Netflix, Inc. (NFLX), Amazon.com, Inc. (AMZN): Don’t Miss the Opportunity in Grupo Televisa SAB (ADR) (TV)

To be profitable in the English speaking market Netflix, Inc. (NASDAQ:NFLX) has been forced to produce its own content. Producing this content is not cheap. Netflix spends around $4 million per episode for a number of its series. To really make a dent in the Mexican market Netflix would have to start producing its own content. It is more likely that Netflix, Inc. (NASDAQ:NFLX) would try and focus on the English-speaking market and simply license Televisa’s content. Televisa already made $57.3 million from Univision’s royalty fees in the first quarter of 2013.

Online streaming companies are not like the profitable old media giants. Netflix, Inc. (NASDAQ:NFLX) has a profit margin of 0.5%, an EBIT margin of 1.4% and a ROI of 1.5%. Amazon.com, Inc. (NASDAQ:AMZN)’s numbers are quite similar with a profit margin of -0.1%, an EBIT margin 0.6% and an ROI of -0.8%. Amazon.com, Inc. (NASDAQ:AMZN) is able to bear losses from its Amazon.com, Inc. (NASDAQ:AMZN) Prime streaming video streaming service because these customers bring in more revenue in other areas.

Conclusion

Grupo Televisa enjoys a powerful position in Mexico and played an important role in electing Mexico’s current president. While the recent anti-monopoly legislation will hurt some of Grupo Televisa SAB (ADR) (NYSE:TV)’s Mexican operations, it is highly unlikely that Mexico’s president would completely throw one of his strongest supporters under the bus. The company is profitable, diversifying itself by moving into America’s English speaking market and licensing more of its content. It a good long term investment.

Time Warner is another good investment, but Grupo Televisa SAB (ADR) (NYSE:TV) offers more growth and a surer way to play America’s growing Latino population. Amazon.com, Inc. (NASDAQ:AMZN) and Netflix, Inc. (NASDAQ:NFLX) are good technology plays, but the lack of profits mean that investors must be ready for a wild ride.

The article Don’t Miss the Opportunity in Grupo Televisa originally appeared on Fool.com and is written by Joshua Bondy.

Joshua Bondy has no position in any stocks mentioned. The Motley Fool recommends Amazon.com and Netflix. The Motley Fool owns shares of Amazon.com and Netflix. Joshua is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

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