Pay-TV Surge Boosts Televisa Profit - Analyst Blog
October 30 2012 - 8:30AM
Zacks
Driven by strong growth of its
pay-TV services, Grupo Televisa S.A.B. (TV)
handily beats the Zacks Consensus Estimates in the third quarter of
2012. Quarterly consolidated net income was approximately $222
million, up by a considerable 41.5% year over year. The annualized
upsurge primarily resulted from an increase in the top line and a
significant reduction of financing costs. Third-quarter earnings
per Global Depository Shares were 39 cents, well above the Zacks
Consensus Estimate of 33 cents.
Quarterly consolidated net revenue
of around $1,347 million was an improvement of 8.7% over the
prior-year quarter and exactly in line with the Zacks Consensus
Estimate. Except the Other business segment, all the remaining four
business segments of Grupo Televisa witnessed considerable sales
growth.
Quarterly gross margin was 58.3%
compared with 56.7% in the year-ago quarter. Third-quarter
consolidated operating income was $377.4 million, up 8.6% over the
prior-year quarter. Quarterly operating margin was 28% compared
with 28.1% in the year-ago quarter.
Capital expenditure, during the
reported quarter, was $228.2 million. At the end of the third
quarter of 2012, Televisa had a little over $1,675 million in cash
and marketable securities compared with $1,549.9 million at the end
of 2011. At the end of the reported quarter, Televisa had $4,113.9
million of outstanding debt on its balance sheet compared with
$4,059.1 million at the end of 2011. At the end of the previous
quarter, debt-to-capitalization ratio was around 0.45 compared with
0.49 at the end of 2011.
Content
Segment
Quarterly total revenue was $648
million, up 4.4% year over year. Operating profit was $328 million,
up 5.6% year over year. Quarterly operating margin was 50.6%
compared with 50% in the year-ago quarter. Royalty from Univision
was $62 million, up 6.5% year over year.
Within this segment, Advertising
revenue was $474.9 million, up 1% year over year. Network
Subscription revenue was $63.8 million, up 22.2% year over year.
Licensing and Syndication revenue was $109.3 million, up 11.3% year
over year.
Publishing
Segment
Quarterly revenue was $64.3
million, up 16.7% year over year. Operating profit was $9.6
million, up 1% year over year. Quarterly operating margin was 14.9%
compared with 15.1% in the year-ago quarter.
Sky Segment
Quarterly revenue came in at $288.9
million, up 18.9% year over year. Operating profit was $133
million, up 17.6% year over year. Quarterly operating margin was
46% compared with 46.5% in the year-ago quarter.
Cable and Telecom
Segment
Quarterly revenue was $301.9
million, up 14.6% year over year. Operating profit was $111
million, up 19% year over year. Quarterly operating margin came in
at 36.8% compared with 35.4% in the year-ago quarter.
Other Businesses
Segment
Quarterly revenue was $71.4
million, down 4.4% year over year. Operating income was $0.9
million compared with an operating loss of $0.5 million in the
year-ago quarter. Quarterly operating margin was 1.3% compared with
a negative 0.7% in the year-ago quarter.
Subscriber
Statistics
As of September 30, 2012, Televisa
had 2,263,631 Video subscribers; 1,249,377 Internet Broadband
subscribers; and 729,982 Telephony subscribers, which together
constitutes 4,242,990 revenue generating units (RGU) in the Cable
and Telecom segment. As of September 30, 2012, Televisa had
4,883,388 net active Satellite TV subscribers including 161,484
commercial subscribers. These figures were up 27.7% and 3.8% year
over year, respectively. In the reported quarter, Sky segment
generated a record-high 332,693 net active subscribers.
Our
Recommendation
Televisa is on the verge of
entering into the lucrative Mexican wireless market through its
partnership with Grupo Iusacell. Mexican wireless market is highly
monopolistic. Telcel, a unit of America Movil SAB
(AMX), controls over 70% of the market, Telefonica
SA (TEF) controls more than 22%, and Iusacell controls
hardly 5% of market share. Undoubtedly, a foothold in the lucrative
wireless market will make Televisa a highly integrated broadcasting
and telecom operator in Mexico.
We maintain our long-term Neutral
recommendation on Televisa. Currently, it holds a short-term Zacks
#3 Rank (Hold) on the stock.
AMER MOVIL-ADR (AMX): Free Stock Analysis Report
TELEFONICA S.A. (TEF): Free Stock Analysis Report
GRUPO TELEVISA (TV): Free Stock Analysis Report
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