networks in Mexico with around 260 affiliated stations. The company
has interests in TV production, broadcasting, international
distribution of television programming, direct-to-home (DTH)
satellite services, publishing, music recording, radio production
and broadcasting, cable television, professional sports and show
business promotions, paging services, and feature film production
and distribution. Grupo Televisa also operates a horizontal
Internet website, esmas.com, and has interest in direct-to-home
(DTH) satellite services through its 60% stake in Innova, which
runs the SKY DTH satellite system. Programs produced by the company
include: telenovelas (soap operas), sports, newscasts, sitcoms,
game shows, and musical and cultural events, which are broadcasted
through its network stations, affiliated stations, and cable
systems in Mexico, and through its DTH satellite joint ventures in
the Americas and Spain.
Televisa reports in four revenue generating segments:
Content: This segment was created in Jan 1, 2012 and covers all
sources of revenues derived from its content businesses, which were
earlier divided into TV Broadcasting, pay-TV Networks, Programming
Exports, and Online services. The Content segment has three sub-
segments, namely, Advertising, Network Subscription and Licensing
Sky: This segment provides direct-to-home broadcast satellite
pay-television services in Mexico.
Telecommunications: This segment operates a cable television
system in the Mexico City metropolitan area. The segment also
provides data and long-distance service solutions to carriers and
other telecommunications service providers through its fiber-optic
network in Mexico and the U.S.
Other Businesses: This segment offers sports and show business
promotion, soccer, feature film production and distribution,
Internet, gaming, radio operations, publishing and
Latest Development in the Mexican Telecommunications Market
The government of Mexico has decided to reform its
telecommunications sector, predominantly the wireline and wireless
phone segments and the cable and satellite TV segments. The
telecommunications sector in Mexico is highly monopolistic with one
or two companies dominating the market. The Mexican government,
however, intends to increase competition by encouraging the entry
other operators. In this regard, regulator Federal
Telecommunications Institute, which is popularly known as IFT,
identified broadcasting giant Televisa and telecom behemoth America
Movil as the dominant players in the respective markets.
Grupo Televisa S.A.- GDS* (TV): Read the Full
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