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Televisa Profit Climbs as Pay-TV Subscriptions Increase

Grupo Televisa SAB, the largest Spanish-language TV producer, rose the most in more than a year as cable and satellite subscriptions helped increase second-quarter profit by 31 percent.

Televisa jumped 5.5 percent to 65.68 pesos at the close in Mexico City, the biggest one-day increase since November 2011. The shares have fallen 3.8 percent this year, compared with 8 percent for the benchmark IPC index.

While pay-TV services have become Televisa’s biggest growth engine, its broadcasting advertising showed signs of recovery despite lower government spending since President Enrique Pena Nieto took office in December. The company has also benefited from increased revenue from its cable channels, such as sports station Televisa Deportes and music-video network Bandamax.

“These results will be positive for Televisa’s stock price,” said Gregorio Tomassi, an analyst at Itau BBA SA in Mexico City, in a research note today. “They show higher-than-expected profitability in key business lines -- content, and cable and telecom.” He has the equivalent of a neutral rating on the shares.

Net income climbed to 1.83 billion pesos ($142 million) from 1.4 billion pesos a year earlier, the Mexico City-based company said yesterday in a filing. Leaving out some items, profit was 7.46 billion pesos, beating the 6.98 billion-peso average of five analysts’ estimates compiled by Bloomberg.

The number of cable-TV customers rose by 41,000 to 2.41 million, while satellite subscribers rose by 233,000 to 5.65 million, Televisa said.

No Forecast

Spending on commercials on Televisa’s Mexican broadcast networks rose 6.2 percent from a year earlier to 5.91 billion pesos, bounding back from a 7.2 percent first-quarter decline, the company said. Cable-network subscription revenue rose 9.5 percent to 882 million pesos.

Advertising by government agencies at the federal and state level has yet to return since the election, Televisa Executive Vice President Alfonso de Angoitia said today on a conference call. The broadcast business will also be hurt this year by a new law that requires it to offer its over-the-air programming for free to all pay-TV carriers, he said.

Because Televisa hasn’t been able to estimate the impact of those items, it will stop providing a forecast for its content business this year, de Angoitia said. It had previously forecast a “mid-single digit” percentage increase in sales for the unit, which includes broadcast advertising, cable-network subscriptions and licensing and syndication fees.

Total second-quarter sales climbed 6.4 percent to 18.1 billion pesos. The company reported that losses from joint ventures, mostly from mobile-phone carrier Grupo Iusacell SA, in which it has a 50 percent stake, reduced earnings by 461.8 million pesos.

(Televisa discussed second-quarter results on a conference call today. For details, click here.)

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