- Auditor PwC is now able to sign off on annual report
- Advertising sales rise for the first time in four quarters
Grupo Televisa SAB, Mexico’s largest TV broadcaster, said an external investigation requested by the company has concluded that allegations raised against executives in an anonymous letter sent to regulators were false.
The conclusion of the probe by Wachtell, Lipton, Rosen & Katz paves the way for Televisa to file delayed financial statements after its auditor refrained from signing off on the documents pending the results of the investigation. A second law firm, Kramer, Levin, Naftalis & Frankel, advised Televisa’s audit committee and came to the same conclusion. The company also reported second-quarter results Tuesday, with advertising sales that rose for the first time in four quarters.
The maker of telenovelas that have gripped Mexican audiences for generations said in May that it had hired an outside law firm to investigate allegations of “malfeasance” made in the anonymous letter, which was sent to the company and the U.S. Securities and Exchange Commission. In the 15-page letter that has since been posted online, executives are accused of pushing political propaganda on viewers and then pocketing millions of dollars from federal and state governments.
Televisa had sent the SEC its financial statements on April 29, only to say in a follow-up regulatory filing a few days later that there had been a “misunderstanding” about whether auditor PricewaterhouseCoopers LLP had finished its review. Under the rules of the New York Stock Exchange, where the company’s American depositary receipts trade, companies have an initial period of six months after a delinquency to submit audited reports before the risk of being delisted.
“It puts us on alert,” said Jorge Unda, who oversees about $35 billion of assets as the chief Latin America investment officer for Banco Bilbao Vizcaya Argentaria SA in Mexico City, in an interview before the results of the investigation were announced. “It’s noise that shouldn’t be ignored.”
Televisa had said throughout that the allegations against its executives were “false and immaterial.”
In the second quarter, sales rose 12 percent to 23.5 billion pesos ($1.25 billion), compared with the 23.2 billion-peso average of analysts’ estimates compiled by Bloomberg. Operating-segment profit, which leaves out items such as depreciation and amortization, rose 13 percent to 9.68 billion pesos.
Advertising sales rose 2.1 percent to 5.35 billion pesos, a sign that Televisa is making progress with its plan to recover from a slump in revenue by charging advertisers a uniform, higher rate. While sales of its Sky satellite-service jumped 18 percent, content margins shrank as the broadcaster increased costs to launch its streaming-video service, Blim.