Yesterday, Grupo Televisa S.A. (TV), the largest integrated cable/media company in Mexico, reported excellent financial results for the fourth quarter of 2010. During the reported quarter, four of the top-five rated soap operas in Mexico were produced and transmitted by Televisa. As a result, the pay-TV revenue and profit accelerated.

Additionally, higher programming revenue from abroad, especially from Brazil, increased royalties from its newly formed agreement with Univision in the U.S., and growing satellite TV subscribers are the other reasons for this fabulous performance.

Quarterly consolidated net income was $211.8 million, up by a whopping 121% year over year. Fourth-quarter EPGDS (Earnings per Global Depository Shares) was 38 cents, significantly above the Zacks Consensus Estimate of 34 cents.

Quarterly consolidated net revenue of $1,330.8 million was an improvement of 8.8% over the prior-year quarter and also surpassed the Zacks Consensus Estimate of $1,233 million.

Quarterly gross margin was 55.7% compared with 54.9% in the prior-year quarter. Fourth-quarter consolidated operating income was $377 million, up 8.8% over the prior-year quarter. Integral cost of financing, in the reported quarter, was $56.8 million, down 23.2% year over year. 

At the end of fiscal 2010, Televisa had approximately $2,548.8 million cash and marketable securities compared with $2,313.9 million at the end of fiscal 2009. Capital expenditure during 2010 was $1,011 million. During 2010, Televisa repurchased 25.5 million of CPOs for a total consideration of $103.5 million.

At the end of fiscal 2010, Televisa had $3,894.8 million of outstanding debt on its balance sheet compared with $3,355.2 million at the end of fiscal 2009. At the end of fiscal 2010, debt-to-capitalization ratio was 0.47 compared with 0.49 at the end of fiscal 2009.

Television Broadcasting Segment

Quarterly revenue was $556 million, up 2.1% year over year. Operating profit was $277.5 million, up 2.8% year over year. Quarterly operating margin was 49.9% compared with 49.6% in the year-ago quarter.

Pay Television Networks Segment

Quarterly revenue was $69.2 million,  up 15.7% year over year. Operating profit was $41.5 million, up 27.6% year over year. Quarterly operating margin came in at 59.9% compared with 54.3% in the year-ago quarter.

Programming Exports Segment

Quarterly revenue was $81.5 million, up 32% year over year. Operating profit was $43.9 million, up 43.5% year over year. Quarterly operating margin was 53.8% compared with 49.5% in the year-ago quarter.

Publishing Segment

Quarterly revenue of $76.2 million inched down 0.1% year over year. Operating profit was $14.2 million, up 15,198.2% year over year. Quarterly operating margin was 18.7% compared with 0.1% in the year-ago quarter.

Sky Segment

Quarterly revenue came in at $232 million, up 9% year over year. Operating profit was $102.8 million, up 11.3% year over year. Quarterly operating margin was 44.3% compared with 43.4% in the year-ago quarter.

Cable and Telecom Segment

Quarterly revenue was $255.9 million, up 19.4% year over year. Operating profit was $88.3 million, up 39% year over year. Quarterly operating margin was 34.5% compared with 29.6% in the year-ago quarter.

Other Businesses Segment

Quarterly revenue was $84.2 million, up 8.8% year over year. Operating loss was $8.7 million, down 50.9% year over year. Quarterly operating margin was a negative 10.3% compared with a negative 22.7% in the year-ago quarter.

Subscriber Statistics

As on December 31, 2010, Televisa had 1,967,922 video subscribers; 806,474 broadband subscribers; and 501,750 telephony subscribers. Together these constitute 3,276,146 revenue generating units (RGU) in the Cable and Telecom segment.

At the end of 2010, Televisa had 3,044,028 gross active satellite TV subscribers including 149,899 commercial subscribers. Pay-Television Network Subscriber base was 26,000,000.

Our Recommendation

We maintain a long-term Neutral recommendation on Televisa. Currently, it holds a short-term Zacks #3 Rank (Hold) on the stock.

 
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