Carlos Slim Exerts His Power as Televisa Suffers|
Jul. 15, 2011
Published by Minyanville
The world’s largest Spanish-language broadcaster, Televisa (TV), has seen its stock slide consistently over the last two weeks -- to its lowest level in three months -- as investors appear anxious over the company’s second-quarter earnings.
Profits were at just over $150 million in the second-quarter, matching the same period in 2010 though on sales growth of 4.7%. Broadcast sales fell 5.9% as a row with the world’s richest man, Carlos Slim, led him to pull all advertising.
Slim’s companies played a huge part in Televisa’s broadcast sales, representing 3.8% in 2010. The fall was even offset by a rise in advertising spending for the soccer World Cup in South Africa.
“We would welcome [Slim’s companies] back as clients anytime,” Jose Baston, Televisa’s president of television and content, told Bloomberg.
“People focused a lot on the fact that net income was flat,” Enrique Gomez-Tagle, an analyst at HSBC Securities, told the agency. “We already knew the Slim effect, but maybe some people didn’t have it very well understood.”
After denying Slim the right to broadcast and finally enter the TV market, Mexican regulators are investigating whether he has snuck in through the back door. Slim’s Telmex joined forces with satellite TV firm Dish Mexico in 2008, offering low-cost services. Rivals -- of which Slim has many -- have complained ever since. A Reuters investigation has discovered that regulators are beginning to explore whether the merger was legitimate.
"Carlos Slim has grown a lot,” Slim-biographer Jose Martínez told the news agency. “But I think that he has reached his limit and has lost part of his power -- or maybe the competition is getting stronger.”
The authors of the special report suggest that Slim may be a victim of his own success in Mexico, where roughly half the population live in poverty. “[Being the world’s richest man] made him visible, when before he was invisible,” Jana Palacios, consultant at competition lobby group IMCO, told Reuters. “Slim is the favorite villain."
Slim’s power seems even more evident as the New York Times has agreed to pay back a $250 million loan it took from the Mexican tycoon two years ago earlier than expected. Interest will add a further $29 million to the amount owed. Slim’s family still holds a 7% stake in the company. There were rumors earlier this year that the businessman was looking to double this stake as well as expressing interest in Newsweek.
USA Today is drawing focus to the reality of the US-Mexico border, bucking the trend of talking down the area by suggesting that crime rates have actually been falling for years, at least on the US side.
“US border cities were statistically safer on average than other cities in their states,” writes the newspaper. “Those border cities, big and small, have maintained lower crime rates than the national average, which itself has been falling.”
It goes on to acknowledge that the commonly held belief that the region poses serious safety threats has fuelled anti-immigration legislation -- perhaps a motive for perpetuating the belief -- as well as forced an increase in tax dollars going into fencing and security.
Indeed, Ciudad Juárez -- the most violent city in the world with thousands of deaths annually -- borders El Paso, Texas, one of the safest in the US.
Despite the violence, US firms are staying strong. The Mexican economy is growing faster than that of its northern neighbor. “Even as drug organizations battle for turf around them, more TV sets are being assembled, car parts boxed up, and electronic widgets soldered together in the large manufacturing plants here known as maquiladoras,” writes Randal C Archibold in the New York Times.
While jobs in manufacturing have gone up, it is the maquiladoras that are often blamed for violence and death in Mexico, with workers struggling on low wages and with little security in cities where criminals live in the luxury of complete immunity from prosecution.
Auto Industry Speeding Along
The auto industry has hit record highs in 2011, looking to reach output of 2.3 million units by the end of the year. Output of cars and light trucks in the January-June period rose 14% to 1.23 million vehicles on the same period last year.
The impressive figures show that Latin America is becoming an ever-more important market for exporters, more so than the US. Exports in total were up 15% to 1.02 million units. Latin America brought up 14% of exports in the first six months of 2011, compared to 9% last year. The US market grew 9% in the same period.