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Maintaining Growth in a Dying Industry

· Media,Latin America,Cable,Mexico,Televisa

With the rise of the internet, television media companies have to adopt or create new innovations in order to stay relevant. Spanish-language media is no exception. This market is dominated by a few companies: Televisa is a multimedia company based in Mexico and is the largest such corporation in Spanish America; TV Azteca is a Mexican multimedia conglomerate running TV stations and providing cable and satellite service; and Telemundo is an American Spanish-language television network. These companies have taken unique approaches, some of which involve AI and other advance technologies, in order to stay relevant in an age where television media is slowly dying.

Televisa has expanded its holdings to provide a range of products involving film, television, publishing, radio, websites, merchandising, investments, gambling, and lotteries. In addition, Televisa has been trying to expand and improve its technology. According to a recent press release from on-set production technology company Lightcraft Technology, Televisa purchased two Previzion systems. These are real-time visual effects systems that lower production costs. The press release calls the partnership “ideal,” since Televisa has been a leader in innovation in the production of television programs.

TV Azteca has likewise been improving is technology, though at a faster pace than Televisa. In 2017, the multimedia conglomerate announced its Visiòn 2020, which states its aim of radically changing the global entertainment industry with upgrades to both technology and content. TV Azteca released via press release in April that they had partnered with Vault Analytics, a company which uses AI for marketing and rating analytics. With this company, TV Azteca hopes to improve viewership and ad revenue. In addition, TV Azteca launched Dopamine, a production company that produces premium content for HBO-like channels. With these changes, TV Azteca hopes to lead Spanish-language television into the future.

Comcast, the parent company of Telemundo, lost around 165,000 video subscribers in the third quarter of 2017. This loss will certainly affect viewership of Telemundo. In an effort to curb this decline, Comcast has been creating physical products to attract new customers and boost profits. These include Xfinity Home, which is a home security system, Xfinity xFi, a wi-fi router, and X1 Voice, a voice-powered remote control. Comcast has branded these products as an attempt to create an automated home, and so far, they have been very successful. Xfinity Home, for example, reached 10 million homes on launch. It is through this product development that Comcast hopes to maintain profitability.

The performance of these companies’ stocks can help gauge how effective recent efforts to improve technology have been. Grupo Televisa, S.A.B. trades on the NYSE as TV at $17.07 per share on the close of May 29 and pays an annualized dividend of $0.09 per share. As of last earnings release, annual revenue was $5.15 billion, EBITDA was $1.87 billion, and operating cash flow was $1.37 billion. P/E is 44.27, and EV/EBITDA is 8.09. In the last year, quarterly earnings have fallen by 12.5%, a trend which is expected to reverse, as earnings per share are expected to rise from between $0.09 and $0.15 in the present quarter to between $0.13 and $0.18 next quarter. However, annualized sales are only expected to rise by 0.3% this quarter and fall by 2.1% next quarter. Troublingly, company has burned through $450 million of cash and cash equivalents in 2017. Regardless, analysts estimate the stock will trade at $21.05 in one year.

TV Azteca, S.A.B. de C.V. trades on the BMV in Mexico City as AZTECACPO at $2.57 per share ($ representing pesos) as of close on May 29 and pays an irregular dividend. Annual revenue is $14.19 billion, EBITDA is $3.39 billion, and operating cash flow is $1.47 billion. P/E is 42.17, and EV/EBITDA is 5.03. Quarterly earnings growth year over year is -57.1%. EPS is estimated to be between $0.03 and $0.13 this quarter and -$0.03 next quarter. Annualized sales growth is expected to be 5.4% this quarter and $3.0% next quarter. The company lost $1.69 billion in cash and cash equivalents in 2017. However, analysts expect the price to rise to $3.67 per share in the next year.

Comcast Corporation, the owner of Telemundo, trades on the NASDAQ as CMCSA at $31.51 per share as of close on May 29 and pays an annualized dividend of $0.76 per share. Annual revenue is $84.52 billion, EBITDA is $27.81 billion, and operating cash flow is $21.4 billion. P/E is 6.63, and EV/EBITDA is 7.80. Quarterly earnings growth in the past year has been a massive 552.7%. Earnings per share this quarter are expected to be between $0.57 and $0.63 and between $0.58 and $0.66 next quarter. Annualized sales growth is expected to be 3.4% this quarter and 4.8% next quarter. Cash and cash equivalents actually grew by $127 million. Analysts expect the stock to trade at $44.28 in one year.

Written by Jack Vasquez & Edited by Alexander Fleiss

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