As Televisa Upgrades Revenue Outlook, FX Volatility Contains Margin

Date : 07/10/2012 @ 11:34AM
Source : Dow Jones News
Stock : Grupo Televisa S.A. (TV)
Quote : 20.62  0.15 (0.73%) @ 4:02PM

As Televisa Upgrades Revenue Outlook, FX Volatility Contains Margin

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--Televisa predicts higher growth in 2012 content revenue

--Margin outlook unchanged given FX volatility

--Wireless operator Iusacell could merit more capital

By Amy Guthrie

MEXICO CITY--Spanish-language media company Grupo Televisa SAB (TV, TLEVISA.MX) said Tuesday it has raised its growth projection for content revenue this year by one percentage point, to between 7% and 8%, while maintaining its margin outlook of 47% for 2012.

Televisa Executive Vice President Alfonso de Angoitia explained during a conference call that the company is being conservative in keeping its margin forecast, since foreign exchange fluctuations have a tremendous impact on the business. "If the peso appreciates, that would change the scenario," he said.

The company, which is Mexico's biggest television broadcaster and the world's top producer of Spanish-language programming, reported content revenue of 30.69 billion pesos ($2.29 billion) for 2011.

During the second quarter, content revenue grew by 8.2% on the year amid higher network subscriptions in areas such as pay-TV, as well as from growth in licensing and syndications. Televisa receives royalties from its stake in Univision, the U.S.'s largest Spanish-language network and fifth-biggest network overall, and revenue from an agreement with online movie and TV service Netflix.

Televisa plans to make a capital expenditure of $850 million in 2012, with $475 million going toward the company's cable and telecommunications business, $250 million for satellite TV business Sky Mexico and $125 million for broadcast content and other areas.

"We're in a heavy capex phase, driven largely by growth," Mr. De Angoitia said.

The company could opt to invest additional capital in Mexican mobile operator Grupo Iusacell, Mr. De Angoitia said, depending on the carrier's growth trajectory.

Televisa reached an agreement last year to invest $1.6 billion for a 50% stake in Iusacell. The media firm seeks to add mobile phone service to its triple-play package offerings, which currently include bundled fixed-line phone, pay-TV and Internet service.

Iusacell announced a network-sharing pact in June with the Mexican unit of Spanish phone company Telefonica SA (TEF); combined the carriers serve 27 million wireless subscribers for a market share of roughly 30%. America Movil SAB's (AMX, AMX.MX) Telcel unit dominates the Mexican mobile market.

The Telefonica agreement should allow Iusacell to offer additional services at a lower cost, given Telefonica's more extensive network. Yet the pact also raises the question of whether Iusacell could acquire Telefonica's Mexican business as the Spanish firm studies the sale of nonstrategic assets.

Mr. De Angoitia said that while Televisa believes that consolidation in the Mexican mobile industry would be good for the market, Televisa has not "explored" this possibility.

Nor is the company working on an initial public offering of Univision, he said.

Write to Amy Guthrie at

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