February 21, 2018 / 6:39 PM / 6 months ago

Mexico's Televisa says studying whether to keep divisions together

MEXICO CITY (Reuters) - Mexican broadcaster Televisa said on Wednesday that it was considering whether to keep the company intact or to spin off some divisions, as it tries to adapt to a changing media market and shore up advertising.

FILE PHOTO: The logo of broadcaster Televisa is pictured at a truck in Ciudad Juarez, Mexico, November 16, 2017. Picture taken November 16, 2017. REUTERS/Jose Luis Gonzalez/File Photo

Like other media companies, Televisa (TLVACPO.MX), Mexico’s largest broadcaster by far, is grappling with the rise of online streaming services and suffered a steep drop in advertising revenue last year. The company is assessing whether to keep its business units together or create separate companies, co-Chief Executive Alfonso de Angoitia said in a conference call with analysts on Wednesday.

“We are considering all types of scenarios,” said Angoitia who, along with fellow co-Chief Executive Bernardo Gomez, was promoted to succeed longtime Chief Executive Emilio Azcarraga in January.

“This is basically whether it’s good for Televisa but most importantly good to generate value for shareholders to keep all assets under the same umbrella or to create separate public vehicles.”

Angoitia said Televisa was evaluating the approaches taken by U.S. peers such as telecommunications firm AT&T (T.N), which has tried to move into content through an agreement to buy Time Warner TWX.N, and news and film conglomerate Twenty-First Century Fox (FOXA.O), which has sold off significant assets.

“Even though we now live in a world where media and telecommunications continue to converge from the point of view of customers, there does not seem to be a consensus among our peers... in terms of the right business mix,” he said.

Grupo Televisa is also considering spending more on content, Angoitia said.

Shares of Televisa, which owns Mexico’s popular “Las Estrellas” network and a sizeable stake in U.S. Spanish-language peer Univision, were down 4.66 percent in late morning trading.

Televisa on Tuesday posted a quarterly net profit down 12.5 percent from a year ago, hurt by the declines in advertising.

The company shifted its advertising clients to a new pricing scheme that went into effect this year, intended to help it capitalize on improved ratings.

Televisa has also said that it will shed assets as it doubles down on content and distribution.

Last week, the company announced that it had reached an agreement to sell its 19 percent stake in Imagina, a Spanish media group, for 284 million euros ($350 million).

In addition, Televisa recently sold Editorial Atlantida, an Argentine publishing group, to Luis Castro, an Argentine businessman, according to a person with knowledge of the matter and a statement issued by the union representing Atlantida workers.

As part of the transaction, Castro agreed to assume Atlantida’s debt, according to the source. Castro did not respond to a request for comment.

Like America Movil (AMXL.MX), the telecommunications firm owned by Mexican billionaire Carlos Slim, Televisa faces regulatory scrutiny for its high market share in Mexico.

After a recent Supreme Court decision, Mexico’s telecommunications regulator may revisit its decision that Televisa has “substantial power” in the market for pay TV, Angoitia said. That decision would require Televisa to take steps to boost competition.

“We believe that one of the probable outcomes will be that the (Federal Telecommunications Institute) will now determine that we do not have substantial market power,” said Angoitia, noting the company had not been officially notified of the court’s decision.

Reporting by Sheky Espejo and Julia Love in Mexico City; additional reporting by Nicolas Misculin in Buenos Aires; Editing by Cynthia Osterman

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