Pay TV boosts Televisa’s Q2 sales

Web posts total sales of $1.12 billion

Televisa, Mexico’s top broadcaster, saw net sales gain $166.1 million in the second quarter, bolstered by the strong growth and consolidation of its satellite and cable feevees, the company announced Thursday.

Despite all-time second-quarter highs in consolidated sales and operating income, an 8.6% drop in majority interest profit connected with its San Diego station operation tempered the report’s optimism. In addition, a more powerful peso hurt foreign export sales.

The web posted total sales of $1.12 billion and an operating income of $226 million, up 22.8% over the year-earlier quarter. Televisa also paid investors a $217 million dividend this quarter.

On the whole, the drop in majority interest profit to $180 million from $197 million a year earlier reflects a $43 million increase in operating expenses and a $25.5 million rise in profits headed to minority shareholders in the satellite and cable stakes.

In calculating this quarter’s results, Televisa revised its 2007 figures to reflect changes in Mexican reporting standards that no longer take inflation into account.

Key growth is found in Televisa’s feevee segments.

Televisa’s satellite service Sky reported sales of $222 million, up increase of 11.8% over the 2007 quarter, resulting from an increase in the subscriber base in Mexico and the launch of operations in Central America, including the Dominican Republic. The company also expects to begin operations in Panama in the second half of 2008.

In May 2007, the federal government greenlit Televisa’s acquisition of Cablemas, of which the conglom took official control on June 1. Inclusion of Cablemas, in addition to the consolidation of telecom Bestel, contributed to $137.5 million in segment sales, or a whopping 140.3% leap, bolstered by 20.1% growth in sales by mainstay Cablevision. Altogether, the web now has more than 1.86 million cable subscribers in the fold.

The broadcaster continues to dominate TV screens, commanding a 75% audience share during weekday primetime hours. Overall, the TV division took in $517 million, 7.5% over the year-earlier quarter, lifted by the fact that the normally slow Easter holiday came in the first rather than the second quarter.

The conglom also noted 16% sales growth in other businesses, with gains in its gaming, Internet and radio divisions and losses in its soccer and feature-film distribution projects. While still operating at a $615,000 loss, the sector is headed toward the black due to higher sales and lower operating expenses.

Second-quarter programming exports sales dropped 1.7% or $966,000 over a year earlier. This loss resulted largely from a stronger currency, with the peso stronger than it has been in more than five years against the dollar. This was partially offset by a 5.2% increase in royalties from Univision that amounted to $32.2 million for the quarter.

Televisa and Univision’s long-awaited day in court has been pushed ahead to Oct. 14 in a Los Angeles federal courtroom after repeated postponements; a resolution to the longstanding feud over royalties on shared content could free Televisa from its contractual obligations.

The web also noted a $186 million investment in business infrastructure and development this quarter. Looking ahead, the broadcaster continues to forecast 4.5% growth in operating income for 2008.

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