Mexican broadcaster Televisa buys out AT&T's stake in Sky Mexico

FILE PHOTO: The logo of broadcaster Televisa is seen outside its headquarters in Mexico City

By Cassandra Garrison

MEXICO CITY (Reuters) -Mexican broadcaster Televisa said on Wednesday it reached an agreement with AT&T for its stake in satellite TV unit Sky Mexico, giving Televisa full control of the firm.

In a filing, Televisa said the payout would happen over 2027 and 2028, but it did not provide the cost of the deal. It said the current head of its cable TV and internet service Izzi, Francisco Valim, would also lead Sky.

A media representative for AT&T declined to comment.

"The lack of a published price and the long payment schedule makes me think a significant portion of the consideration will be in the form of an earn-out, in turn reflecting the uncertainty of Sky's short-term prospects," said Gilberto Garcia, head of financial advisory at consultancy Miranda Partners.

In an earn-out, AT&T would receive a portion of the purchase price based on Sky's performance.

Shares in Televisa closed up 5.5% on Wednesday at 10.94 pesos ($0.66) per share.

Televisa's aim was cost efficiency to drive better results for Sky, a source with knowledge of the deal said.

"It makes a lot of sense to have Televisa operating as a whole unit," the source told Reuters. Televisa previously had held 58.7% of Sky Mexico, an analyst said.

"There are a lot of efficiencies in doing so, one management team and it's easier to negotiate," the source said, referring to contracts with suppliers and providers.

Sky's performance has lagged in recent years. It saw about 160,400 disconnections in the fourth quarter of 2023, with a 15.3% fall in revenue.

Televisa executives in February said about $145 million of a planned $790 million in capital expenditure will go toward Sky this year.

($1 = 16.5325 Mexican pesos)

(Reporting by Cassandra Garrison and Kylie Madry; Additional reporting by Noe Torres; Editing by Bill Berkrot, Cynthia Osterman and Tom Hogue)