Televisa, Dish Mexico Push Pay-TV Offers as Analog Cutoff Looms

  • Potential customer pool swells with Dec. 22 cutoff weeks away
  • Mexican pay-TV subscriptions lag behind Latin American average

Grupo Televisa SAB and Dish Mexico are benefiting from the country’s transition to digital broadcasting, promising millions of Mexicans they don’t have to spend a day without TV.

As Mexico switches to digital from analog broadcasting on Dec. 22, a pool of potential customers is opening for pay-TV providers Televisa, Dish Mexico and Megacable Holdings SAB, Itau BBA analyst Gregorio Tomassi said in Nov. 26 note to clients. The companies are offering plans targeting the estimated 3.1 million households that could tune into static in two weeks unless they buy a digital television or converter box -- or sign up for cable or satellite service.

While a new digital TV can cost at least 3,000 pesos ($178), Televisa’s prepaid Sky VeTV is luring customers potentially affected by the cutoff and costs 169 pesos a month. It has done well in towns like Monterrey, Mexico’s third-biggest city, Televisa said in an e-mailed statement. The transition has helped boost Dish Mexico’s subscriber growth this year, said Felipe Chao, a spokesman for closely held MVS, which co-owns Dish Mexico. Neither Televisa nor Dish would give specific growth figures.

“As the shutdown approaches and families are faced with choices, this is of course an opportunity for pay-TV operators,” Maria Elena Estavillo, a commissioner on Mexico’s telecommunications regulator IFT, said in an interview. “This market’s current situation leaves a lot of room for growth.”

While more than 9 out of 10 Mexican homes have a TV, only 48 percent have a pay-TV subscription, trailing the Latin America region average of about 57 percent, according to the Latin American Multichannel Advertising Council. Televisa is the biggest provider of pay-TV services in Mexico, with a 62 percent market share, followed by Dish Mexico and Megacable, according to Dataxis.

A press official for Megacable had no comment when asked about their subscriber growth in the runup to the switch to digital broadcasting. The company is promoting a 219 peso-a-month offer, according to its website.

The government is delivering the last of 10 million high-definition TVs to low-income households this year to speed along Mexico’s transition. The plan is meant to help viewers shift to digital signals so broadcasters such as Televisa and TV Azteca SAB can stop using analog airwaves. Mexico previously had planned to give converters to families that didn’t have digital tuners, mimicking a U.S. government program during its 2009 digital transition.

The program has been plagued by delays and accusations that the TV handouts, which no longer bear the current federal government’s “Moving Mexico” slogan, could be used for political advantage during campaigns. As broadcasters stop using analog signals, it will free up spectrum that the government can reassign for other uses, such as wireless Internet access.

“Not all households or all TV sets in a household would qualify for this free government-sponsored replacement,” said Itau’s Tomassi, who recommends buying Televisa and Megacable shares. “This is where pay-TV companies come in, offering valid alternatives.”