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Grupo Televisa (TV) Q2 Earnings Miss, Revenues Lag Y/Y

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Mexican pay-TV and broadcasting behemoth Grupo Televisa S.A.B. (TV - Free Report) reported weak financial results in the second quarter of 2016. While the bottom line missed the Zacks Consensus Estimate, the top line lagged year over year.

Net income in the reported quarter came in at approximately $96.8 million, up 11.3% year over year. However, earnings per Global Depository Shares (GDS) were 17 cents, missing the Zacks Consensus Estimate of 20 cents. Moreover, consolidated net revenue of around $1,289 million in the reported quarter declined 5.9% year over year.

Quarterly gross margin came in at 46% compared with 46.3% in the year-ago quarter. Consolidated operating income was $227.6 million, plunging 15.9% from the prior-year quarter. Operating margin was 17.7% compared with 20.1% in the year-ago quarter. Capital expenditure, during the reported quarter, was approximately $358.2 million.

At the end of the second quarter of 2016, Televisa had approximately $2,916.5 million of cash and marketable securities and $6,502.7 million of outstanding debt compared with $3,174.2 million of cash and marketable securities and $6,472.5 million of outstanding debt at the end of 2015. At the end of the reported quarter, the debt-to-capitalization ratio was around 0.54 against 0.52 at the end of 2015.

Content Segment

Content Segment revenues came in at $481.9 million, up 11% year over year. Operating profit was $201.8 million, up 9% year over year, while operating margin was 41.9% compared with 42.6% in the year-ago quarter. Quarterly royalty from Univision was $83.3 million, up 11.1% year over year. 

Within this segment, Advertising revenues totaled $293.2 million, up 2.1% year over year. Network Subscription revenues were $63 million, indicating an increase of 34.7% year over year. Licensing and Syndication revenues were $125.6 million, up 25.2% year over year.  

Sky Segment

Sky segment revenues came in at $305.8 million, up 18.1% year over year. Operating profit was $138.7 million, up 11.3% year over year. Quarterly operating margin was 45.4% compared with 48.1% in the year-ago quarter.

Cable Segment

Cable segment revenues of $427.6 million increased 12.9% year over year. Operating profit was $180.5 million, up 19.2% year over year. Operating margin expanded to 42.2% from 40% in the year-ago quarter.

Other Businesses Segment

Other Business revenues were $112.1 million, up 7.8% year over year. Operating income was $8.4 million, up a substantial 33.3% year over year. Operating margin was 8.4%, up from 6.8% in the year-ago quarter.

Subscriber Statistics

As of Jun 30, 2016, Televisa had 4,219,906 Video subscribers; 3,258,061 Broadband Internet subscribers; and 2,051,434 Telephony subscribers, which together constituted 9,529,401 revenue generating units (RGU) in the Telecommunications segment. The company also had 7,803,614 net active Satellite TV subscribers, up 13.3% year over year. In the reported quarter, the Sky segment added 121,235 net active subscribers.

Zacks Rank and Stock to Consider

Televisa currently carries a Zacks Rank #4 (Sell). Some better-ranked stocks in the same industry include Discovery Communications Inc. (DISCA - Free Report) , The E.W. Scripps Co. (SSP - Free Report) and Starz . All three stocks carry a Zacks Rank #2 (Buy).

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