(Adds details from report)
MEXICO CITY, April 29 (Reuters) - Mexican broadcaster Televisa, the world’s biggest producer of Spanish-language content, reported on Monday a 20 percent drop in its first-quarter net profit, battered by the new government’s reduced advertising spending.
Despite a modest increase in net sales, Televisa’s net profit fell to 542 million pesos ($28 million). The broadcaster said a decline in government spending was the primary culprit for the nearly 14 percent drop in advertising.
President Andres Manuel Lopez Obrador, who took office in December after a sweeping election victory, has pledged to run an austere government. The veteran leftist sets his own agenda during televised news conferences each morning, reducing the need for pricey television campaigns.
“The new government is implementing a series of public policy measures aimed at freeing up funds for other initiatives,” Televisa said in a statement accompanying its results. “One of these measures is the reduction of its total advertising investment.”
Televisa said it anticipates a 50-percent drop in government spending over the course of the year, and the decline in the first quarter was even steeper.
Private sector advertising dropped 2 percent.
Last year, government spending accounted for about 11 percent of total advertising revenue and 2 percent of net sales, Televisa said.
($1 = 19.4120 pesos at end-March)
Reporting by Julia Love and Noe Torres; Editing by David Alire Garcia and Chris Reese