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Grupo Televisa S.A. (TV) |
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WIKI ANALYSIS
Televisa is having legal problems with Nicaragua due to 6 trucks that were detained by Nicaragua's authorities for Money Laundering. Check the website Aristegui Noticias
Grupo Televisa, S.A. de C.V. GDS (TV) was incorporated in 1990 and is the largest media company in the Spanish-speaking world. It is a major player in the international entertainment business. Televisa runs four television networks in Mexico with approximately 260 affiliated stations. The company has interests in television production, broadcasting, international distribution of television programming, direct-to-home (DTH) satellite services, publishing, music recording, radio production and broadcasting, cable television, professional sports and show business promotions, paging services, and feature film production and distribution. Grupo Televisa also operates a horizontal Internet website, esmas.com, and has interest in direct-to-home (DTH) satellite services through its 60% stake in Innova, which runs the SKY DTH satellite system. Programs produced by the company include: telenovelas (soap operas), sports, newscasts, sitcoms, game shows, and musical and cultural events, which are broadcasted through its network stations, affiliated stations, and cable systems in Mexico, and through its DTH satellite joint ventures in the Americas and Spain.
Televisa has grown over the last few years by expanding its portfolio of assets in the industry and moving into new markets while adopting technologies that allow its content to be distributed to a wider variety of platforms.
Televisa has continued its entry into new markets through joint ventures in Brazil, China and France as well as companies that raise the company’s global profile like BBC International and Telemundo.Through joint ventures with Cablevision, Cablemas and TVI Televisa continues its efforts in establishing itself as a cable and telecommunications company.
Televisa’s core business is open television, however, recent growth has come from direct to home services, cable and telecommunications services. These last three represented over 30% of revenues, a sharp increase to the 5% eight years ago. Sky, the dish network service provider established as a subsidiary, is the main distribution platform in Mexico, Central America and the Caribbean. [1]
Business and Financial Metrics
- In 2008 net sales increased 18.6% to 48BB MXN and operation profits increased 8.7% to 15.1BB MXN. Of the top 100 television programs in Mexico, 74 of them are Televisa’s. The transmission of the Beijing Olympic Games had a 68% viewer participation which raised revenues higher than projected. Further, in 2008, the soap opera Fuego en la Sangre (Fire in the blood) reached the highest level of ratings in 8 years.
- Expansion into Central America and the Dominican Republic yielded a total number of 109K new subscribers.
- In 2008, Televisa continued its presence in the publishing industry with a distribution of over 174MM magazines in 20 different countries. This account for 189 different titles sold through 95 different brands.
- Strong revenues in 2008 allowed Televisa to build a strong capital structure. By year’s end cash reserves reached 42.7BB MXN and net excess cash was 3.8BB MXN. Debt had an average maturity of 13 years.
- Net sales in 2008 increased by 6,410.8 BB MXN – this marked an increase of 15.4% compared to 2007 due in large part to increased sales in the Cable and Telecommunications divisions, Sky, Publishing, Restricted Television Programming, Open Television Programming, and exported programming. These increases were partially offset by inflation which rose 3.2%.
- COGS increased 18.9% to 21,560.0BB MXN due to rising COGS in all business segments.
- Overhead costs increased 24.7% to 3,058.2BBMXN which reflects an increase in overhead costs in all business segments as well as an increase in corporate expenses due in large part to payment given in the form of stocks and stock options.
- Financing costs increased almost 50% to 830.9MM MXN due an increase in interest payments for long term debt, a decrease of 544.9MM MXN of interest payments received due a decline in interest rates applicable to short-term investments in foreign currency in 2008. This fluctuations were partially offset by an increase of 469.8MM MXN derived from exchange rates, favorable swap contracts and the absence of a loss of 293.8MM MXN in accordance to the new NIF rules in Mexico.
The company also has a number of subsidiaries:
- Telesistema Mexicano S.A. de C.V. (Open Television and Restricted Television)
- Television Independiente de Mexicano S.A. de C.V. (Open Television)
- TuTV, LLC (Restricted Television)
- Innova S. de R.L. de CV (Sky)
- Editorial de Televisa S.A. de C.V. (Editorials/Publishing)
- Cablemas S.A. de C.V. (Cable and Telecommunications)
- Cablevision S.A.B. de C.V. (Cable and Telecommunications)
- Corporativo Vasco de Quiroga S.A. de C.V.
- CVQ Espectaculos S.A. de C.V.
- Grupo Distribuidoras Intermex S.A. de C.V.
- Sistema Radiopolis S.A. de C.V.
- Televisa Juegos S.A. de C.V.[4]
Key Trends and Forces
Changing Tax Rates
On October 1, 2007 the Mexican government put into effect the Ley del Impuesto Empresarial de Tasa Unica (a flat rate tax for companies). This means that for 2008 companies paid 16.5% flat tax rate, in 2009 companies paid 17% and from 2010 on, 17.5%.[5]
Movement towards HD=
Starting in 2009 TV Azteca and Televisa have both began providing HiTV, a higher quality image through Digital Terrestrial Television. In Mexico there are about 20 channels providing this service and this number is expected to increase.
Nonmexicans are not allowed to hold Televisa shares of any kind
They may however hold them through an indirect CPO trust which is involved in the voting of A and B shares. Trustees may request that certificates representing the underlying shares so as to allow transfer and sale of said shares.
Mexican Securities Market Law (MSML)
Minority stockholders do not have the same amount of protection under the the Mexican Securities Market Law as set by an international standard. Companies like Televisa however have amended their bylaws to allow for a greater degree of protection. The MSML makes it more difficult to enforce their rights against the company or its directors. The law provides stockholders of a public company representing 5% or more of the capital stock an action for liability against the board and the management of a firm. Further, it requires companies to establish audit committees when the rights of minority stockholders may face a change. [6]
Competition
- Though Televisa faces competition in all of the different business segments its largest competitor is TV Azteca S.A. de C.V..
- Because of their divestiture in Univision Televisa expects competition to increase from this particular company.
- In the gaming industry, Televisa faces competition from Corporacion Interamericana de Entretenimiento S.A.B. de C.V. and Grupo Caliente S.A. de C.V.
- In the telecommunication industry the company faces a high degree of competition. Every company authorized by the Mexican government to provide bidirectional data and internet broadband services that provide VoIP services participates in the price war. This in addition to increased coverage creates a difficult situation for cable service providers.
References
- ↑ http://www.esmas.com/documento/0/000/002/035/RA08_Segmentos_Negocio.pdf
- ↑ http://www.esmas.com/documento/0/000/002/035/RA08_Segmentos_Negocio.pdf
- ↑ http://www.esmas.com/documento/0/000/002/035/RA08_MDA.pdf<ref>
- Open television sales fell in 3Q09 by 1.9% to 5,471.9BB MXN. This decrease reflects an unfavorable comparison to 2008 numbers because of the Olympic games transmission in 2008. This was partially offset by successful soap operas available during 3Q09 like “Sortilegio” and “Hasta que el dinero nos separe” (Till money do us part).<ref>http://www.esmas.com/documento/0/000/002/035/RA08_MDA.pdf<ref>
- Open Television (43.7% of net sales)
- Exported programming (5.0% of net sales)
- Restricted television programming (4.5% of net sales): Sales react favorably when sold to currencies appreciating relative to the peso (MXN). Division sales have increased as the customer base increases in Mexico and Latin America.
- Sky – dish network (18.7% of net sales)
- Editorial/Publishing (7.5% of net sales)
- Cable and telecommunications (13.5% of net sales)
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