GrupoTelevisa, S.A.B. (TV - Free Report) commands a very strong position in the Mexican pay-TV market. The company’s goal is to create a Spanish language-based media domain in the North American market, comprising broadcast, Internet, publishing, and live events.
The pay-TV market in Mexico is vastly untapped. Several industry researchers have estimated that the pay-TV penetration has reached hardly 50% in the country, reflecting massive opportunity for future growth. Televisa’s Cable & Telecom service, which offers bundled triple-play video, data and telephony services, may become a significant revenue generator.
Televisa is also likely to gain significantly from its ownership stake in U.S. broadcaster Univision Communications Inc. Privately-held Univision is the largest Spanish-language broadcaster in the U.S.
Currently, a considerable share of Televisa’s income is generated from its U.S. operations, which includes the sale of content, website and cable TV. Televisa allows Univision to access its content and then rebroadcast it on TV and the Internet for a specific royalty. The U.S. Hispanic TV market is highly lucrative and is growing at a remarkable pace. In the third quarter of 2014, Televisa’s royalty from Univision was a record-high $87.4 million, up 22.4% year over year.
On the downside, Televisa currently dominates approximately 70% of the Mexican broadcasting and pay-TV market. The IFT seeks to restrict the maximum hold of a company in a market to 50%. As part of these stringent measures, Televisa has to share its broadcast towers with competitors for a stipulated fee. Moreover, the company will not be allowed to acquire exclusive broadcasting rights of popular sports and entertainment events such as any World Cup tournament.
The new telecommunications industry reform bill passed by the Mexican government will allow America Movil S.A.B. de C.V. (AMX - Free Report) to enter the broadcasting market of Mexico, which has been controlled by Televisa for a long time. This may substantially weigh on Televisa’s advertisement revenues.
GrupoTelevisa currently has a Zacks Rank #3 (Hold).
Key Picks in the Sector
Better-ranked stocks worth considering in this sector include LIN Media LLC and Sirius XM Holdings Inc. (SIRI - Free Report) . LIN Media sports a Zacks Rank #1 (Strong Buy) whereas Sirius XM Holdings holds a Zacks Rank #2 (Buy).