Yes

No

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Quarterly Financial Information

[105000] Management commentary

 

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Management commentary

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Mexico City, April 26, 2018 — Grupo Televisa, S.A.B. (NYSE:TV; BMV: TLEVISA CPO; "Televisa" or "the Company"), today announced results for first-quarter 2018. The results have been prepared in accordance with International Financial Reporting Standards ("IFRS").

The following table sets forth condensed consolidated statements of income for the quarters ended March 31, 2018 and 2017¹,in millions of Mexican pesos:

⁽¹⁾ The operating segment income margin is calculated as a percentage of segment net sales.

Net sales increased by 3.9% to Ps.22,812.0 million in first-quarter 2018 compared with Ps.21,954.3 million in first-quarter 2017. This increase was mainly attributable to revenue growth in the Cable and Content segments. Operating segment income increased by 6.6%, reaching Ps.9,130.8 million with a margin of 38.3%.

Net income attributable to stockholders of the Company amounted to Ps.677.6 million in first-quarter 2018 compared to Ps.1,196.0 million in first-quarter 2017. The net decrease of Ps.518.4 million reflected primarily (i) a Ps.1,436.7 million increase in finance expense resulting from the appreciation of the Mexican peso against the U.S. dollar; and (ii) a Ps.257.0 million increase in depreciation and amortization. These unfavorable variances were partially offset by (i) a Ps.565.4 million increase in operating segment income; and (ii) a Ps.256.6 million decrease in other expense, net.

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¹For comparison purposes, 2017 figures are presented net of the results of the disposed publishing business in Argentina and the suspended online lottery business, both reported within the Other Businesses segment.

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Disclosure of nature of business

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Televisa, is a leading media company in the Spanish-speaking world, an important cable operator in Mexico, and an operator of a leading direct-to-home satellite pay television system in Mexico. Televisa distributes the content it produces through several broadcast channels in Mexico and in over 50 countries through 26 pay-tv brands and television networks, cable operators and over the top or "OTT" services. In the United States, Televisa´s audiovisual content is distributed through Univision, the leading media company serving the Hispanic market. Univision broadcasts Televisa's audiovisual content through multiple platforms in exchange for a royalty payment. In addition, Televisa has equity and Warrants which upon their exercise would represent approximately 36% on a fully-diluted, as-converted basis of the equity capital in UHI, the controlling company of Univision. Televisa's cable business offers integrated services, including video, high-speed data and voice services to residential and commercial customers as well as managed services to domestic and international carriers through five cable multiple system operators in Mexico. Televisa owns a majority interest in Sky, a leading direct-to-home satellite pay television system in Mexico, operating also in the Dominican Republic and Central America. Televisa also has interests in magazine publishing and distribution, radio production and broadcasting, professional sports and live entertainment, feature-film production and distribution, and gaming.

 

 

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Disclosure of management's objectives and its strategies for meeting those objectives

 

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We intend to leverage our position as a leading media company in the Spanish-speaking world to continue expanding our business while maintaining profitability and financial discipline. We intend to do so by maintaining our leading position in the Mexican television market, by continuing to produce high quality programming and by improving our sales and marketing efforts while maintaining high operating margins and expanding our cable business.

By leveraging all our business segments and capitalizing on their synergies to extract maximum value from our content and our distribution channels, we also intend to continue expanding our cable business, increasing our international programming sales worldwide and strengthening our position in the growing U.S.-Hispanic market. We also intend to continue developing and expanding Sky, our DTH platform, and our cable businesses. We will continue to strengthen our position and will continue making additional investments, which could be substantial in size, in the DTH and cable industry in accordance with the consolidation of the cable market in Mexico, and we will also continue developing our publishing business and maintain our efforts to become an important player in the gaming industry.

We intend to continue to expand our business by developing new business initiatives and/or through business acquisitions and investments in Mexico, the United States and elsewhere.

 

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Disclosure of entity's most significant resources, risks and relationships

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We expect to fund our operating cash needs during 2018, other than cash needs in connection with any potential investments and acquisitions, through a combination of cash from operations and cash on hand. We intend to finance our potential investments or acquisitions in 2018 through available cash from operations, cash on hand and/or borrowings. The amount of borrowings required to fund these cash needs in 2018 will depend upon the timing of such transactions and the timing of cash payments from advertisers under our advertising sales plan.

 

The investing public should consider the risks described as follows, as well as the risks described in "Item 3. Key Information Risk Factors" in the Company's Annual Report on Form 20-F, which are not the only risks the Company faces. Risks and uncertainties unknown by the Company, as well as those that the Company currently considers as not relevant, could affect its operations and activities.

