Televisa revenue rises but weaker peso hurts profit
(Reuters) - Mexico's Televisa, the world's biggest producer of Spanish-language TV content, said on Tuesday the weaker peso caused its debt servicing costs to jump, offsetting a double-digit jump in second-quarter revenue.
The peso slipped more than 4 percent against the dollar in the second quarter, increasing the costs of Televisa's dollar-denominated debt.
Still, investors responded positively to the 12.3 percent jump in revenue triggered by a pickup in pay-TV subscribers. Televisa (TLVACPO.MX) shares ended up 1 percent at 57.09 pesos by the end of Tuesday trading.
Televisa said it added pay-TV subscribers in the quarter, mostly in Mexico, and it ended June with 32 million subscribers compared to 27.8 million in the year-earlier quarter.
Advertising spending was flat, however, hurt by a lack of advertising revenue during the presidential election campaign and foreign exchange losses.
"Advertising revenue remained practically flat, reflecting the temporary absence of investment from certain advertisers due to electoral campaigns in Mexico during the quarter," the company said in a statement.
The broadcaster earned 1.396 billion pesos ($105 million) in the April-June period, down from 1.662 billion pesos in the same quarter of 2011.
The company also took a second-quarter accounting hit on the value of its investment in cell phone company Iusacell, which is denominated in dollars.
Televisa, which had injected $1.6 billion in debt into the tiny cell phone company, last month finally sealed the terms of a deal converting that debt into a 50 percent equity stake, after the companies agreed to conditions imposed by Mexico's competition watchdog.
Iusacell is an affiliate of Televisa rival TV Azteca and competition regulators were worried the deal could create an incentive for Televisa and Azteca to fix TV advertising prices since together they control more than 90 percent of that market.
The tie-up allows Televisa to enter Mexico's mobile phone market, which is dominated by America Movil (AMXL.MX), the company controlled by Carlos Slim, the world's richest man.
The arrangement will also allow Televisa to bundle together its internet, cable and satellite TV packages with cell phone offers, executives told analysts on a call discussing results.
Emilio Azcarraga, chairman and chief executive of Televisa, will become co-chairman of Iusacell as part of the deal, Televisa executive vice president Alfonso de Angoitia told analysts on a conference call.
Televisa may increase its spending on Iusacell to help the company's chances of taking on Slim's America Movil, executives told analysts.
"We are focusing on improving the operations of Iusacell which is a challenge, as you know, it is really tough to compete against the incumbent," de Angoitia said.
Iusacell last month reached a separate deal with Spain's Telefonica (TEF.MC) to share infrastructure in Mexico and that should help boost Iusacell's subscriber base, de Angoitia said.
"We will invest additional capital in Iusacell to the extent that Iusacell is growing," he said, adding that Televisa does not yet have details on how much that might be. "We will start to share more information about Iusacell in the next quarter."
The terms of the deal allow Televisa to make an additional payment of $400 million to Iusacell if it reaches a cumulative core profit (earnings before interest, taxes, depreciation and amortization) of $3.472 billion before the end of December 2015, according to a Televisa regulatory filing.
Iusacell does not publicly report financial results.
($1 = 13.3396 at end June)
(Reporting by Elinor Comlay, Tomas Sarmiento and Mica Rosenberg; Editing by John Wallace and Tim Dobbyn)
- Tweet this
- Share this
- Digg this