April 28, 2020 / 4:54 PM / a month ago

UPDATE 1-Mexico's Televisa proposes cancelling dividend, cuts costs as coronavirus bites

(Adds comments from Televisa call, background, byline)

By Julia Love

MEXICO CITY, April 28 (Reuters) - Mexican broadcaster Televisa on Tuesday outlined plans to scrap its 2020 dividend as part of "aggressive" cost-cutting measures aimed at steeling itself for the economic blow of the coronavirus.

The outbreak has hammered Mexico's biggest broadcaster during an advertising slump, and forced the group to shutter its casinos and sideline its soccer team.

During a call with analysts, Co-Chief Executive Alfonso de Angoitia said the measures include freezing new hires and salary increases as well as renegotiating contracts with suppliers.

Executives will also take temporary pay cuts, de Angoitia said, as he and his fellow co-chief executive slash their salaries by 50%.

The company's board decided to propose cancelling its 2020 dividend at the shareholders' meeting, he added.

"These are unprecedented and turbulent times," de Angoitia said. "We know that during the second quarter, our advertising sales business will be challenged, while our Sky and cable segments will likely remain resilient."

Televisa reported on Monday a first-quarter net loss of 9.65 billion pesos ($405.6 million), citing the depreciation of the Mexican peso and a change in the book value of its stake in U.S. Spanish-language peer Univision.

The blow from the coronavirus could already be detected in the company's results. Advertising sales declined 28.4% as some clients suspended campaigns near the quarter's end, Televisa said. Changes in the schedule for advertising negotiations also contributed to the drop.

In the coming quarters, Televisa expects federal government advertising to fall substantially, "maybe even to zero," with the economic fallout from the coronavirus, de Angoitia said.

Spending by local governments may be more resilient, the executive added.

Televisa's cable unit has seen demand soar during the lockdown, but it also recognizes tough economic times in Mexico may hurt customers' ability to pay, said Salvi Folch, chief executive of division.

Televisa will roll out a "lifeline package" with reduced speeds in May and June for those who are struggling to keep up with their bills, he said.

"More than ever, there is a strong need for connectivity, information and entertainment," de Angoitia said. "And we're satisfying the need with the content and the service we offer, especially through broadband." (Reporting by Julia Love Editing by Drazen Jorgic and Richard Chang)

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