 

Risk Factors Related with Political Developments:

 

•	Imposition of fines by regulators and other authorities could adversely affect our financial condition and results of operations
•	Social Security Law
•	Federal Labor Law
•	Mexican tax laws
•	Elimination of the tax consolidation regime
•	Limitation of the deduction of non-taxable employee benefits
•	Increase to the border Value Added Tax rate
•	The amendment to the regulations of the General Health Law on advertising could materially affect our business, results of operations and financial condition
•	Mexican Securities Market Law
•	The operation of our business may be adversely affected if the Mexican government does not renew or revokes our broadcast or other concessions

 

Risk Factors Related to our Business:

 

•	Control of a stockholder
•	Measures for the prevention of the taking of control
•	Competition
•	The seasonal nature of our business

•	Loss of transmission or loss of the use of satellite transponders could cause a business interruption in Innova, which would adversely affect our net income
•	Any incidents affecting our network and information systems or other technologies could have an adverse impact on our business, reputation and results of operations
•	The results of operations of UHI may affect our results of operations and the value of our investment in that Company
•	Uncertainty in global financial markets could adversely affect our financing costs and exposure to our customers and counterparties
•	Political events in Mexico could affect Mexican economic policy and our business, financial condition and results of operations

 

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Disclosure of results of operations and prospects

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The following table presents first-quarter consolidated results ended March 31, 2018 and 2017, for each of our business segments. Consolidated results for first-quarter 2018 and 2017 are presented in millions of Mexican pesos.

¹ For segment reporting purposes, intersegment operations are included in each of the segment operations.

² Operating segment income is defined as operating income before depreciation and amortization, corporate expenses, and other expense, net.

 

Content	First-quarter sales increased by 8.3% to Ps.7,899.4 million compared with Ps.7,290.7 million in first-quarter 2017.
	Millions of Mexican pesos	1Q'18	%	1Q'17	%	Change %
	Advertising	4,272.7	54.1	4,128.2	56.6	3.5
	Network Subscription	1,179.1	14.9	1,042.3	14.3	13.1
	Licensing and Syndication	2,447.6	31.0	2,120.2	29.1	15.4
	Net Sales	7,899.4	100.0	7,290.7	100.0	8.3

	Advertising First-quarter Advertising sales increased by 3.5% to Ps.4,272.7 million compared with Ps.4,128.2 million in first-quarter 2017. The increase in sales is mainly explained by the new sales mechanism that contributed to a better inventory utilization and a healthy level of advertising spending across our client base.
	Network Subscription First-quarter Network Subscription sales increased by 13.1% to Ps.1,179.1 million compared with Ps.1,042.3 million in first-quarter 2017. The increase is explained by a repackaging of our networks which now includes additional rights that resulted in higher overall price.   Licensing and Syndication First-quarter Licensing and Syndication sales increased by 15.4% to Ps.2,447.6 million compared with Ps.2,120.2 million in first-quarter 2017. The increase is mainly explained by the step up in the royalty rate. Royalties from Univision increased by 31.6% to US$95.5 million in first-quarter 2018 from US$72.6 million in first-quarter 2017.   First-quarter operating segment income increased by 7.7% to Ps.2,820.1 million compared with Ps.2,618.6 million in first-quarter 2017. The margin was 35.7%, in line with the 35.9% achieved in the first-quarter 2017.
Sky	First-quarter sales decreased by 1.2% to Ps.5,474.2 million compared with Ps.5,540.6 million in first-quarter 2017, mainly explained by a drop in sales in Central America and the Dominican Republic. Sales in Mexico increased by 0.6%.   The number of net active subscribers decreased by 1.2% to 7,910,225 as of March 31, 2018, compared with 8,008,148 as of March 31, 2017. Sky ended the quarter with 169,047 subscribers in Central America and the Dominican Republic.   First-quarter operating segment income decreased by 1.0% to Ps.2,441.9 million compared with Ps.2,466.3 million in first-quarter 2017. The margin was 44.6%, comparable to the 44.5% margin achieved in first-quarter 2017.
Cable	First-quarter sales increased by 7.1% to Ps.8,669.7 million compared with Ps.8,096.3 million in first-quarter 2017 driven by solid net additions in all three services.   Total revenue generating units, or RGUs, reached 10.4 million. Quarterly growth was mainly driven by 173 thousand data net additions. Video net additions were 53 thousand and voice net additions were 36 thousand, for a total quarter net additions of more than 262 thousand, the highest in the past nine quarters.   This quarter was the fourth consecutive quarter of improvement in net additions.   The following table sets forth the breakdown of RGUs per service type for our Cable segment as of March 31, 2018 and 2017.
		RGUs	1Q'18	1Q'17
		Video	4,237,862	4,066,899
		Broadband	3,970,473	3,376,559
		Voice	2,158,238	2,061,059
		Total RGUs	10,366,573	9,504,517
	First-quarter operating segment income increased by 7.9% to Ps.3,664.9 million compared with Ps.3,397.3 million in first-quarter 2017. Margin increased 30 basis points to 42.3%.   The following tables set forth the breakdown of revenues and operating segment income, excluding consolidation adjustments, for our cable and enterprise operations for first-quarter 2018 and 2017.

