Grupo Televisa: Political Links And American Expansion Could Be Key

| About: Grupo Televisa, (TV)

By Sean Geary

This past week may turn out to be a defining one for Grupo Televisa (NYSE:TV). A presidential victory for an alleged ally of the firm and an audacious expansion plan into English-speaking American homes could be seminal for the Mexican television company.

If Carlos Slim is any indication, political connections in Mexico are particularly helpful for firms in telecommunications and broadcasting. After this week's Mexican Presidential elections, Grupo Televisa may have just that, as the firm had previously given what observers have called "overly favorable coverage" to the recently elected Enrique Peña Nieto. With Peña Nieto’s victory for the PRI, Grupo Televisa now has a friend in the capitol. While it may be difficult to discern what material effects Peña Nieto's election will have on Grupo Televisa's stock, any political concerns going forward are now unlikely to materialize.

This week also marks Grupo Televisa's first major foray into the English-speaking television market. Grupo Televisa has long been the biggest player in Spanish-language soap operas throughout Latin America and Spanish-speaking Americans -- it has the largest library of Spanish-language soaps in the world. But the company has never tried to break into the massive English-language American market. Until now.

While the American market surely seems saturated with no less than twenty outfits producing individual content, Grupo Televisa has some unique ideas that may yield results in the U.S. The company plans to introduce the five-nights-a-week format, standard for Latin American shows, to American audiences. With some of Grupo Televisa's shows catering to teenagers of the instant-gratification generation, this idea could prove quite successful.

On the flip side of the coin, Grupo Televisa has latched on to former HBO head of Drama Series Michael Garcia, who was responsible for such cerebral series as "The Wire" and "The Sopranos." If Grupo Televisa is able to create content that embraces the "rise of the mass intelligent," combined with offerings that cater to the lucrative teenage demographic, it may find success in the U.S.

Investors considering jumping into Grupo Televisa might consider waiting for a more compelling entry point. The stock trades at about 20 times its forward P/E, and it remains to be seen if these initiatives will be fruitful. However, Grupo Televisa's outside-the-box thinking means investors should keep the Mexican firm on their radar.