Mexican Billionaire Carlos Slim. Slim’s companies stopped buying spots from Televisa this year because of a disagreement over prices Photographer: Chris Goodney/Bloomberg Grupo Televisa SA (TLEVICPO), the world’s largest Spanish-language broadcaster, reported a drop in second- quarter advertising sales after a dispute with billionaire Carlos Slim led to a slump in demand. The stock fell the most in three months.
The broadcast division, Televisa’s largest unit, reported a 5.9 percent decline in sales to 5.48 billion pesos ($458 million), Mexico City-based Televisa said today in a statement to the country’s stock exchange. Leaving out sales to Slim’s businesses, the drop would have been 1 percent, Televisa said.
Slim’s companies stopped buying spots from Televisa this year because of a disagreement over prices. The billionaire’s land-line carrier, Telefonos de Mexico SAB, competes with Televisa’s cable units for phone and Internet users, and the companies filed antitrust complaints against each other this year.
“We would welcome them back as clients anytime,” Jose Baston, Televisa’s president of television and content, said today on a conference call. The companies aren’t in talks to reach an agreement, he said.
Second-quarter net income was 1.8 billion pesos, even with a year earlier. Sales rose 4.7 percent to 15.1 billion pesos, compared with the 15 billion-peso estimate of three analysts compiled by Bloomberg.
Televisa fell 1.13 pesos, or 2.1 percent, to 53.86 pesos at 4 p.m. New York time in Mexico City trading, the most since April 7. The shares have lost 16 percent this year.
No World Cup
The stock decline compared with an 0.38 percent drop in Mexico’s benchmark IPC index and a 2.2 percent decrease in the Bloomberg Hollywood Reporter Index, which includes Televisa, Comcast Corp. (CMCSA), CBS Corp. (CBS) and other companies with a large presence in the entertainment business.
The advertising unit’s second-quarter operating profit fell to 2.62 billion pesos from 8.7 percent a year earlier, when the broadcasts of soccer’s World Cup drew more customers. The company didn’t provide a figure for sales growth leaving out revenue from the World Cup.
The division’s sales still beat the 5.43 billion-peso estimate of Gregorio Tomassi, an analyst at Banco Santander SA in Mexico City, who said the company’s operational performance was good.
“The valuation of the stock is still putting some more expectations on results than what we are seeing here,” Tomassi, who advises holding on to the shares, said today in a phone interview. “I’m not sure the stock has room to react.”
The stock decline today, the seventh in the past eight trading days, may have been the result of investors continuing to collect profits after the shares reached a nearly three-month high of 58.37 pesos on June 29, said Martin Lara, an analyst at Corp. Actinver SAB in Mexico City who advises holding on to the shares.
“When you have an in-line quarter like this, investors take profits,” he said today in a phone interview.
Revenue from U.S. broadcaster Univision Communications Inc., which pays royalties to Televisa for programming, gained 63 percent to $60.2 million. Televisa agreed in October to a new royalty arrangement with higher payments as part of a plan to invest $1.2 billion in Univision for a stake of as much as 35 percent.
Satellite subscriptions rose by almost 274,000 to 3.59 million, and the three cable carriers controlled by Televisa added almost 80,000 TV customers for a total of 2.09 million.
During the quarter, the company paid $1 billion in cash as part of its $1.6 billion transaction to acquire a 50 percent stake in Grupo Iusacell SA, Mexico’s third-biggest wireless carrier. The rest will be paid by the end of the year, the company said.
The transaction, which is being considered by Mexico’s antitrust agency, would put Televisa in direct competition in the mobile-phone industry with Slim’s America Movil SAB, the nation’s biggest wireless carrier, and Telefonica SA (TEF), the second-biggest. Televisa Executive Vice President Alfonso de Angoitia said today on the conference call that the company expects antitrust approval of the deal.
((Televisa held a conference call today to discuss second- quarter results. To listen, click here.))
To contact the reporter on this story: Crayton Harrison in Mexico City at tharrison5@bloomberg.net
To contact the editor responsible for this story: Peter Elstrom at pelstrom@bloomberg.net
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