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Ad bump boosts Mexican congloms

Televisa sees 74% jump, Azteca reports 30-fold profit increase

MEXICO CITY — Mexico’s battling media giants, Grupo Televisa and TV Azteca, reported strong third-quarter results thanks mainly to healthy spikes in advertising sales.

Televisa, Mexico’s top broadcaster, showed a 74% earnings jump to 686 million pesos ($62 million) on Thursday, up from $36 million a year earlier. It also unveiled its most important management reorganization since 1997.

Rival Azteca reported a whopping 30-fold profit increase to $30 million from $910,000.

The key for both was an invigorated sales force. Azteca reported all-time high revenue for the quarter, reaching $155 million, up over 8% from last year’s $144 million in sales.

The traditionally slow summer has of late become an active season for the 10-year-old net. Last year’s sales were a record, thanks to a bump in ad rates.

This time, Azteca reported strong sales from its Azteca America affiliate, which nearly quadrupled income to $4.8 million. Azteca also benefited from programming sales, which reached $3.6 million, up a third. Net said telenovela “Mirada de Mujer, el Regreso” sold well in Europe, while “La Hija del Jardinero” and “La Duda” scored in Latin America.

Free TV leads rise

Story is much the same for Televisa. Topline rose 3% to $511 million from $495 million a year earlier. Bump was led by free TV sales, which rose 6% to $335 million thanks in large part to a 12% increase in local sales, particularly on Televisa’s Channel 4.

Conglom saw increased revenue from nearly all divisions, except its film distribution, Internet greeting card and cable operations. Cablevision Mexico has been struggling, and profits for the unit fell nearly 50% for the quarter.

Azteca operating costs increased 8% during the quarter, to $64 million, due mainly to increased inhouse production, which reached 2,039 hours for the period, up from 1,923 in 2002. Net expects to distribute $15 million to shareholders on Dec. 5.

Televisa reported nearly flat year-to-year operations costs.

Shares in Grupo Televisa rose 19 cents to $36.80 while TV Azteca rose 4 cents to $8.09 on the NYSE Thursday.

Meanwhile, Televisa gave details of its management restructure, which has created a new three-person supervisory body that will control the conglom’s operations.

The executive office of the president will be made up of Televisa chairman Emilio Azcarraga Jean, exec VP Bernardo Gomez, and Alfonso de Angoitia, who will ankle as the net’s chief financial officer.

Televisa also will create a finance committee chaired by de Angoitia. Salvi Foch, head of Televisa’s Internet operations, will fill the CFO post de Angoitia is exiting.

Renewed stability

The new organization, which the net says reflects renewed corporate stability, goes into effect Jan 1. The executive office will oversee strategy, future business and growth opportunities and operations policy, while the finance committee will be concerned with conglom’s financial activities.

“Televisa is consolidated. It has the strongest balance in its history,” de Angoitia said. “That’s why it’s necessary to make changes that allow it to identify the strongest future growth opportunities.”

Azcarraga has run Televisa since 1997, when he took control of the board of directors and increased his stock ownership.

TV head Jose Baston will remain in his slot and oversee most of the net’s day-to-day operations. Television accounts for nearly two-thirds of Televisa sales.

According to Baston, net’s top Mexican growth opportunities are in local TV, satellite and cable TV and content production, as well as Televisa’s print editorial division.

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