Grupo Televisa SA, the world's largest Spanish-language broadcaster, said fourth-quarter profit fell 7 percent on slowing advertising growth and higher taxes.
Net income slid to 2.34 billion pesos ($216.4 million) from 2.52 billion pesos a year earlier, the Mexico City-based company said today in an e-mailed statement. Sales rose 11 percent to 10.7 billion pesos from 9.65 billion pesos a year earlier. The company doesn't report earnings per share.
A slowdown in broadcast and satellite TV combined with taxes and currency losses to trim profit. The company said broadcast revenue will fall more than 5 percent in the first half of 2007 from a year earlier, when World Cup soccer and the Mexican presidential election boosted sales. Chief Executive Officer Emilio Azcarraga is counting on cable and a new gambling business to boost growth.
``Last year was really a very good year for special events for the company,'' said Rodrigo Ortega Salazar, a senior analyst with BBVA Bancomer SA in Mexico City. ``That decline was really not a surprise,'' he said.
Ad sales at Televisa's broadcast network rose 1.4 percent, adjusted for inflation, to 6.16 billion pesos.
Sales at Televisa's satellite-television service, Sky Mexico, rose 17 percent to 1.89 billion pesos, the company said. Cable television revenue continued to increase, gaining 37 percent to 555.6 million pesos. Televisa's cable television operation has 497,000 subscribers, the company said.
``Cable is what they're betting on for growth,'' Ortega Salazar said in a telephone interview.
Investment in Rival
Televisa announced it invested $258 million in debt of a company holding a stake in Cablemas SA, Mexico's second-largest cable operator. The five-year notes are convertible to equity in the holding company, which owns 49 percent of Cablemas. The conversion would require regulator approval, Televisa said.
Mexican regulators blocked Televisa's efforts to buy another cable television company, the newspaper El Universal reported in October.
``Televisa is reducing competition in the sector,'' said Raymundo Cardenas, a lawmaker with the party of the Democratic Revolution, in an interview from Mexico City yesterday. Cardenas presented a resolution this week in the Congress urging the Federal Competition Commission to investigate the deal.
Taxes were 592.4 million pesos, compared with a benefit of 479 million pesos last year. The company had a one-time tax gain last year from credits in its satellite division.
Gambling
The company had little revenue from its gambling business, which started with bingo-style parlors last year and added a lottery this month. Lottery sales could reach 2 billion pesos, or 4.7 percent of Televisa's revenue, this year, Analyst Vera Rossi at Morgan Stanley in New York said in a Feb. 13 report.
Azcarraga plans to shed his company's 11 percent stake in Univision Communications Inc., the No. 1 U.S. Spanish-language network, after failing in an effort to gain control of the broadcaster. Univision, which has rights to Televisa-produced shows, agreed to an investor-led buyout last year.
Televisa's U.S. shares fell 94 cents, or 3.2 percent, to $28.90 in extended trading in New York. Televisa's Mexican shares have risen 13 percent this year compared with the Bolsa index's 8.1 percent gain.
Net income was hurt by a foreign exchange loss of 205.5 million pesos as a result of the appreciation of the Mexican peso against the U.S. dollar. Televisa said in October it lost money when the Mexican peso rose and it held a higher-than-usual amount of dollars.
source:www.bloomberg.com
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