Zacks_Analysts' Blog : Televisa Underperforms in 1Q11 - Analyst Blog

Grupo Televisa S.A.B. (TV), the largest integrated cable and media company in Mexico, reported first quarter of 2011 financial results, which fell below the Zacks Consensus Estimates. The company announced that it lost considerable advertisement revenue from Carlos Slim’s businesses including AmericaMovil S.A.B. de C.V. (AMX), Telefonos de Mexico S.A.B. (TMX), and Grupo Carso.   

Quarterly consolidated net income was approximately $73 million, down 17.8% year over year. First-quarter EPGDS (Earnings per Global Depository Shares) was 13 cents, significantly below the Zacks Consensus Estimate of 18 cents. Quarterly consolidated net revenue of $1,108.8 million was an improvement of 8.7% over the prior-year quarter but well below the Zacks Consensus Estimate of $1,260 million.

Quarterly gross margin was 50.8% compared with 51.2% in the prior-year quarter. First-quarter consolidated operating income was $214 million, up 0.8% over the prior-year quarter. Integral cost of financing, in the reported quarter, was $65.6 million, up 48% year over year. 

At the end of the first quarter of 2011, Televisa had approximately $3,102.2 million cash and marketable securities compared with $2,548.8 million at the end of fiscal 2010. Capital expenditure during the reported quarter was $144.1 million. During the first quarter of 2011, Televisa repurchased 0.2 million of CPOs for a total consideration of $1.1 million.

At the end of the first quarter of 2011, Televisa had $4,456.4 million of outstanding debt on its balance sheet compared with $3,894.8 million at the end of fiscal 2010. At the end of the reported quarter, debt-to-capitalization ratio was 0.51 compared with 0.47 at the end of fiscal 2010.

Television Broadcasting Segment

Quarterly revenue was $345 million, down 1.8% year over year. Operating profit was $120 million, down 11% year over year. Quarterly operating margin was 34.8% compared with 38.4% in the year-ago quarter.

Pay Television Networks Segment

Quarterly revenue was $64.5 million, up 9.5% year over year. Operating profit was $30.4 million, up 9.7% year over year. Quarterly operating margin came in at 47%, the same year over year.

Programming Exports Segment

Quarterly revenue was $66.4 million, up 19.7% year over year. Operating profit was $30.9 million, up 24.6% year over year. Quarterly operating margin was 46.5% compared with 44.7% in the year-ago quarter.

Publishing Segment

Quarterly revenue was $51.2 million, down 11.1% year over year. Operating profit was $1.7 million, down 19.4% year over year. Quarterly operating margin was 3.3% compared with 3.6% in the year-ago quarter.

Sky Segment

Quarterly revenue came in at $254.4 million, up 14.5% year over year. Operating profit was $119.8 million, up 27.6% year over year. Quarterly operating margin was 47.1% compared with 42.2% in the year-ago quarter.

Cable and Telecom Segment

Quarterly revenue was $271.3 million, up 17.9% year over year. Operating profit was $89.7 million, up 17.7% year over year. Quarterly operating margin was 33.1%, the same year over year.

Other Businesses Segment

Quarterly revenue was $79.8 million, up 18.1% year over year. Operating loss was $5.5 million, down 29.3% year over year. Quarterly operating margin was negative 6.9% compared with negative 11.5% in the year-ago quarter.

Subscriber Statistics

As on March 31, 2011, Televisa had 2,008,613 video subscribers; 852,965 broadband subscribers and 534,292 telephony subscribers. These constitute 3,395,870 revenue generating units (RGU) in the Cable and Telecom segment. As on March 31, 2011, Televisa had 3,312,106 gross active satellite TV subscribers including 151,677 commercial subscribers. Pay-Television Network Subscriber base was 26,000,000.

Our Recommendation

We maintain our long-term Neutral recommendation on Televisa. Currently, it holds a short-term Zacks #3 Rank (Hold) on the stock.