	Our cable operations include the video, voice and data services provided by Cablevisión, Cablemás, TVI, Cablecom and Telecable. Our enterprise operations include the services offered by Bestel and the enterprise operations of Cablecom.
	1Q'18 Millions of Mexican pesos	Cable Operations (1)	Enterprise Operations (1)	Total Cable
	Revenue	7,691.4	1,273.8	8,669.7
	Operating Segment Income	3,338.0	433.9	3,664.9
	Margin	43.4%	34.1%	42.3%
	(1) These results do not include consolidation adjustments of Ps.295.5 million in revenues nor Ps.107.0 million in Operating Segment Income, which are considered in the consolidated results of the Cable segment.
	1Q'17 Millions of Mexican pesos	Cable Operations (2)	Enterprise Operations (2)	Total Cable
	Revenue	7,018.3	1,327.2	8,096.3
	Operating Segment Income	3,023.0	467.7	3,397.3
	Margin	43.1%	35.2%	42.0%
	(2) These results do not include consolidation adjustments of Ps.249.2 million in revenues nor Ps.93.4 million in Operating Segment Income, which are considered in the consolidated results of the Cable segment.
Other Businesses	First-quarter sales increased by 1.1% to Ps.1,778.4 million compared with Ps.1,758.61 million in first-quarter 2017. The increase is mainly explained by growing revenues from the soccer business, partially compensated by the publishing business.   First-quarter operating segment income increased by 145.1% to Ps.203.9 million compared with Ps.83.21 million in first-quarter 2017. The increase was essentially driven by the soccer business, partially compensated by the distribution of feature films.

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Corporate expense decreased by Ps.29.0 million, or 5.0%, to Ps.551.7 million in first-quarter 2018, from Ps.580.7 million in first-quarter 2017.

Share-based compensation expense in first-quarter 2018 and 2017 amounted to Ps.375.8 million and Ps.362.5 million, respectively, and was accounted for as corporate expense. Share-based compensation expense is measured at fair value at the time the equity benefits are conditionally sold to officers and employees, and is recognized over the vesting period.

Other Expense, Net

Other expense, net, decreased by Ps.256.6 million, or 62.5%, to Ps.154.1 million in first-quarter 2018 compared with Ps.410.7 million in first-quarter 2017. This decrease reflected primarily a lower non-recurrent severance expense in connection with the dismissal of personnel, a lower loss on disposition of property and equipment, a lower expense related to donations, as well as a gain on disposition of a 50% equity in Televisa CJ Grand, S.A. de C.V., a joint venture for a home shopping channel in Mexico.

 

Finance Expense, Net

The following table sets forth finance (expense) income, net, stated in millions of Mexican pesos for the quarters ended March 31, 2018 and 2017.

Finance expense, net, increased by Ps.1,419.0 million to Ps.2,200.7 million for first-quarter 2018 from Ps.781.7 million for first-quarter 2017. This increase primarily reflected (i) a Ps.1,185.8 million increase in other finance expense, net, resulting  primarily from a higher loss for changes in fair value of our derivative contracts, in connection with a 7.3% appreciation of the Mexican peso against the U.S. dollar in first-quarter 2018; (ii) a Ps.250.9 million decrease in foreign exchange gain resulting primarily from the effect of a 7.3% appreciation of the Mexican peso against the U.S. dollar on our average net U.S. dollar liability position in first-quarter 2018 compared with a 9.2% appreciation in first-quarter 2017; and (iii) a Ps.26.3 million increase in interest expense, due primarily to an increase in the weighted average effective interest rate applicable to our debt, finance leases and other notes payable in first-quarter 2018. These unfavorable effects were partially offset by a Ps.44.0 million increase in interest income explained primarily by an increase in interest rates applicable to our cash equivalents and temporary investments in first-quarter 2018.

