Televisa Remains Neutral - Analyst Blog
January 03 2013 - 11:20AM
Zacks
We reaffirm our long-term Neutral
recommendation on Grupo Televisa S.A. (TV). The
company’s third-quarter 2012 financial results easily outpaced the
Zacks Consensus Estimates. In the reported quarter, except the
Other business segment, all the remaining four business segments of
Televisa witnessed considerable sales growth. Moreover, Televisa
continues to generate higher royalties from its Univision
venture.
At present, a considerable share of
Televisa’s income comes from its U.S. operations, including the
sale of content, website and cable television. We believe the deal
will be beneficial to both Televisa and Univision. Televisa allows
Univision to access its content and then rebroadcast it on
television and the Internet for a royalty. The U.S. Hispanic TV
market is highly lucrative and growing at a remarkable pace. In the
previous quarter, royalty from Univision was $62 million, up 6.5%
year over year. Management estimated that Univision will generate
$245 million of royalty revenue in 2012.
We are quite optimistic regarding
the newly formed Televisa-Iusacell venture in the Mexican wireless
market. 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.
Televisa controls four free-to-air
broadcast channels, the largest of the two satellite TV channels,
and three cable TV units offering triple-play TV, voice and
Internet services. Undoubtedly, a foothold in the lucrative mobile
market will make the company a highly integrated broadcasting and
telecom operator in Mexico. Nevertheless, We believe Televisa is
currently fairly valued as the stock price has soared over 47% in
the last year.
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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