If you can tear yourself away from tonight's novelas, you can tune in to Univision's (NYSE:UVN) first-quarter earnings report. The indisputable domestic market leader in Hispanic television should have some good numbers available, alongside tonight's El Gordo y la Flaca.

What analysts say:

  • Buy, sell, or waffle? Sixteen of 22 analysts recommend buying this stock, while four say hold and only two want to sell.
  • Revenues. Sales should show a 5% uptick over last year, to $456 million.
  • Earnings. Fifteen cents of earnings per share are expected, up 15% over last year. The analysts are looking for better net margins this time, as well they should.

What management says:
The 2005 annual report talks about the expanding Hispanic population and the opportunities this trend brings to the market for Spanish-language television programming. "Hispanics are expected to account for more than $1 trillion of U.S. disposable income (9.7% of the U.S. total) by 2010, outpacing the expected growth in total U.S. disposable income," according to the report, and Univision controls the lion's share of the media market for selling to this important demographic.

What management does:
While gross and operating margins are fairly stable for this large media company -- with its predictable expenses and ad revenues -- quarterly net margins have been a rollercoaster ride. In fact, that ride has been going decidedly downhill lately.

Margins %

9/04

12/04

3/05

6/05

9/05

12/05

Gross

61.77

62.87

62.46

62.26

62.51

62.61

Op.

26.87

29.03

29.23

29.53

29.94

27.65

Net

13.05

14.31

14.4

11.76

11.95

9.59
Margins calculated directly from SEC filings; data reflects trailing-12-month performance for the quarters ending in the named months.

One Fool says:
It's a story of margin control. If the completed quarter saw some improved cost control, we could be in for a pleasant earnings surprise tonight. If not, it's back to the slide. But that may not be the biggest story tonight.

Buyout rumors are swirling around Univision, with Mexican media giant GrupoTelevisa (NYSE:TV), CBS (NYSE:CBS), and Disney (NYSE:DIS) reportedly considering their bids right now. CEO and largest shareholder Jerrold Perenchio has made no bones about wanting to divest himself of all or part of his controlling stake in the company. The conference call this evening could very well touch on these rumors and give us a glimpse of where Univision is really leaning.

Given the expansion and rising affluence of the Hispanic media market, it's no surprise that there are multiple potential suitors for this blushing Latin beauty. Univision stations command nearly 50% of all Hispanic eyeballs on the TV screen, and grabbing hold of that juicy demographic through a single acquisition could prove too tempting to pass up.

But whoever the eventual winner is, they'll have to grab a firm hold of the reins. Those net margins can't be allowed to slide forever. Fresh faces in the management team could bring in some ideas on how to pull out of that nosedive and start growing earnings, not just sales.

Bottom line: There is great potential here, as long as proper attention is paid to the nuts and bolts of the operation.

Competitors:

  • CBS
  • Disney, owner of ABC
  • Grupo Televisa
  • GE (NYSE:GE), the indirect owner of Telemundo through NBC

Disney is a Motley Fool Stock Advisor selection.

Fool contributor Anders Bylund wishes he could be as cool as Don Francisco. He doesn't own any stock in the companies he discusses -- yet. He will have a few Disney shares when the merger with Pixar is completed. Disclosure can be tricky, but it must be done.