Company Reports

Televisa continued to post weak results during the first quarter, lagging its key competitors in the brutally competitive Mexican broadband market. The plan to merge Sky with the cable business after acquiring AT&T's Sky minority interest is poised to deliver significant cost savings, which management expects to begin materializing in the third quarter, sooner than we would have expected. Our fair value estimate remains $6.50. We expect Televisa will exit 2024 on a better trajectory than it is on currently, but uncertainty remains very high.

Not much is going well for Televisa, and the road ahead looks difficult. The firm is focused primarily on Mexican telecom, a highly competitive market that would benefit greatly from consolidation. The firm also holds a minority interest in TelevisaUnivision, the largest Spanish-language media company globally but a small player versus streaming giants like Netflix. We expect Televisa to continue to refine its portfolio as it finds opportunities to improve its competitive position or realize value for shareholders. Still, it doesn’t entirely control the path forward, which will likely cause continued volatility in financial performance and the stock price.

Grupo Televisa sharply improved profitability during the fourth quarter, but the more important task of reviving revenue growth remains a work in progress. Management indicated that customer metrics have steadily improved since the firm shifted its strategy last fall to reduce promotional discounting, and that the level of competition in the broadband market is easing somewhat. Commentary from rival Megacable on its earnings call lines up with this view. Still, the Mexico broadband market needs to consolidate to cement pricing discipline and reduce duplicative investment. We have trimmed our fair value estimate to $6.50 from $8, which primarily reflects the debt-free spinoff of Ollamani, which closed on Feb. 20. Ollamani holds the majority of Grupo Televisa’s former “other” segment, including Stadium Azteca, the Club America soccer team, and gambling operations. We expect Grupo Televisa will continue to look for ways to utilize its assets more efficiently and deliver value for shareholders.

Not much is going well for Televisa, and the road ahead looks difficult. The firm is focused primarily on Mexican telecom, a highly competitive market that would benefit greatly from consolidation. The firm also holds a minority interest in TelevisaUnivision, the largest Spanish-language media company globally but a small player versus streaming giants like Netflix. We expect Televisa to continue to refine its portfolio as it finds opportunities to improve its competitive position or realize value for shareholders. Still, it doesn’t entirely control the path forward, which will likely cause continued volatility in financial performance and the stock price.

Televisa’s core cable business continues to struggle as management attempts to reset its market approach. New cable CEO Francisco Valim provided extensive thoughts on the business, noting that Televisa needs to prioritize efficiency and increasing revenue per customer to improve cash flow, while also stating the obvious: the Mexican broadband industry needs consolidation. Unfortunately, Televisa’s rivals don’t share this point of view, as Megacable clearly declared its intention to continue aggressively expanding its network on its earnings call. The TelevisaUnivision business generated strong revenue growth, but it continues to burn cash as it builds out ViX, its streaming service. We are maintaining our $8 fair value estimate, and we don’t believe much needs to go right for Televisa from here to justify the current stock price.

Not much is going well for Televisa, and the road ahead looks difficult. The firm is focused primarily on Mexican telecom, a highly competitive market that would benefit greatly from consolidation. The firm also holds a minority interest in TelevisaUnivision, the largest Spanish-language media company globally but a small player versus streaming giants like Netflix. We expect Televisa to continue to refine its portfolio as it finds opportunities to improve its competitive position or realize value for shareholders. Still, it doesn’t entirely control the path forward, which will likely cause continued volatility in financial performance and the stock price.

Televisa reported disappointing second-quarter results, posting a net decline in cable broadband customers and a sharp contraction in cable profitability. Management highlighted the appointment of telecom veteran Francisco Valim to head the cable business. Valim, who has served as CEO of several firms in Brazil, hasn’t yet officially joined Televisa but addressed investors briefly, mentioning an ongoing structural review that will serve as the basis for improving cash flow. We are cutting our fair value estimate to $9 from $10, as the strong peso partially offsets cuts to our growth and margin expectations.

Historically a powerhouse in Spanish-language media, Televisa is now focused primarily on Mexican telecom, a highly competitive market that would benefit greatly from consolidation. The firm also holds a majority interest in satellite television provider Sky Mexico and a minority interest in TelevisaUnivision, the largest Spanish-language media company globally, in addition to several smaller holdings it plans to spin off. We expect Televisa will continue to refine its portfolio as it finds opportunities to improve its competitive position or realize value for shareholders.

Televisa’s first-quarter results didn’t deviate much from recent trends, and we’re leaving our fair value estimate at $10. We believe the stock is very attractive despite concerns around the Mexican broadband business, as we expect Televisa will make gradual progress in improving operations with the potential to buy or sell assets or merge with another entity to unlock value.

