Televisa sees TV growth in Q2, but faces challenges

Gabriel Miramar-Garcia | 16-07-2013

Thanks to strong growth in its TV subscription and cable/telecom segments, Mexican powerhouse Televisa reported $1.44 billion in profit, a 6.4% increase in net sales from the $1.31 billion it earned in the previous year's Q2.

The company saw a 12.8% growth year-on-year in subscriptions and the cable and telecom segment saw 8.2% growth year-on-year. The overall growth rate for the company was, however, negatively affected by a 9.7% decrease in publishing revenues, which continue to fall across all print ventures in Mexico as circulation declines.
Televisa's free-to-air TV advertising revenues increased 6.2% year-on-year from $429.7 million in Q2 2012 to $456.3 million in Q2 2013. This was an uplift after a weak Q1, which saw a 7.2% decrease from the previous year. IHS estimates Televisa's multichannel advertising revenues at $47 million in Q2 2013, up 11.2% from $42.3% in Q2 2012.
"The Mexican advertising market faces tough comparatives in 2013," IHS noted in an analysis ues_bounce_back_/view.html
. "The general elections in 2012 triggered a surge in advertising investment, particularly on TV. A similar driver is missing in 2013 as advertising expenditure levels return to normal."
Q1 2013 was exposed most strongly to this comparative effect: general elections took place in Q2 2012 and advertising activity was concentrated on the election run-up in Q1. In a post-election slump, Televisa revenues declined by 7.2% in Q1 2013.
The weak Q1 performance was exacerbated by Easter taking place in Q1 this year. In Mexico, Easter is a period of typically soft advertising sales due to strict religious practices. In contrast, European advertising markets thrive during Easter time.
"Although political advertising spend continues to decline throughout 2013, Televisa's TV advertising revenue bounced back in Q2 2013 growing 6.2% year-on-year," IHS added. "This reflects the confidence of advertisers in the TV medium in Mexico. At 60.5% market share of all Mexican advertising revenue, TV remains the strongest platform to deliver brand messages and will maintain its media share in 2013."
There are changes afoot, however. While cyclical factors shape Mexican TV advertising in 2012 and 2013, the market is facing deep structural changes as viewership and advertising revenue migrate to multichannel TV, the firm noted. "Incumbent broadcasters like Televisa are pressed to develop a coherent set of channels in order to shore up their market position," it said.