Share of Income of Associates and Joint Ventures, Net

Share of income of associates and joint ventures, net, decreased by Ps.156.6 million, or 59.4%, to Ps.107.1 million in first-quarter 2018, from Ps.263.7 million in first-quarter 2017. This decrease reflected mainly a lower share of income of Univision Holdings, Inc. ("UHI"), the controlling company of Univision Communications Inc.

Income Taxes

Income taxes decreased by Ps.262.3 million, or 32.9%, to Ps.535.7 million in first-quarter 2018 compared with Ps.798.0 million in first-quarter 2017. This decrease reflected primarily a lower income tax base.

Net Income Attributable to Non-controlling Interests

Net income attributable to non-controlling interests decreased by Ps.200.9 million, or 38.8%, to Ps.317.3 million in first-quarter 2018, compared with Ps.518.2 million in first-quarter 2017. This decrease reflected primarily a lower portion of net income attributable to non-controlling interests in our Sky and Cable segments

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Financial position, liquidity and capital resources

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Capital Expenditures

During first-quarter 2018, capital expenditures were 27% lower than in first-quarter 2017. We invested approximately U.S.$158.7 million in property, plant and equipment as capital expenditures, including approximately U.S.$106.1 million for our Cable segment, U.S.$40.0 million for our Sky segment, and U.S.$12.6 million for our Content and Other Businesses segments.

 

Debt, Finance Lease Obligations and Other Notes Payable

The following table sets forth our total consolidated debt, finance lease obligations and other finance liabilities as of March 31, 2018 and December 31, 2017. Amounts are stated in millions of Mexican pesos.

¹ As of March 31, 2018 and December 31, 2017, total debt is presented net of finance costs in the amount of Ps.1,226.2 million and Ps.1,250.7 million, respectively, and does not include related accrued interest payable in the amount of Ps.1,669.5 million and Ps.1,796.8 million, respectively.

² In connection with the acquisition in 2016 of a non-controlling interest in Televisión Internacional, S.A. de C.V., one of our Cable segment subsidiaries.

As of March 31, 2018, our consolidated net debt position (total debt, finance lease obligations and other notes payable, less cash and cash equivalents, temporary investments, and non-current investments in financial instruments) was Ps.73,339.3 million. As of March 31, 2018, the non-current investments in financial instruments amounted to an aggregate of Ps.13,546.4 million.

In March 2018, the Company executed a revolving credit facility with a syndicate of banks, for up to an amount equivalent to U.S.$583 million payable in Mexican pesos, for a three-year term. The funds may be used for the repayment of existing indebtedness and such other general corporate purposes as may be authorized by the Board of Directors of the Company.

Dividend

On April 2018, the Company will present in its annual stockholders meeting the recommendation to pay a dividend of Ps.0.35 per CPO and Ps.0.002991452991 per share of Series "A", "B", "D" and "L" Shares not in the form of a CPO. Upon approval, the dividend will be paid in cash in May 2018 in the aggregate amount of approximately Ps.1,073.4 million.

Shares Outstanding

As of March 31, 2018 and December 31, 2017, our shares outstanding amounted to 338,947.9 million and 342,337.1 million shares, respectively, and our CPO equivalents outstanding amounted to 2,897.0 million and 2,926.0 million CPO equivalents, respectively. Not all of our shares are in the form of CPOs. The number of CPO equivalents is calculated by dividing the number of shares outstanding by 117.

As of March 31, 2018 and December 31, 2017, the GDS (Global Depositary Shares) equivalents outstanding amounted to 579.4 million and 585.2 million GDS equivalents, respectively. The number of GDS equivalents is calculated by dividing the number of CPO equivalents by five.

The Company's Board of Directors has approved a proposal to cancel 5,122,615.3 thousand shares of capital stock of the Company in the form of 43,783.0 thousand CPOs, which were acquired by the Company during 2017 and 2018.

Executive Officer Appointment

Luis Alejandro Bustos Olivares has been appointed as Legal Vice President and General Counsel, replacing Joaquín Balcárcel Santa Cruz, who has been appointed Chief of Staff of the Executive Chairman of the Board of Directors of the Company.

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Internal control

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⁽¹⁾ The operating segment income margin is calculated as a percentage of segment net sales.

¹ For segment reporting purposes, intersegment operations are included in each of the segment operations.

² Operating segment income is defined as operating income before depreciation and amortization, corporate expenses, and other expense, net.

