Televisa's financial results improve in 3Q

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MEXICO CITY -- Grupo Televisa reported improved results for the third quarter of 1998 after post- ing a disappointing second quarter that sent its stock price tumbling 17% in one day in July. The company reported a net loss of $87 million for the third quarter, compared to a net profit of $144 million in the same period a year ago, which included several extraordinary items.

Revenue, which had declined year-over year in the second quarter, rose 8.8% in peso terms versus the third quarter of 1997 to $452 million.

Televisa attributed part of the third quarter 1998 loss to on-going investments in direct-to-home platforms in Mexico, Latin America and Spain, as well as to exchange rate losses related to the depreciation of the Mexican peso throughout the year. The depreciation of the peso also increased its financing costs.

Televisa has continued its cost-cutting program and is focusing on core operations. It did book a net gain in the third quarter for the sale of its controlling interest in billboard company Vendor.

Televisa said it has reorganized its sales team to maximize revenue in each of its divisions. Its new TV ad sales plan is more flexible and will better serve both the company and advertisers, Televisa said. It has also eliminated its cross-division bonus system. Televisa's strong ratings performance should help it close the gap between audience and advertising share on television. Its third quarter audience share from sign-on to sign off as measured by IBOPE was 78.7%--but it has only an estimated two-thirds share of TV ad spend this year.

For the third quarter, television revenue rose 4.7% to $244 million given higher income from World Cup advertising, and additional foreign revenue from programming sales and advertising. Publishing sales grew 11.1% on more ads and a greater volume of magazines due to recent launches. It noted that the number of magazines distributed in foreign markets declined.

Audio sales rose 33.5%, primarily due to a new Enrique Iglesias album. Cable sales fell 5.4% due to lower advertising on pay television. However, subscribers in its Cablevision system rose to 253,200 by Sept. 30, 1998 versus 217,600 a year ago.

In DTH, the Sky Mexico system had more than 225,000 subscribers at the end of September, compared with 61,000 a year ago. The Spain platform, Via Digital, started operations in September 1997 and now boasts 325,000 subscribers. DTH joint ventures are expected to experience substantial net losses and negative cash flow over at least the next several years, Televisa said.

Copyright October 1998, Crain Communications Inc.

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