Grupo Radio Centro SAB, whose stations reach half of Mexico City’s residents, had its biggest weekly drop in more than two years after it failed to come up with the money needed to buy a national-television license.
Shares have fallen 20 percent this week, the most since January 2013. The stock declined 2.8 percent today to 17.5 pesos at the close in Mexico City trading.
Radio Centro said April 10 that it wouldn’t be able to pay the 3.06 billion pesos ($200 million) required in the bidding process to get a new TV network. The Mexico City-based company had secured the right to operate a network from regulators on March 11.
The payment amount was equal to Radio Centro’s total assets and more than triple the company’s sales last year, according to filings. Radio Centro had 96.1 million pesos in cash as of March 31. The company had to forfeit a guarantee payment of 415 million pesos it pledged earlier in the process.
Radio Centro “presented a bid that wasn’t credible or sustainable given its financial situation,” Ramiro Tovar Landa, a regulatory consultant with Mediatelecom, wrote in a research note dated April 14.
The auction marked Mexico’s first national TV broadcast license awarded in more than two decades. It’s part of President Enrique Pena Nieto’s push to increase competition in the broadcast and telecommunications industries.
New regulations signed into law by Pena Nieto last year stipulate the creation of two new networks to compete with Grupo Televisa SAB and TV Azteca SAB, which currently control all of Mexico’s broadcast TV market. Cadena Tres won the right to operate one of the new networks in the auction, and regulators said they are analyzing what they will do with the unused spectrum now that Radio Centro’s bid fell apart.