US Hispanic TV market bolsters Televisa outlook

Gabriel Miramar-Garcia | 07-01-2013

Zacks Equity Research has reaffirmed its long-term Neutral recommendation on Grupo Televisa SA, noting that the US Hispanic TV market is "highly lucrative and growing at a remarkable pace."

Televisa's income mainly comes from its US operations, including the sale of content, the website and cable television. But it's the relationship it has with Univision that has analysts feeling positive about the company.

"Televisa allows Univision to access its content and then rebroadcast it on television and the Internet for a royalty," the firm said. "In the previous quarter, royalty from Univision was $62 million, up 6.5% year over year. Management estimated that Univision will generate $245 million of royalty revenue in 2012."

Meanwhile, the company's third-quarter 2012 financial results easily outpaced the Zacks Consensus Estimates.

Televisa's move to form a joint venture with the Iusacell wireless company in its home market of Mexico is also seen as a benefit.

"[In Mexico] Televisa controls four free-to-air broadcast channels, the largest of the two satellite TV channels and three cable TV units offering triple-play TV, voice and Internet services," Zacks said. "Undoubtedly, a foothold in the lucrative mobile market will make the company a highly integrated broadcasting and telecom operator in Mexico. Nevertheless, we believe Televisa is currently fairly valued as the stock price has soared over 47% in the last year."