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Televisa Faces a Major Setback in Mexican Tribunal Ruling
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Mexican pay-TV and media giant, Grupo Televisa SA (TV - Free Report) recently suffered a major setback as a Mexican tribunal questioned the country’s telecom regulator’s favorable judgement regarding Televisa's monopolistic prowess. This might compel the regulatory body to reassess and impose special antitrust measures on the company.
In 2014, the government of Mexico had introduced reforms within its telecommunications sector, which included the pay-TV segment as well. The Mexican telecom regulator, the Federal Telecommunications Institute (IFT) seeks to restrict the maximum hold of a company in the market to 50%.
Nevertheless, Televisa’s share of more than 60% of the overall pay-TV market (Including cable TV and satellite TV) and America Movil SAB’s (AMX - Free Report) control of over 70% of the country’s telecom market (both wireless and wireline) compelled the IFT to identify both as dominant players in their respective markets. America Movil currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Following the implementation of such stringent measures, Televisa has had to share its broadcast towers with competitors for a stipulated amount of fees. Moreover, the company does not have exclusive broadcasting rights of popular sports and entertainment events such as any world cup tournament.
However, in 2015, the IFT exempted Televisa from stringent regulatory measurers declaring that the company no longer occupied a monopolistic position in the Mexican pay-TV market. This decision came following the addition of subscribers and consequently, taking of the market share by its competitors like Dish, Megacable and Axtel. However, the ruling was challenged by a rival cable provider, Total Play.
Televisa’s goal is to create a North American Spanish language media empire, comprising broadcast, Internet, publishing, and live events. Further, the pay-TV market in Mexico is vastly untapped. Several industry researchers estimate pay-TV penetration in the country at roughly 50%, reflecting a massive growth opportunity.
Moreover, the IFT ruling has allowed Televisa to enter into the Mexican wireless market. However the company is yet to take any decision regarding this. Beside America Movil, the other two major wireless operators in the nation are AT&T Inc. (T - Free Report) and Telefonica SA (TEF - Free Report) .
Price Performance of Televisa
2016 was not a good year for Televisa. The stock lost a substantial 18.23% in the last one year in contrast with a 15.06% gain exhibited by the Zacks categorized Broadcast Radio and TV industry. Growing competitive pressure in the Mexican pay-TV market from peers like TV Azteca and others along with shrinkage in operating margin are the near-term concerns. This is the primary reasons behind the stock currently carrying a Zacks Rank #5 (Sell). We will closely monitor whether management can introduce any effective turnaround strategy in 2017.
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Televisa Faces a Major Setback in Mexican Tribunal Ruling
Mexican pay-TV and media giant, Grupo Televisa SA (TV - Free Report) recently suffered a major setback as a Mexican tribunal questioned the country’s telecom regulator’s favorable judgement regarding Televisa's monopolistic prowess. This might compel the regulatory body to reassess and impose special antitrust measures on the company.
In 2014, the government of Mexico had introduced reforms within its telecommunications sector, which included the pay-TV segment as well. The Mexican telecom regulator, the Federal Telecommunications Institute (IFT) seeks to restrict the maximum hold of a company in the market to 50%.
Nevertheless, Televisa’s share of more than 60% of the overall pay-TV market (Including cable TV and satellite TV) and America Movil SAB’s (AMX - Free Report) control of over 70% of the country’s telecom market (both wireless and wireline) compelled the IFT to identify both as dominant players in their respective markets. America Movil currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Following the implementation of such stringent measures, Televisa has had to share its broadcast towers with competitors for a stipulated amount of fees. Moreover, the company does not have exclusive broadcasting rights of popular sports and entertainment events such as any world cup tournament.
However, in 2015, the IFT exempted Televisa from stringent regulatory measurers declaring that the company no longer occupied a monopolistic position in the Mexican pay-TV market. This decision came following the addition of subscribers and consequently, taking of the market share by its competitors like Dish, Megacable and Axtel. However, the ruling was challenged by a rival cable provider, Total Play.
Televisa’s goal is to create a North American Spanish language media empire, comprising broadcast, Internet, publishing, and live events. Further, the pay-TV market in Mexico is vastly untapped. Several industry researchers estimate pay-TV penetration in the country at roughly 50%, reflecting a massive growth opportunity.
Moreover, the IFT ruling has allowed Televisa to enter into the Mexican wireless market. However the company is yet to take any decision regarding this. Beside America Movil, the other two major wireless operators in the nation are AT&T Inc. (T - Free Report) and Telefonica SA (TEF - Free Report) .
Price Performance of Televisa
2016 was not a good year for Televisa. The stock lost a substantial 18.23% in the last one year in contrast with a 15.06% gain exhibited by the Zacks categorized Broadcast Radio and TV industry. Growing competitive pressure in the Mexican pay-TV market from peers like TV Azteca and others along with shrinkage in operating margin are the near-term concerns. This is the primary reasons behind the stock currently carrying a Zacks Rank #5 (Sell). We will closely monitor whether management can introduce any effective turnaround strategy in 2017.
The Best Place to Start Your Stock Search
Today, you are invited to download the full list of 220 Zacks Rank #1 "Strong Buy" stocks – absolutely free of charge. Since 1988, Zacks Rank #1 stocks have nearly tripled the market, with average gains of +26% per year. Plus, you can access the list of portfolio-killing Zacks Rank #5 "Strong Sells" and other private research. See these stocks free >>