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Televisa Posts Loss on Exit From Mobile After Iusacell Sale

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Grupo Televisa SAB reported a third-quarter loss after booking a one-time charge for exiting its ill-fated investment in Mexican wireless operator Grupo Iusacell SA. The shares dropped the most in more than a year.

The net loss of 182.8 million pesos ($13.5 million) compared with net income of 2.39 billion pesos a year earlier, according to a statement yesterday from the world’s biggest Spanish-language broadcaster. Banco Itau BBA had estimated a net loss of 370 million pesos. The company said it would miss its full-year revenue forecast for its TV programming business after Mexican lawmakers placed limits on junk-food advertising.

Televisa agreed to sell its 50 percent stake in Iusacell to Ricardo Salinas for $717 million last month, taking a loss on the mobile-phone company that has struggled for years to compete against industry giant America Movil SAB. Televisa agreed in 2011 to pay $1.6 billion for a 50 percent stake in Iusacell, a deal that took a year to gain regulatory approval.

While the Iusacell deal was “painful,” it doesn’t mean Televisa is finished with the wireless market, Executive Vice President Alfonso de Angoitia said today on a conference call with analysts. The company is looking at ways to get involved the industry without requiring as much capital, he said.

“We will offer mobility to our clients one way or another,” Angoitia said.

Televisa slid 4.1 percent to 89.41 pesos at the close in Mexico City, the biggest one-day drop since June 2013. With today’s drop, the shares are still up 14 percent this year.

Billionaire Emilio Azcarraga’s broadcaster also has cable and satellite units and has explored ways to combine a wireless service with those offerings to provide a new source of growth as the broadcast business slows.

Junk Food

In the third quarter, broadcast advertising spending fell 6.4 percent from a year earlier to 6.02 billion pesos. New regulations restricted advertising for high-calorie food and beverages, mainly for programs with younger audiences. The company’s content business, of which advertising is the biggest component, won’t meet its 2014 forecast for a mid-single-digit rate of growth, Angoitia said. He didn’t give a new forecast.

Televisa faces other imminent challenges as Mexico plans to auction two national broadcast channels next year. Billionaire German Larrea, who controls Mexico’s biggest mining company, resigned from the broadcaster’s board last month to avoid a potential conflict of interest because he plans to participate in the government auction.

A bright spot in the content business has been Televisa’s deal to export programming to Univision Communications Inc., the biggest U.S. Spanish-language broadcaster. Licensing and syndication sales climbed 18 percent to 1.76 billion pesos.

Univision IPO?

Televisa co-owns Univision with private-equity firms that will eventually want to sell their stakes, either in a transaction with a private investor or in an initial public offering, Angoitia said. The U.S. broadcaster has made no decision yet, he said.

Televisa reported gains in its pay-TV segment after adding about 800,000 new video customers through its acquisition of cable operator Cablecom SA. That, plus subscriber additions in the third quarter, brought its total to 9.9 million users through its cable and satellite units -- the most in the nation.

In the satellite business alone, users grew by more than 160,000 in the third quarter, compared with a 167,000 estimate from Corporativo GBM SAB. The unit’s growth is slowing after four consecutive years of more than 1 million additions each. Televisa is relying on revenue growth from pay TV after new regulations last year required the company to start offering up its two most popular broadcast channels to other cable and satellite companies for free.

(Updates with share decline in first paragraph.)
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