Earnings rise a nice Azteca surprise

Quarterly profits reach $18 million

By KEN BENSINGER

MEXICO CITY -- Broadcaster TV Azteca beat expectations for the first quarter, reporting record sales and a surprising -- and much needed -- 6% earnings lift on Thursday.

Net, which analysts expected to reveal an earnings slide during one of the slower times of the year, announced that profits for the quarter reached 202 million pesos ($18 million), up from $17.3 million a year ago.

Wall Street was expecting $15.5 million.

Azteca has spent well over a year under the shadow of an investigation into alleged debt fraud committed by Azteca staff, including chairman Ricardo Salinas, in 2003.

In January the SEC filed formal charges against Salinas and another officer. Case is expected to go to trial in June.

The first-quarter growth came primarily from ad sales, which reached $149 million, up 4% from a year earlier.

Net's Azteca America unit saw sales rise 16% to $7 million.

The positive sales were offset by increasing programming overhead.

While administration and sales expenses fell 5% from last year, production costs rose 10% to $68 million.

In the second half of last year, Azteca began producing five telenovelas rather than its usual four.

And in a response to the fraud investigation, net announced that a new nominations committee will oversee the selection of independent members of Azteca's board.

Committee will include Ignacio Morales, Mexico's former attorney general; Jose Represeas, former prexy of Nestle Mexico; and Andres Holzer, a prominent Mexican businessman.