Televisa Profit Drops 17% on Payouts for Pay-TV Expansion

Televisa Profit Drops 17% on Payouts for Pay-TV Expansion

Grupo Televisa SAB, the world’s
largest Spanish-language broadcaster, said fourth-quarter profit
fell 17 percent as growth in its pay-TV divisions led to bigger
payouts to partners.
Net income declined to 2.17 billion pesos ($169 million)
from 2.62 billion pesos a year earlier, Mexico City-based
Televisa said yesterday in a filing. Sales rose 11 percent to
18.3 billion pesos, beating the 17.9 billion peso average
estimate of five analysts polled by Bg.
Televisa is using promotions such as free calls to wireless
phones to recruit more cable customers from America Movil SAB,
the phone company controlled by billionaire Carlos Slim. The
three cable carriers controlled by Televisa added 61,000 TV
subscribers, 92,000 Internet users and 40,000 voice plans.
Sales in the broadcast division, Televisa’s largest unit,
climbed 5.1 percent from a year earlier. The satellite-TV
business added 184,000 subscribers for a total of 4 million.
Televisa gained 0.6 percent to 53.48 pesos at 8:44 a.m. in
Mexico City. The shares had dropped 9.6 percent in the 12 months
before today.
Even as the company offered promotions to lure customers,
profit margins were little changed in the satellite business and
expanded in the cable unit, helping push operating profit up 16
percent.
The pay-TV growth also cut into net income, since Televisa
has to pay out a portion of its profits to DirecTV, which owns
42 percent of its satellite business, and to Grupo Multimedios,
which owns half of its TVI cable unit.

Higher Payouts

Payouts to such partners rose to 385 million pesos from 94
million a year earlier. A weaker peso and higher interest
payments also hurt net income, pushing financing costs up 54
percent to 1.08 billion pesos.
Losses in two companies in which Televisa has stakes, U.S.
broadcaster Univision Communications Inc. and Spanish TV network
Gestora de Inversiones Audivisuales La Sexta SA, cut into net
income. Those units combined for 131 million pesos in losses, up
from 23.7 million a year earlier.
Income taxes more than doubled to 1.4 billion pesos as the
company’s tax rate increased from 2010.