Fitch Issues Stable Outlook for LatAm Media Sector

CHICAGO: Fitch Ratings sees a “stable” market for Latin American broadcasters in 2016, despite a squeeze on ad revenues and a sluggish economy.

Ad budgets in the region are expected to be constrained in 2016, Fitch says, resulting in flat pricing. Fitch also expects rising production costs. As such, profitability at media companies’ free-to-air assets may be under pressure. Cash flow from content sales and new business platforms should help companies maintain financial stability. Free-to-air TV’s dominant position among advertisers is expected to remain intact even as pay-TV and digital platforms gain market share.

“Most operators are well positioned to mitigate the suppressed free-to-air (FTA) TV’s advertising demand in 2016 given their diversified cash flow sources and solid balance sheets,” said Alvin Lim, director at Fitch. “On that note, TV Azteca will remain most vulnerable among the rated issuers given its over-reliance on the FTA revenues.”