Historically a powerhouse in Spanish-language media, Televisa is now focused primarily on Mexican telecom, a highly competitive market that would benefit greatly from consolidation. The firm also holds a majority interest in satellite television provider Sky Mexico and a minority interest in TelevisaUnivision, the largest Spanish-language media company globally, in addition to several smaller holdings it plans to spin off. We expect Televisa will continue to refine its portfolio as it finds opportunities to improve its competitive position or realize value for shareholders.

Televisa continued to face weakness at Sky and stiff broadband competition during the fourth quarter. We’ve cut our expectations for the core business while also reducing our estimate of the value of TelevisaUnivision, pulling our Televisa fair value estimate down to $10 from $14 per ADR. Competition in the Mexican broadband business remains a concern—especially with Televisa management stating it has abandoned hope for a merger with Megacable—but we believe the stock’s valuation is very undemanding.

We remain bullish on Televisa's long-term prospects. Historically a powerhouse in Spanish-language media because of its programming prowess and ownership of the leading broadcast networks in Mexico, the firm merged its media business into Univision. Televisa is now focused on telecom. The firm transformed itself into a leading telecom firm in Mexico through a series of acquisitions and is now one of the country’s fastest-growing broadband providers.

Groupo Televisa confirmed that it has held talks to merge its cable assets with Megacable recently and that it submitted a nonbinding proposal last month. While Megacable’s board has rejected that proposal, Televisa asserted that it will continue pursuing a combination. The shares of both firms were up sharply on the news, a logical response in our view given the potential strategic benefits that a merger could produce. A transaction could have modest negative implications for America Movil. We are leaving our fair value estimates unchanged for now at $14 per share for Televisa and $21 for America Movil; Televisa shares look attractive.

Televisa’s third-quarter earnings showed continued weakness at Sky and the impact of competitive pressure in the cable business. The firm announced plans to spin off several small businesses, including its gaming business and soccer operations. These units account for only about 7% of consolidated revenue and 3% of EBITDA. We are leaving our fair value estimate at $14 per ADR, and we believe the shares are undervalued.

Televisa’s consolidated businesses, cable and Sky, struggled to generate growth during the second quarter. The firm used its earnings call to outline strategic plans for the Sky satellite business, including a new partnership with AT&T to offer wireless services in Mexico, plans to launch a new content aggregation platform, and initiatives to expand in Central America. We aren’t optimistic about Sky’s growth potential, given the expansion of telecom infrastructure in Mexico, but we expect it will play a role in serving a substantial portion of the market in the years ahead. We are maintaining our $14 fair value estimate.

Televisa’s cable segment, now its main segment, kicked off 2022 with a mixed quarter, highlighted by consumer broadband growth offset by a decline in enterprise revenue. The merger of the firm’s content business with Univision was completed in January, turning Televisa into a bet on broadband and pay-TV penetration within Mexico, with a large equity stake in TelevisaUnivision. We are maintaining our fair value estimate of $14.

We remain bullish on Televisa's long-term prospects. Historically a powerhouse in Spanish-language media because of its programming prowess and ownership of the leading broadcast networks in Mexico, the firm merged its media business into Univision. Televisa is now focused on telecom. The firm transformed itself into a leading telecom firm in Mexico through a series of acquisitions and is now one of the country’s fastest-growing broadband providers.

Televisa’s cable segment--now its main business--ended 2021 with another strong quarter driven by broadband growth. The merger of the content business with Univision was completed in January. With the merger completed, Televisa is now a bet on broadband and pay-TV penetration within Mexico with a large equity stake in TelevisaUnivision. We expect the firm to remain laser focused on the broadband opportunity within Mexico and further explore potential M&A opportunities including the long-rumored acquisition of Megacable. We maintain our fair value estimate of $14.

Televisa’s content segment continues to rebound from the pandemic, and the cable segment—now its main business—reported strong growth again for the third quarter. The merger of the firm’s content business with Univision remains on track for completion by the end of 2021. After the merger, Televisa will become a bet on broadband and pay-TV penetration in Mexico. We are maintaining our narrow moat rating and fair value estimate of $14.

We are still bullish on Televisa's long-term prospects despite ongoing and potential regulatory changes. The firm is a powerhouse in Spanish-language media due to its programming prowess and ownership of the leading broadcast networks in Mexico, which garner about 70% audience share. Televisa is a dominant producer of Spanish-language programming, especially telenovelas, which draw huge audiences. Telenovelas are also popular with Spanish-speaking viewing audiences in the United States via distribution partner Univision, which pays royalties to Televisa based on an agreement that runs through 2025. We believe Televisa can retain a dominant position because of its huge market share and programming prowess, even though the government has granted a license for a new entrant into the broadcast market.