The loss of important sporting events – such as the Libertadores, the Brazilian team games and Formula 1 – as well as the departure of stars from part of its crew of artists and broadcasters, have sparked some rumors about the company’s financial situation. Globe, the largest telecommunications network in Latin America.
Despite this, the broadcaster continues to be in a strong cash position and a good financial position, revealing Fitch.
Earlier this month, the rating agency gave a BB rating to a proposed $400 million debt issue.
The company will use the proceeds for early repayment of a portion of its bonds due in 2025 and 2027.
“Globo’s net worth and strong competitive position in the Brazilian media sector support the rating of the local currency, despite the decline in its operational performance in recent years, due to the transfer of advertising revenue to other platforms and the negative impact of the epidemic.” Puts agency.
good financial center
Fitch highlights that Globo has one of the strongest financial structures in the region, backed by its net cash position.
While the conglomerate has cash and financial investments of R$12 billion, its debts are in the range of R$5.7 billion.
The company should maintain a net cash position of R$7 billion to R$10 billion, according to agency projects.
The size of these resources provides the company with great financial flexibility, despite the depreciation of the riyal against the dollar. Globo has the flexibility to defer or reduce the payment of dividends,” he says.
In 2021, Globo ended the year with net revenue of R$14 billion and Ebitda (which measures operating income) of R$122 million, with a margin of 0.9%.
Despite this, the rescheduling of football matches alone cost the broadcaster about R$503 million in impacts on Ebitda.
In 2022, net revenue is expected to grow by 11% to R$15.7 billion, mainly due to the increased number of Globoplay subscribers, while Ebitda of R$891 million will result in a 5.7% margin.
Losing a TV audience is the biggest challenge Globo will have to face, Fitch explains.
Traditional shows, such as Jornal Nacional and Fantástico, are losing audience points year after year, despite the broadcaster taking the lead.
In 2021, the company captured 34% of the television audience in the early months of the year, and reached 39% in primetime.
Fitch remembers, however, that the Brazilian pay-TV market is facing a downturn – at the end of 2020 there were 14.8 million subscribers, 24% less than 19.5 million in 2014.
He notes that “Globo’s strategy to counter market changes and the decline in traditional broadcast TV business included the launch of Globoplay.”
According to Fitch, the number of Globoplay’s subscriptions increased rapidly – 27% in the 12-month period ending in September 2021.
The share of content and programming in revenue is expected to reach 40% in 2022 compared to 36% in 2019.
“Globoplay is expanding its subscriber base through package offerings and partnerships, which should continue to play an important strategic role,” he adds.
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