Televisa Falls After Forecasting Slower Programming Growth

Grupo Televisa SAB, the world’s largest Spanish-language broadcaster, reversed earlier gains in Mexico City trading after forecasting slower growth in its programming unit.

Revenue in the content division, which relies mostly on advertising and licensing fees, will climb by a “mid-single digit” percentage this year, Executive Vice President Alfonso de Angoitia said today. That compares with last year’s 7.2 percent expansion to 32.9 billion pesos ($2.56 billion).

Bookings in the past few months of advance ad sales for the year, known as upfronts, rose 0.7 percent from a year earlier, after 8.9 percent growth in 2012, Televisa said. Government agencies that normally participate in the sales didn’t this time because they were busy with the transition to a new presidential administration, de Angoitia said on a conference call.

The upfronts also caused Mexico City-based Televisa to spend more on its TV shows to impress advertisers, cutting into fourth-quarter profit. The content division’s operating margin fell to 47 percent last quarter, from 49.2 percent a year earlier, and will remain about 47 percent this year, he said.

“Margin was the main disappointment in the quarter,” Andrew Campbell, an analyst at Credit Suisse Group AG in Sao Paulo, said in a research note published today. “We see results as neutral for the shares.” He rates the stock outperform.

Televisa fell 0.5 percent to 67.45 pesos at the close in Mexico City after climbing as much as 1.3 percent. The shares have dropped 1.2 percent this year, compared with an 0.5 percent decline for the benchmark IPC index.

Profit Climbs

The forecast for mid-single-digit revenue growth in the programming business compared with the 3.9 percent average of nine analyst estimates compiled by Bloomberg. Some of the analysts haven’t updated their outlook for several months.

Fourth-quarter net income climbed to 3 billion pesos from 2.17 billion pesos a year earlier, Televisa said yesterday in a statement. That topped the 2.6 billion average estimate. Sales rose 8.2 percent to 19.8 billion pesos, just above the 19.6 billion average estimate.

Televisa is depending more on its pay-TV businesses for expansion as growth slows at its broadcast networks, whose viewers increasingly turn to the Internet and to cable channels for entertainment. Satellite subscriptions rose 5.5 percent from the previous quarter to 5.2 million, while cable-TV accounts grew 2 percent to 2.3 million.

Broadcast advertising sales rose 3.6 percent from a year earlier to 7.7 billion pesos.

Operating income climbed 3.5 percent to 5.32 billion pesos. Net income was boosted by a gain of 687.6 million pesos from the value of derivative instruments, compared with an increase of 70.3 million pesos a year earlier.

(Televisa held a conference call to discuss the fourth-quarter results at 10 a.m. New York time. Click here for audio and a transcript.)

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