In all good Latin soaps, the downtrodden always get revenge.

Not so, it seems, when it comes to the stock price of


second-largest TV company:

TV Azteca

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broke down because Azteca was said to have been too demanding.

Most importantly, though, the market is pricing in expected changes in earnings, not what companies have done in the past. Analysts reckon that Televisa will this year report an EBITDA (earnings before interest, taxes, depreciation and amortization) margin in the 21% to 23% range, half Azteca's impressive 51% to 54%.

But, due to a cost-cutting program and so-far successful efforts to recapture lost audience share, Televisa's EBITDA could grow 27% this year and 23% in 1999, says Leonardo Simpser, a media analyst for

Deutsche Morgan Grenfell

in Mexico City. He reckons Azteca's EBITDA will advance at a considerably slower rate of 20% this year and 11.5% in 1999.

Since his appointment in March, Televisa's tough new CFO,

Gilberto Perez Alonso

, has instilled a new confidence in shareholders. His next big move, says one analyst, will be to slash 1,200 jobs, equivalent to 6% of the total workforce.

But a recovery for Azteca may be close -- especially if Televisa screws up its restructuring.

Shares of Televisa, controlled by the Azcarraga family, will get badly hit if shareholders do not get some idea soon about what the company wants to do with its growing cash mountain.

The company will soon have amassed between $800 million and $1 billion from the April sale of its 7.5% stake in


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and a proposed sale of 70% of


( UVN).

Televisa's stock would tank if the family, while ignoring minority shareholders' interests, used these proceeds to pay off the estimated $1.1 billion in private debts left by

Emilio Azcarraga Milmo

, the former chairman of Televisa and father of current chairman and CEO,

Emilio Azcarraga Jean


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Although Televisa did not provide a precise and up-to-date ownership breakdown, the company is reportedly controlled by Azcarraga Jean through a 52% holding in


, a holding country that owns 100% of Televisa's voting stock. The Azcarraga family as a whole is estimated to own some 60% of Televisa shares. Azcarraga Jean himself is thought to have, indirectly and directly, 40% of total shares.

Azcarraga Milmo's debts, said to be owed to

Goldman Sachs


Morgan Stanley

and a range of Mexican banks, cast a big shadow over Televisa and must be settled soon.

Whitney Johnson, a media analyst at Salomon Smith Barney, says that one shareholder-friendly way in which the debts could be largely settled is for the Panamsat and Univision proceeds to distributed as a dividend to all shareholders. That way, the family could expect to receive as much as $600 million, due to its 60% stake in Televisa.

The remaining $500 million could be raised through the sale of family shares in a secondary offering. But markets may not be ready for that, even though it would boost Televisa's free float.

Alternatively, the family could raise money for debt repayment by selling shares back to the company, reducing the number of shares outstanding and boosting return on equity for all shareholders. Pablo Riveroll, head of research at

Merrill Lynch

in Mexico City, points out that Televisa recently upped the size of its share repurchase program to $350 million from $200 million.

He reckons the program could be increased still further (maybe as high as a $1 billion). This way the family could raise the lion's share of the money needed to settle the old man's debts, and other shareholders could participate.

But share repurchase does not address the question of what to do with the proceeds from the Univision and Panamsat sales.

Analysts fear they may be used to fund a foray into the wireless telephony market.

Alejandro Burillo Azcarraga

, a large Televisa shareholder, has teamed up with


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to provide cellular services in Mexico. It is not clear whether Burillo Azcarraga is counting on Televisa to financially back his venture.

It has even been rumored that he may even buy or build a retail chain of electronic goods stores so that he has outlets from which to sell cellular handsets and subscriptions. Such plans send a chill down the spines of some analysts: "Televisa needs to be concentrating on moving back to core businesses, not diversifying," says one.

A dream scenario for Azteca would be if it announced a concerted U.S. strategy just as Televisa disappointed the market by misspending its cash.

Christopher Recouso, a media analyst at

Bear Stearns

, which lead-managed the company's international IPO last year, says Azteca could set up a company to rival Univision and Telemundo, which have 80% and 20%, respectively, of the U.S. Hispanic market.

Azteca is said to be actively looking for partners for such a venture. And Recouso says it need not burn a hole in Azteca's pocket. He reckons that a consortium would need $200 million to start its bid for U.S. market share. With foreign ownership in U.S. media companies capped at 25%, Azteca need only raise some $50 million to get a good foothold.

Representatives for neither Azteca nor Televisa were immediately available for comment.