On Jan 3, 2015, Zacks Investment Research downgraded Mexican pay-TV and broadcasting company Grupo Televisa S.A.B. (TV) by a notch to a Zacks Rank #4 (Sell).
In the third quarter, the company reported quarterly loss per Global Depository Shares of 2 cents in contrast to the Zacks Consensus Estimate of earnings of 17 cents. Net loss in the reported quarter stood at approximately $13.5 million compared with a net income of $169 million in the year-ago quarter. Moreover, the company missed the Zacks Consensus Estimate in the last four quarters by an average of 38.6%.
Ever since Grupo Televisa reported dismal quarterly results, the company’s estimates for both the current year as well as the fourth quarter moved south. Over the last 90 days, the Zacks Consensus Estimate for 2014 went down 19.2% to 80 cents and the same for the fourth quarter declined 5.3% to 38 cents.
Televisa currently dominates approximately 70% of the Mexican broadcasting and pay-TV market. Meanwhile, the IFT seeks to restrict the maximum hold of a company in a market to 50% and has imposed strict laws to implement the same. As part of these stringent measures, Televisa will have to share its broadcast towers for a stipulated fee. Moreover, the company will not be allowed to acquire exclusive broadcasting rights of popular sports and entertainment events such World Cup tournaments.
The new telecommunications industry reform bill passed by the Mexican government will allow America Movil S.A.B. de C.V. (AMX) to enter the broadcasting market of Mexico, which has been largely controlled by Televisa for quite some time now. This may substantially weigh on Televisa’s advertisement revenues.
Other Stocks to Consider
Other better-ranked stocks worth considering in this sector include Nexstar Broadcasting Group, Inc. (NXST) and Salem Communications Corp. (SALM). Nexstar Broadcasting Group currently sports a Zacks Rank #1 (Strong Buy), while Salem Communications carries a Zacks Rank #2 (Buy).
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