Televisa telescopes revs

Net has big plans for 2006

If 2005 is looking good for Televisa, Mexico’s No. 1 net and the world’s largest producer of Spanish-language content, just wait until next year.

Web reported Monday after market close that total sales grew 8.8% to $754 million during the third quarter year on year. Strong subscriber growth at the satellite TV unit and heavy political advertising during party primaries for next year’s presidential race boosted the bottom line. Net profit rose 8.1% to $155 million.

Terrestrial broadcasting unit reported 3% revenue growth to more than $426 million. Free TV unit has 70% of Mexican viewers in its grip. Analyst Patrick Grenham at Citigroup Smith Barney said he expects revenue at the broadcast unit to grow 11% during 2006, when net expects around $150 million in ad windfall from the 2006 World Cup and heavy political advertising for national elections in July.

“It will be a great year to push for price increases,” said exec veep Alfonso de Angoitia about upfront talks in a Tuesday conference call with analysts. De Angoitia said Televisa would invest x200 million ($239.7 million) in “La Sexta,” a consortium Televisa formed with five Spanish media firms to bid on a license for one analog and two digital terrestrial channels in Spain. Group is still discussing programming agreement.

Net also plans to roll out a digital download business with its massive library of content during the first half of 2006. De Angoitia said it was unclear how revenue may be split with U.S. Hispanic broadcaster Univision, with which Televisa has a programming agreement that runs through 2017. Nets are locked in a legal dispute and had previously postponed any discussion of Internet rights until late in 2006.

Analysts say net’s aggressive expansion will continue; next stop may be Brazil. Net has an option to buy a stake in Brazil’s No. 2 broadcaster SBT that expires in 2008. De Angoitia said company was evaluating the macroeconomic situation in Brazil as well as observing the fallout of a debt restructuring at the nation’s top media firm, Organizaciones Globo. “We are in no hurry to do anything there,” de Angoitia said.

Loose coin won’t be a problem, with net expected to generate around $640 million in free cash flow during 2006.

Company will also roll out a division of off-track betting and bingo parlors next year. Grenham said company could see up to $1.4 billion in gambling booty by 2008.

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