Mexican TV profit down

Consolidation, overhead, peso decline blamed for drop

MEXICO CITY — Mexico’s two largest broadcasters saw second-quarter earnings drop despite surprisingly strong sales for the period.

Grupo Televisa, Mexico’s largest net and the world’s biggest Spanish-lingo producer, reported a profit of 462 million pesos ($40 million) — a hefty 65% decline from a year ago. But the low earnings were almost entirely attributable to a one-time $86 million charge related to the consolidation of satellite TV unit Innova and belie an impressive 25% revenue bump to $646 million.

Innova operates Sky Mexico, and its earnings will be included in Televisa results.

The story was much the same at rival TV Azteca, which reported only a $39 million net gain for the period, down 23% from the second quarter of last year. Dip is blamed on increased overhead and the decline of the Mexican peso. Azteca said that production and transmission costs for the quarter rose 11%.

Yet Azteca, too, saw the topline expand for the period, with sales increasing 5% to $171 million.

The positive nature of both results is revealed in the fact that both nets outpaced stock analysts’ expectations for the quarter. Televisa said it expected revenue growth to continue, predicting a 3%-4% ad sales increase for the remainder of the year, while Azteca was sanguine about its Azteca America unit, which showed promising results in the U.S.

In a separate announcement, Azteca named Mario San Roman chief executive at the net. He replaces Pedro Padilla Longoria, who became the CEO of Grupo Salinas, the holding company that controls Azteca. San Roman was formerly chief operating officer of Azteca.

Televisa also said that it planned to make a long-rumored purchase of DirecTV’s 300,000 subscribers in Mexico, adding them to the roughly 950,000 it already has through Sky Mexico, the country’s largest satcaster. Net did not reveal details of the purchase but said it hoped to complete the deal by year’s end.

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