MEXICO CITY Oct 22 Broadcaster Televisa is
betting on the U.S. Hispanic market for growth after reaching a
new royalty deal with partner Univision and is sending plans to
enter Mexican mobile phone market to the backburner for now.
Grupo Televisa (TV.N) (TLVACPO.MX) said earlier this month
it was investing $1.2 billion in debt-laden broadcaster
Univision, a long-time partner that uses the Mexican company's
programs to fill in most of its prime time slots.
Under the agreement, Univision [UVN.UL] will have
unrestricted use of Televisa content for television, Internet,
video on demand and mobile phones.
"The U.S. Hispanic market is of paramount interest ... it is
a market with tremendous potential," said Televisa's Executive
Vice President Alfonso de Angoitia during a conference call
In exchange for the expanded rights and content, Televisa
will receive larger royalties from Univision through December
2017. Currently, royalties amount to 9.36 percent of
Univision's television revenue, excluding certain soccer
events, but this will rise to 11.91 percent through 2017.
"This market has a purchasing power of $1 trillion.
Advertisers are finally realizing the potential of this market
and this should reflect in Univision's strong revenue growth in
the coming years," he added.
Televisa's talks with Univision happened while the company
negotiated another deal with NII Holdings' Nextel (NIHD.O) to
enter the mobile phone market in Mexico.
But after facing dozens of legal challenges from a rival
that questioned the auction process where Televisa and Nextel
purchased a portion of spectrum, the two decided to part ways
Given the large number of injunctions "against the spectrum
auction it was in the best interest of Televisa and our
shareholders not to proceed with this transaction," De Angoitia
The executive said Televisa will continue to evaluate
opportunities for the mobile market but did not say when this
could happen or which option it would look at.
Televisa on Thursday posted a 9 percent rise in
third-quarter net earnings on higher sales driven by World Cup
advertising and paid cable and satellite television services.
Given its solid performance, De Angoitia said broadcast
television revenues could now grow between 5.5 percent and 6
percent this year, up slightly from a previous view of 5
Televisa shares slipped 0.05 percent to 55 pesos on the
Mexican stock exchange, while its New York-traded shares fell
0.18 percent to $22.25.
(Reporting by Cyntia Barrera Diaz; Editing by Steve Orlofsky)