“Top pick” rating for Televisa

Mexico’s broadcasting giant Groupo Televisa gets a resounding “top pick” from investment banker Morgan Stanley in a client note. Televisa, says the study, enjoys “market leadership in Mexico and distribution into the US via Univision provide unique scale advantages that make it easier for Televisa to produce high-quality content, and to do so profitably and consistently.”

Univision, in which Televisa holds a 37 per cent stake, is rumoured to be planning an IPO .

“Although secular trends will likely continue to cause headwinds for years to come, the US experience suggests that broadcast TV remains the most cost-effective way to reach the mass market. We expect such pricing power to help offset the modestly negative impact of the reforms beginning in Q3 2013. Meanwhile, content producers are the primary beneficiary of the connected TV theme, in our opinion,” says the bank.

“We have significantly increased our base case valuation for Televisa’s 37 per cent stake in Univision from $1.5 billion to $3.2 billion. This reflects the benefit of stronger-than-expected 2Q13 results, and faster-than-expected deleveraging. Moreover, press reports about a possible IPO in 2014 (see Reuters, “Univision in talks with banks about 2014 IPO”, Sept 19 2013), has brought forward the date when investors could be able to more easily gauge the value of Televisa’s minority investment in the US broadcaster. The company has not commented on the Reuters article,” adds the bank’s report.

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