Zacks Investment Research upgraded Mexican pay-TV and
Grupo Televisa S.A.B.
) to a Zacks Rank #2 (Buy) on Jun 17, 2014.
Why the Upgrade?
The upgrade came on the back of Televisa's speculation that it
is likely to gain significantly from its stake in U.S. broadcaster
Univision Communications Inc. Privately held Univision is the
largest Spanish broadcaster in the U.S.
Currently, a considerable share of Televisa's income is
generated from its U.S. operations, which includes the content
sale, website and cable TV services. Televisa allows Univision to
access its content and then rebroadcast it on TV and on the
Internet for a royalty. The U.S. Hispanic TV market is highly
lucrative and is growing at a remarkable pace. In the first quarter
of 2014, Televisa's royalty from Univision grossed a record-high
$64.8 million, up 13.1% year over year.
Currently, Televisa effectively holds a 38% (after converting
debt into equity) stake in Univision. In early 2012, Televisa had
effectively purchased 35% stake in Univision for $1.2 billion. The
contract also allowed Televisa the right to buy an additional 5%
stake over the next five years, which will increase its potential
ownership in Univision to 40%. This means Televisa can buy another
2% stake in Univision over the next three years.
Televisa commands a very strong position in the Mexican pay-TV
market. The company is currently working toward its goal of
establishing a strong Spanish media base in North America,
comprising broadcast, Internet, publishing, and live events.
Further, the pay-TV market in Mexico remains vastly untapped.
Several industry researchers estimate that the pay-TV penetration
therein has reached barely 50%, which reflects significant
opportunity for Televisa's growth going ahead.
Televisa has witnessed upward earnings estimate revisions in the
past 30 days, with the Zacks Consensus Estimate for the year 2014
moving higher by 1.7% to $1.17 per share. For the year 2015, the
company has seen upward estimate revisions with the consensus
moving north to $1.41 from $1.39 over the past one month. Notably,
Televisa's expected earnings growth for the next year stands above
its peers like
LIN Media LLC
AMC Networks Inc.
Entercom Communications Corp.
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