Mexico's Media Giant Meets Few Obstacles to Expansion

THE last few weeks have been eventful ones for Grupo Televisa, Mexico's voracious media giant.

On July 27 the company proclaimed its intention to become listed on the New York Stock Exchange in early 1993, having recorded a half-year net profit increase of 61.7 percent above the level of a year earlier.

On July 28 it announced the completed purchase of Grupo America, the world's major publisher of Spanish-language magazines, for $130 million. Already the publisher of several high-circulation Mexican magazines, Televisa now has 80 percent of the world market. When the Bolsa (Mexico's stock market) closed July 31, company shares had gained 10.4 percent in that week.

A $2 billion purchase of Ovaciones, a popular Mexico City daily, is expected to be announced this week.

The move into print media comes as no surprise to some observers. The company's substantial interests in radio, music recording, film and video production, soccer and bullfighting, in addition to TV, have earned it the moniker "the octopus."

"Televisa always used to have ties with [the Mexico City newspaper] Novedades," says Mexico-based political analyst Richard Seid. "I think [Televisa CEO Emilio] Azcarraga wants to get his foot in the door again."

When Peruvian novelist-politician Mario Vargas Llosa last year referred to Mexico as "the perfect dictatorship," he might equally have been talking about the nation's television giant. Like the Institutional Revolutionary Party, which has ruled Mexico since the 1920s, Televisa competes for the loyalties of the people. But its competition pales beside the monolithic nature of the company.

The world's largest Spanish-language broadcaster, Televisa claims a 97 percent market share in Mexico and produces around 80 percent of its own TV programming.

In 1991, Televisa exported more than 38,000 hours of programming to 52 countries, much of it satellite newscasts and soap operas known as telenovelas.

The recent purchases mark the latest moves in a spending spree that originated in the company's first-ever public stock offering on Dec. 10, 1991. Twenty percent of Televisa shares were placed on the Mexican and European stock exchanges and made available to United States corporate investors, raising $808.7 million after expenses.

THE same month, Televisa bought a 49 percent stake in Chile's Megavision network. Since then it has signed programming agreements with Venezuela's largest broadcaster, Venevision, and Argentina's ATC network, and recently it bought out Peru's Radiodifusion TV company.

But Televisa's biggest overseas investment has been its $50 million role in the joint purchase of Univision, the leading Spanish-language network in the US, in association with California businessman Jerrold Perenchio and Venevision. The purchase is subject to approval by the US Federal Communications Commission, which forced Televisa boss Emilio Azcarraga Milmo to sell Univision in 1987. US law forbids aliens owning more than 25 percent of broadcast media firms.

"Televisa can't grow any more in Mexican television, so it's planning to expand into all Spanish-speaking communities," comments a Mexico City market analyst.

The wave of expansion marks the fruition of radical changes in company organization that began with the 1990 departure of major partners Romulo O'Farrill Jr., and Miguel Aleman Velasco, who jointly own Novedades.

Media analysts say that last December's flotation was in part motivated by the buying out of Mr. O'Farrill (Mr. Aleman ceded his share to his son) and also by the $130 million loss sustained by Mr. Azcarraga's venture with a failed US sports daily, The National.

"For a while the position of Televisa wasn't as strong as people assumed," says Kent Wilkinson, a television expert at the University of Texas, Austin.

The prospectus Televisa released in December revealed a corporate balance in the red for each of the years 1988 through 1990.

But now with sales soaring (up 27.4 percent for the first half of 1992 from 1991 first-half sales) and stock looking strong, the octopus appears poised to strike again.

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