Televisa Net Falls 17% on Partner Payouts for Cable, Satellite Expansion

Grupo Televisa SAB (TLEVICPO), 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 Bloomberg.

Televisa is using promotions such as free calls to wireless phones to recruit more cable customers from America Movil SAB (AMXL), 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.

Televisa gained 2 percent to 54.2 pesos at the close in Mexico City. The shares have dropped 6.7 percent in the past 12 months.

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 pesos 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.

Sales in the broadcast division, Televisa’s largest unit, climbed 5.1 percent from a year earlier. Sales of advance advertising for 2012 rose 8.9 percent from a year earlier, Executive Vice President Alfonso de Angoitia said today on a conference call.

The content business, which includes advertising, cable network subscriptions and syndication, will expand 6 percent to 7 percent this year, with an operating profit margin of 47 percent, little changed from 2011, he said.

Televisa’s satellite-TV unit added 184,000 subscribers for a total of 4 million in 2011. This year, sales will expand at a rate in the mid-single-digit percentage points, down from 11 percent in 2011, de Angoitia said.

Capital Expenses

Capital expenses will reach $850 million, including $475 million for the cable unit, $250 million for satellite and $125 million for programming, he said.

Losses in two companies in which Televisa has stakes, U.S. broadcaster Univision Communications Inc. (UVN) and Spanish TV network Gestora de Inversiones Audiovisuales La Sexta SA, cut into net income. Those units combined for 131 million pesos in losses, up from 23.7 million pesos a year earlier.

Royalties from Univision, which licenses Televisa’s programming, will climb 8.9 percent to $245 million this year, de Angoitia said.

Income taxes more than doubled last year to 1.4 billion pesos as the company’s tax rate increased from 2010.

To contact the reporter on this story: Crayton Harrison in Mexico City at tharrison5@bloomberg.net

To contact the editor responsible for this story: Ville Heiskanen at vheiskanen@bloomberg.net

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