Televisa Misses Q2 Earnings by a Penny, Tops Revs - Analyst Blog

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Mexican pay-TV and broadcasting behemoth Grupo Televisa S.A.B. ( TV ) reported mixed financial results for the second quarter of 2014. Net income came in at around $203.5 million, up 19.5% year over year. However, earnings per Global Depository Shares (GDS) stood at 35 cents, missing the Zacks Consensus Estimate by a penny.

Quarterly consolidated net revenue of around $1,489.5 million, reflects an improvement of 7.1% over the prior-year quarter and also surpassed the Zacks Consensus Estimate of $1,400 million. Televisa currently carries a Zacks Rank #3 (Hold).

Gross margin came in at 47.5% compared with 47.8% in the year-ago quarter. Consolidated operating income was $374.8 million, down 1.8% from the prior-year quarter. Operating margin was 25.2% compared with 27.4% in the year-ago quarter. Capital expenditure, during the reported quarter, was approximately $245.6 million.

At the end of second-quarter 2014, Televisa had approximately $2,851.7 million in cash and marketable securities and $5,695.3 million of outstanding debt compared with $1,572 million of cash and marketable securities and $4,624.3 million of outstanding debt at the end of 2013. At the end of the reported quarter, the debt-to-capitalization ratio was around 0.47 against 0.43 at the end of 2013.

Content Segment

Quarterly total revenue came in at $662.6 million, up 4.4% year over year. Operating profit was $304.7 million, down 2.7% year over year, while operating margin was 46% compared with 49.3% in the year-ago quarter. Quarterly royalty from Univision was a record-high $84 million, up 19.1% year over year.  

Within this segment, Advertising revenues totaled $482.4 million, up 6% year over year. Network Subscription revenues were $51.7 million, indicating a decrease of 23.8% from the year-ago quarter. Licensing and Syndication revenues were $128.5 million, up 15.2% year over year.  

Sky Segment

Quarterly revenues came in at $333.7 million, up 8.3% year over year. Operating profit was $160.3 million, up 10.7% year over year. Quarterly operating margin was 48% compared with 47% in the year-ago quarter.

Telecommunications Segment

Quarterly revenues were $369.9 million, up 14.7% year over year. Operating profit totaled $136.9 million, up 12.4% year over year. Operating margin came in at 37% compared with 37.7% in the year-ago quarter.

Other Businesses Segment

Quarterly revenues were $149.9 million, down 1% year over year. Operating income stood at $15.3 million, down 4.4% year over year. Operating margin was 10.2% as against 10.5% in the year-ago quarter.

Subscriber Statistics

As of Jun 30, 2014, Televisa had 2,570,599 Video subscribers; 1,840,348 Broadband Internet subscribers; and 990,785 Telephony subscribers, which together constitute 5,401,732 revenue generating units (RGU) in the Telecommunications segment. The company also had 6,357,552 net active Satellite TV subscribers, up 12.6% year over year. In the reported quarter, the Sky segment added 203,262 net active subscribers.

Our View

Televisa is likely to gain significantly from its ownership stake in the U.S. broadcaster Univision Communications Inc. In 2007, Univision was acquired by a consortium led by billionaire Haim Saban. Other investors in the group were Madison Dearborn Partners, Providence Equity Partners, TPG and THL Partners.

At present, the owners of Univision are exploring strategic options to sell the company and may also consider an initial public offering (IPO) in 2015. Univision's owners have held talks with CBS Corp. ( CBS ), Time Warner Inc. ( TWX ) and Viacom Inc. ( VIAB ) regarding this, however, nothing concrete has emerged so far. According to industry rumors management is expecting more than $20 billion from the Univision sale.

In 2012, Televisa started investing in Univision and currently effectively holds a 38% (after converting debt into equity) stake in the company. Moreover, Televisa has the scope to buy another 2% stake of Univision within the next three years. Consequently, the Mexican broadcaster is positioned to gain significantly from the Univision sale.


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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Business , Earnings , Stocks

Referenced Stocks: IPO , TV , TWX , CBS , VIAB

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