Televisa posts loss; will revise plans

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MEXICO CITY -- Televisa reported a net loss of $88.7 million in the second quarter versus a net profit of $627 million a year ago.

Televisa attributed the results primarily to losses associated with its investments in direct-to-home satellite projects in Mexico, Latin America and Spain, as well as other ventures.

However, performance of Televisa's ongoing business operations slipped. Its quarterly revenue fell 2% to $415 million and its operating profit fell 9.3% to $36 million. Televisa said its sales were primarily affected by decreases at its audio and cable divisions, and were mostly offset by increases in its publishing business.

Television net sales, which account for 60% of total sales, were down 0.3% compared to a year ago at $250 million.

Top-off sales were lower versus last year, and Televisa did not sell as many promotional services to consumer product advertisers due to a restructuring in its ad sales department.

Last year's second quarter ad spend from political campaigns, private pension funds and long-distance telephone carriers was approximately equal, on a constant peso basis, to the same sectors plus the World Cup in the second quarter of 1998.

World Cup ad spend through June 30, was about $49 million, which Televisa estimates will be 80% of its total World Cup take. Roughly 70% of World Cup ad spend is in top-off payments (versus payments under its upfront ad sales system, called the French Plan.) In a statement, Televisa said it is considering changes to the French Plan for 1999 in order to make TV ad sales more efficient.

"Although the final terms of the 1999 French Plan are undetermined, it is anticipated that, under the new systems, the rates charged to French Plan advertisers would vary depending upon factors relating to the programs during which the advertisement is shown, and such rates would be fixed at the time the French Plan deposit is made," Televisa's statement read. "Advertisers would still have the option to make upfront deposits, but additional flexibility to the advertisers would be granted, allowing a smaller portion of French Plan deposits to be made in the fourth quarter of each year, with a larger portion representing spot purchases made during the following year."

Televisa appears to be moving towards a system of selling ads based on performance from merely selling spots for which there are no broadcast time or rating guarantees. Rival TV Azteca sells advertising on a cost-per-ratings point basis.

As a result, although Televisa has made ratings gains against Azteca this year, the smaller broadcaster has a higher share of ad spend versus its audience share through the second quarter.

Copyright July 1998, Crain Communications Inc.

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