The value of Televisa’s shares rose suddenly on April 14, so much so that the Mexican Stock Exchange (BMV) suspended its listing for a few moments, due to the jump in the titles of Emilio Azcárraga’s television station. That day closed the day with a gain of 22.8%, its highest price in two years and the highest rise in two decades. The previous afternoon, the company announced an agreement with Univision, the US-language network in Spanish, in a historic move that created the largest Spanish-speaking content giant.
The Mexican went from having a 36% stake in Univision, the company that Azcárraga’s grandfather started, to 45% in the new company, Televisa-Univision. In addition, Televisa will receive 4.8 billion dollars in the operation. “We have achieved our shared vision of creating the world’s leading Spanish-language media company,” Alfonso de Angoitia, the station’s executive co-president, said in a call with investors.
The objective is set in a market of 600 million Spanish speakers. The plan is to conquer it with an OTT ( Over-the-top ) platform that allows video content to be offered over the internet and that will compete with other already established ones, such as Netflix, Amazon and Disney +.
Valentín Mendoza, deputy director of Stock Analysis at Grupo Financiero Banorte, says it has potential. The expert explains that only 10% of the Hispanic population has access to one of these platforms, compared to 75% of the Anglo-Saxon market. “But the challenge here is the competition and the quality of the productions,” he asserts.
Televisa-Univision is 10 years late in a market dominated by large companies, but it has the capital and infrastructure to generate new content, as demanded by the new generation of consumers. “The soap opera formula doesn’t work anymore. (…) Young people want sophisticated and better produced stories. This company has to take advantage of its experience to achieve this goal ”, says Yamila Constantino, managing partner and co-founder of the audiovisual production company eContent.
Televisa-Univision is going to grow, otherwise its investment partners (Soft-Bank and Google) would not have invested in the company, Alfonso de Angoitia mentioned. “They clearly did not invest assuming it would hold its value in the near future. The most probable thing is that the vision and the investment will multiply in the next years driven by the digital transformation ”.
A year of ups and downs
Last year it left a bittersweet taste for Televisa. The pandemic forced its executives to take drastic measures, including the implementation of an aggressive plan to reduce costs and expenses that resulted in savings of 2.2 billion pesos in 2020, and which led to the highest profit margin. that the company has had since 2016.
In addition, the number of viewers in the country increased 12% between March 9 and June 7, according to Nielsen data. Televisa’s prime time viewers increased 6% in 2020 compared to the previous year. But advertising revenues did not behave in the same way, uncertainty gripped advertisers and caused a 16% decrease in annual advertising sales.
“The crisis made it difficult for the increase in the audience to be taken advantage of, but, naturally, companies have to re-invest and regain trust, which implies a major challenge for the company, as it needs to maintain that audience with quality content ”, Explains Gustavo Quiroga, president of Quiroga Agencia de Medios.
The proof of this was in the first quarter of this year. In its financial report, Televisa recorded a 28.1% increase in advertising revenues. “We see an important recovery in this segment for this year, it will be challenging because confidence will not come immediately, but advertising sales will return to good levels,” says Brian Rodríguez, stock market analyst at Grupo Financiero Monex.
The telecommunications business
There is also the other side of the coin: telecommunications. Given the demand for connectivity services in the midst of the pandemic, the sales of its Cable and Sky businesses grew 2%, while its operating profit registered an increase of 2.1%.
Last year Izzi added 1.4 million accesses of video, broadband, voice and mobile services, which meant a growth of 11.3% compared to 2019, a record for the company. “We were able to meet the needs of our subscribers despite an increase of approximately 30% in average monthly traffic per user, and 16% in the number of users,” the company said in its annual letter to shareholders.
Sky, meanwhile, posted the highest growth since 2016 in broadband and video net adds, with 8.1 million subscribers. Broadband companies were the ones that grew quarter after quarter and represented 8.2% of total customers. Together, these two businesses sold 67.501 million pesos, that is, 64.7% of the company’s total sales.
“Televisa must be segmented into two large businesses, content and telecommunications. The organic growth it experienced in the latter is what has allowed it to improve its financial performance. It may be that for this 2021 there will be a slowdown, it would be natural, but nothing that could affect it, since the need to be connected by users will continue ”, says Valentín Mendoza.
Towards consolidation
Televisa is putting together strategies to increase its participation in both the broadband market and the content business, the emphasis will be the launch in Mexico of an OTT platform in Spanish for video on demand with advertising (AVOD, for its acronym in English) .
In October, Blim TV announced the launch, in the first half of 2021, of the free version of the video platform supported by advertising. Luis Arvizu, CEO of the OTT platform, explained at that time that users will have free access to almost 40,000 hours of content in Spanish. “The little we put on platforms like Facebook and YouTube reaches more than four billion views in a month,” he said.
It is precisely this audience that will seek to monetize by allowing the entry of advertisers.
