Bloomberg News

Carlos Slim’s Companies Doing ‘Very Well’ Without TV Ads

June 19, 2012

Carlos Slim’s companies are getting along fine without buying advertising on Mexico’s top two TV networks, his eldest son said, signaling that a government intervention last week may not be enough to persuade the world’s richest man to put commercials back on the airwaves.

Slim pulled his ads from Grupo Televisa SAB and TV Azteca SAB at the beginning of 2011, blaming a dispute over prices. Tensions have intensified between the companies and Slim’s America Movil SAB (AMXL) because the broadcasters are pushing into the mobile-phone market, Slim’s main source of revenue. Last week, Mexico’s antitrust agency said Televisa and Azteca should offer spots to rivals at the average price that other advertisers pay, as a condition for them to form a wireless-industry partnership.

Slim, 72, has relied on newspapers, online advertising and cable-TV networks to advertise his wireless service, Internet plans and retail stores. His move away from over-the-air TV came as the broadcasters encroached on the telecommunications industry he dominates.

“We have been able to manage our marketing strategy very well,” Carlos Slim Domit, the son of the billionaire and the co-chairman of America Movil, said in an interview yesterday. “You can have a very strong strategy using new media and using alternate media to get your products’ image to the customer.”

Slim’s Portion

At the time he pulled his TV ads, Slim represented about 1.5 percent of Televisa’s sales and 3 percent of Azteca’s. When asked if the antitrust settlement would cause Slim’s companies to reconsider their strategy for advertising purchases, Slim Domit, 45, deferred to the broadcasters.

“They are the ones that put us out, so the question is more for them,” he said in Los Cabos, Mexico, where he was attending the G-20 business summit.

Dan McCosh, a spokesman for TV Azteca, declined to comment. Televisa didn’t have an immediate comment.

The two broadcasters control almost all of the over-the-air TV audience in a country where only about 40 percent of households have cable or satellite subscriptions.

Televisa controls three cable-TV units that are offering Internet and phone service, taking market share away from Slim. The Mexico City-based broadcaster agreed this week to conditions set by the antitrust agency, allowing the company to take a 50 percent stake in mobile-phone carrier Grupo Iusacell SA to compete even more closely with America Movil.

The other half of Iusacell is owned by Ricardo Salinas, the billionaire who controls TV Azteca.

Movil Share

Even without TV advertising, America Movil has held about 70 percent of Mexico’s wireless market consistently over the past 18 months. Iusacell has increased its share to 6 percent from less than 5 percent, trailing Telefonica SA (TEF)’s 20 percent.

“It’s the result of all the work our marketing areas have done, doing a lot of research, a lot of focused advertising,” Slim Domit said. “It’s been consistently successful for us.”

America Movil has pleaded with the government for a license to offer TV service over its home-phone lines to compete with Televisa’s cable units. The government says America Movil still must satisfy requirements for the way its network connects to competitors, a claim America Movil disputes.

Mexican phone regulators approved a framework agreement, developed with carriers including America Movil, earlier this month that could settle much of the dispute with the government, Alejandro Gallostra, an analyst with Banco Bilbao Vizcaya Argentaria SA, said in a June 14 research note. He said he expects America Movil to get a TV license in the next 12 months.

“We haven’t got any news changing the decision, but we will see,” Slim Domit said. “We believe we have accomplished all the requirements.”

America Movil gained 1.8 percent to 17.46 pesos at the close in Mexico City. Televisa slid 1.2 percent to 54.85 pesos, and Azteca rose 1.9 percent to 8.46 pesos.

To contact the reporter on this story: Crayton Harrison in Mexico City at tharrison5@bloomberg.net

To contact the editor responsible for this story: Nick Turner at nturner7@bloomberg.net


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