Mexico’s Televisa Plunges Most Since 2011 After Ad Sales Tumble

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Grupo Televisa SAB fell the most in almost four years after the world’s largest Spanish-language content producer missed sales and profit estimates as the Mexican elections season contributed to a plunge in advertising.

Televisa dropped 4.8 percent on Tuesday in Mexico City, the biggest decline since September 2011, after earlier falling as much as 6.5 percent. Mexico’s benchmark IPC index rose 0.5 percent.

The Mexico City-based broadcaster said Monday it generated 1.3 billion pesos ($82 million) in net income in the second quarter, down 40 percent from a year earlier. That compares with a median estimate of 2.5 billion pesos from four analysts surveyed by Bloomberg. The broadcaster had to offer free spots to political parties and also suffered compared with the prior year because of the loss of ad revenue from soccer’s World Cup.

“Content revenue was significantly below our estimates as the impact of the absence of the FIFA World Cup and the more limited ad inventory due to political campaigns in Mexico was much greater than we had anticipated,” Barclays Plc analyst Gilberto Garcia said in a report Tuesday.

Ad sales tumbled 16 percent to 5.2 billion pesos as the broadcaster had to offer free spots to political parties during the second quarter, executives said on an earnings call Tuesday. The period is less attractive to other clients because companies don’t want their products associated with political parties, an executive said on the call.

Gerardo Cevallos, an analyst at Vector Casa de Bolsa in Mexico City, said in a note to clients today that after the earnings call and results, he’s reviewing his valuation for the company, citing advertising revenue and changes in fees.

Meanwhile, Itau BBA SA analysts Gregorio Tomassi and Arturo Langa said in a separate note that they’re cutting Televisa’s rating to the equivalent of hold, saying that the drop in open-TV revenues from advertising “leaves us with little visibility on this important line item for the remainder of the year.”