Mexican Media Group Televisa 2Q Net Seen Rising 9%

Media conglomerate Grupo Televisa SAB (TV), Mexico's No. 1 broadcaster and the largest producer of Spanish-language content in the world, is expected to report a 9% increase in second-quarter net profit this week.

Televisa will likely report net profit of 2.01 billion pesos ($145.7 million), compared to MXN1.84 billion in the second quarter of 2008, according to the median estimate in a Dow Jones Newswires survey of 10 analysts.

"We anticipate that Televisa's second-quarter results will reflect strength in pay TV, programming exports, and cable and telecom, moderated by softness in publishing and [satellite TV unit] Sky," Scotia Capital analysts said in a report.

Sales probably expanded 9.5% to MXN12.6 billion, down from the 19% growth posted in the first quarter, due to an unfavorable Easter calendar effect and a drop in economic activity in the second quarter, according to the survey.

Mexico is in the grips of its worst recession in over a decade due to an economic downturn in the U.S., buyer of 80% of its exports, and a slump in global trade.

The Bank of Mexico expects gross domestic product fell about 10% in the second quarter, after shrinking 8.2% in the first quarter.

Revenue growth in the quarter was probably driven by Televisa's broadcast TV business, its largest business unit by sales, as well as the acquisition of cable TV firm Cablemas SA last year and programming exports that benefited from a weak peso.

Earnings before interest, taxes, depreciation and amortization, or Ebitda, a measure of cash flow, are seen rising a modest 2.2% to MXN5.08 billion, while operating income likely fell 3.6% % to MXN3.86 billion.

Televisa is scheduled to release its second-quarter report Thursday after the markets close, followed by a conference call Friday morning.

Investors will be looking for greater clarity from management during the call about entry into Mexico's wireless industry, the strength of the domestic advertising market during the second half of the year, and competition in the satellite TV market.

The federal government plans to auction wireless licenses later this year, with a view to attract a new entrant in the country's highly consolidated mobile telephony market.

Sky, Televisa's No. 2 business unit by sales, faces competition from new entrant Dish Mexico, a joint-venture between MVS Comunicaciones and EchoStar Corporation (SATS).

Dish signed a billing and distribution agreement last year with Mexico's No. 1 fixed-line phone company, Telefonos de Mexico SAB (TMX), and currently provides service in 10 cities, including the capital.

BBVA Bancomer analyst Andres Coello said in a report that Televisa's second-quarter results won't reflect the full impact of competition from Dish Mexico because the media firm has a policy of reporting customer disconnections only after 60 days of non-payment have passed.

"We believe the coming quarter will show the full impact on Televisa's growth, which could result in net client losses, a situation that before the entry of Dish-Telmex would have been unthinkable," Coello wrote.

Televisa's local CPO shares closed 4.7% higher at MXN47.47 amid a broad market rally Tuesday. Its shares have risen 14% so far this year, compared to an 8.8% gain for Mexico's benchmark IPC stock index.

-By Ken Parks, Dow Jones Newswires, 52-55-5001-5723, [e-mail]