Shares of Mexican pay-TV and broadcasting behemoth, Grupo Televisa, S.A.B. (TV) hit a new 52-week high of $36.78 on Aug 14, 2014. However, the company ended yesterday’s trading session a trifle lower at $36.48, reflecting a solid 46% return over the past 12 months.
Grupo Televisa is likely to gain significantly from its 38% ownership stake in privately held, Univision Communications Inc., the largest Spanish-language broadcaster in the U.S.
Recently, Univision, together with ESPN of The Walt Disney Co. (DIS), received a shot in the arm with its impressive broadcasting performance in the 2014 FIFA World Cup Football Tournament. Univision reported an impressive 60% increase in viewership during the soccer tournament. Televisa allows Univision to access its content and then rebroadcast it on TV and the Internet for a royalty. In the second quarter of 2014, Televisa’s royalty from Univision was a record-high of $84 million, up 19.1% year over year.
Further, the recent Mexican telecommunications industry reform bill may pave the way for Televisa to capture a large chunk of the wireless market share. The new regulations will also allow America Movil (AMX) to enter the broadcasting market of Mexico, which has been controlled by Televisa for a long time. However, the latest industry report states that the proposed regulation will defer American Movil’s television expansion plans by nearly two years. During these years, Televisa can reformulate its broadcasting and media strategies and take appropriate decisions which will help it to capitalize on the lucrative Mexican wireless industry.
In another positive development, Grupo Televisa’s top line grew 7.1% over the prior-year quarter and also surpassed the Zacks Consensus Estimate in the recently-concluded second quarter of 2014. Except for the Other Business segment, the company witnessed year-over-year growth across all businesses.
Grupo Televisa currently has a Zacks Rank #3 (Hold). A better-ranked stock which warrants a look is Media General Inc. (MEG) with a Zacks Rank #2 (Buy).
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