July 10, 2017 / 6:26 PM / 2 months ago

Televisa shares surge ahead of quarterly report

MEXICO CITY, July 10 (Reuters) - Shares of Grupo Televisa surged on Monday ahead of the Mexican media company’s quarterly results, with some investors looking beyond a potential dip in cable subscribers to a pickup next year, driven by the World Cup soccer tournament.

Shares of the broadcaster, known for its “telenovela” soap operas, jumped 4.7 percent to 94.10 pesos and were on track for their strongest one-day gain since February. Televisa’s New York-traded shares rose 5.4 percent.

Like its U.S. peers, Televisa is under pressure as younger viewers shun cable bundles in favor of cheaper streaming options including Netflix Inc. Televisa’s stock this year has lagged Mexico’s benchmark index.

Several analysts predicted in recent reports that Televisa’s second-quarter revenue, expected to be released after the market close on Monday, would be in line with the year-ago period. In a note to clients, Banorte Ixe pointed to potentially lower advertising sales and lost subscribers, as well as a strengthening peso, which may have increased the cost of content while reducing financing costs.

Televisa may see a pickup in pay-TV subscribers in the second half of 2017, while its ad revenue will get a boost from the World Cup beginning in June 2018, Interacciones analyst Martin Lara wrote in a preview.

“These results could have a short-term negative effect on Televisa’s share price,” Lara wrote of the second-quarter release. “However, we recommend taking advantage of any adjustment as we believe that Televisa’s medium-term outlook is encouraging.”

Options on Televisa’s U.S.-listed shares drew bullish activity on Monday. Overall trading volume rose to 2,400 contracts, or about 13 times the average daily volume, according to options analytics firm Trade Alert

Televisa is expected by analysts on average to report a 0.5 percent increase in second-quarter revenue to 23.63 billion pesos ($1.31 billion), according to Thomson Reuters data.

The world’s largest maker of Spanish-language content, Televisa has been subject to tougher regulations since 2014 as part of a sweeping sector reform aimed at making the Mexican market more competitive.

It recently won a court order blocking the sale of Roku streaming devices in Mexico on the grounds that the gadgets are used by criminals to illegally sell pirated television content.

Televisa’s stock has gained 8 percent so far this year, underperforming a rise of 11 percent in Mexico’s benchmark S&P/BMV IPC index. ($1 = 17.9920 Mexican pesos) (Reporting by Noel Randewich; Additional reporting by Saqib Ahmed in New York; Editing by Leslie Adler)

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