Yesterday, Grupo Televisa S.A. (TV), the largest media company in Mexico, reported financial results of its third quarter 2010. Quarterly consolidated net income was $175.6 million, up 9% year-over-year. Third quarter EPGDS (Earnings per Global Depositary Shares) was 32 cents, easily beating the Zacks Consensus Estimate of 29 cents.
Quarterly consolidated net revenue of $1,182 million was an improvement of 12.3% over the prior-year quarter, but was slightly below the Zacks Consensus Estimate of $1,190 million.
The year-over-year revenue growth was primarily attributable to an increase in the FIFA World Cup Football advertising and pay-TV, satellite TV and Telecom services.
Quarterly gross margin was 54.8% compared to 55.6% in the prior-year quarter. Third quarter consolidated operating income was $332 million, up 3.9% over the prior-year quarter. Integral cost of financing, in the reported quarter, was $52 million, up 25.8% year-over-year.
At the end of the third quarter of 2010, Grupo Televisa had approximately $3,252.6 million of cash and marketable securities compared to $2,313.9 million at the end of fiscal 2009. Capital expenditure, during the reported quarter was $14.9 million. During the same quarter, the company repurchased 10.7 million of CPOs for a total consideration of $41.6 million.
At the end of the third quarter of 2010, Grupo Televisa had $3,345.7 million outstanding debt on its balance sheet compared to $3,355.2 million at the end of fiscal 2009. At the end of the same quarter, debt-to-capitalization ratio was 0.45 compared to 0.49 at the end of fiscal 2009.
Television Broadcasting
Quarterly revenue of $468.8 million was up 7.1% year-over-year. Operating profit was $224.4 million, up 4% year-over-year. Quarterly operating margin was 47.9% compared to 49.3% in the year-ago quarter.
Pay Television Networks
Quarterly revenue of $64.8 million was up 17.7% year-over-year. Operating profit was $33 million, up 3.7% year-over-year. Quarterly operating margin was 51% compared to 57.9% in the year-ago quarter.
Programming Exports
Quarterly revenue of $61.7 million was up 2% year-over-year. Operating profit was $29.7 million, down 12.3% year-over-year. Quarterly operating margin was 48.1% compared to 56% in the year-ago quarter.
Publishing
Quarterly revenue of $63 million was down 0.9% year-over-year. Operating profit was $7.3 million, up 160.7% year-over-year. Quarterly operating margin was 11.6% compared to 4.4% in the year-ago quarter.
Sky
Quarterly revenue of $231.6 million was up 15.5% year-over-year. Operating profit was $111.9 million, up 29.3% year-over-year. Quarterly operating margin was 48.3% compared to 43.1% in the year-ago quarter.
Cable and Telecom
Quarterly revenue of $240.2 million was up 37.1% year-over-year. Operating profit was $75.7 million, up 27.3% year-over-year. Quarterly operating margin was 33.1% compared to 34.5% in the year-ago quarter.
Other Businesses
Quarterly revenue of $76 million was up 14.1% year-over-year. Operating income was $3.7 million, up 25.9% year-over-year. Quarterly operating margin was 31.5% compared to negative 34.3% in the year-ago quarter.
Subscriber Statistics
At the end of the third quarter 2010, Grupo Televisa had 1,925,010 video subscribers, 769,685 broadband subscribers and 469,911 Voice subscribers. Together these constitute 3,164,606 revenue generating units (RGU) in the Cable and Telecom segment. At the end of the same quarter, Grupo Televisa had 2,753,047 gross active satellite TV subscribers including 149,057 commercial subscribers. Pay-Television Network Subscriber base was 25,000,000.
Our Recommendation
We maintain our long-term Neutral recommendation for Televisa. Currently it is a short-term Zacks #3 Rank (Hold) stock.
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