  

Disclaimer

 

This management commentary contains forward-looking statements regarding the Company's results and prospects. Actual results could differ materially from these statements. The forward-looking statements in these management commentary should be read in conjunction with the factors described in "Item 3. Key Information – Forward-Looking Statements" in the Company's Annual Report on Form 20-F, which, among others, could cause actual results to differ materially from those contained in forward-looking statements made in these management commentary and in oral statements made by authorized officers of the Company. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of their dates. The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

 

[110000] General information about financial statements

 

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Disclosure of general information about financial statements

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Corporate Information

Grupo Televisa, S.A.B. (the "Company") is a limited liability public stock corporation ("Sociedad Anónima Bursátil" or "S.A.B."), incorporated under the laws of Mexico. Pursuant to the terms of the Company's bylaws ("Estatutos Sociales"), its corporate existence continues through 2106. The shares of the Company are listed and traded in the form of "Certificados de Participación Ordinarios" or "CPOs" on the Mexican Stock Exchange ("Bolsa Mexicana de Valores") under the ticker symbol TLEVISA CPO, and in the form of Global Depositary Shares or GDSs, on the New York Stock Exchange, or NYSE, under the ticker symbol TV. The Company's principal executive offices are located at Avenida Vasco de Quiroga 2000, Colonia Santa Fe, 01210 Ciudad de México, México.

Basis of Preparation and Accounting Policies

The condensed consolidated financial statements of the Group, as of March 31, 2018 and December 31, 2017, and for the three months ended March 31, 2018 and 2017, are unaudited, and have been prepared in accordance with the guidelines provided by the International Accounting Standard 34, Interim Financial Reporting. In the opinion of management, all adjustments necessary for a fair presentation of the condensed consolidated financial statements have been included herein.

The unaudited condensed consolidated financial statements should be read in conjunction with the Group's audited consolidated financial statements and notes thereto for the years ended December 31, 2016, 2015 and 2014, which have been prepared in accordance with International Financial Reporting Standards ("IFRSs") as issued by the International Accounting Standards Board, and include, among other disclosures, the Group's most significant accounting policies, which were applied on a consistent basis as of March 31, 2018, except for the guidelines provided by the IFRS 15 and IFRS 9 that became effective beginning on January 1, 2018. The adoption of the improvements and amendments to current IFRSs effective on January 1, 2018 did not have a significant impact in these interim unaudited condensed consolidated financial statements.

 

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Follow-up of analysis

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The financial institutions that perform financial analysis on the securities of Grupo Televisa, S.A.B., are as follows:

Institution:

  

Merrill Lynch

Evercore

Morgan Stanley

JPMorgan  

Itaú Securities

UBS

Credit Suisse

BTG Pactual

New Street

HSBC

Citi

Bradesco

Goldman Sachs

[210000] Statement of financial position, current/non-current

 

 

 

Concept	Close Current Quarter 2018-03-31	Close Previous Exercise 2017-12-31
Non-current provisions
Non-current provisions for employee benefits	757,220,000	716,095,000
Other non-current provisions	53,454,000	54,263,000
Total non-current provisions	810,674,000	770,358,000
Deferred tax liabilities	8,113,000,000	9,037,513,000
Total non-current liabilities	138,219,425,000	146,798,370,000
Total liabilities	188,090,296,000	197,563,187,000
Equity
Issued capital	4,978,126,000	4,978,126,000
Share premium	15,889,819,000	15,889,819,000
Treasury shares	15,060,617,000	14,788,984,000
Retained earnings	76,580,366,000	74,350,826,000
Other reserves	3,893,834,000	5,231,977,000
Total equity attributable to owners of parent	86,281,528,000	85,661,764,000
Non-controlling interests	15,034,502,000	13,995,150,000
Total equity	101,316,030,000	99,656,914,000
Total equity and liabilities	289,406,326,000	297,220,101,000

 

 

[310000] Statement of comprehensive income, profit or loss, by function of expense

 

 

[410000] Statement of comprehensive income, OCI components presented net of tax

 

 

 

Concept	Accumulated Current Year 2018-01-01 - 2018-03-31	Accumulated Previous Year 2017-01-01 - 2017-03-31
Total other comprehensive income	(1,387,862,000)	(673,735,000)
Total comprehensive income	(392,962,000)	1,040,489,000
Comprehensive income attributable to
Comprehensive income, attributable to owners of parent	(660,585,000)	575,791,000
Comprehensive income, attributable to non-controlling interests	267,623,000	464,698,000

 

[520000] Statement of cash flows, indirect method

 

 

 

Concept	Accumulated Current Year 2018-01-01 - 2018-03-31	Accumulated Previous Year 2017-01-01 - 2017-03-31
Proceeds from government grants	0	0
Cash advances and loans made to other parties	0	0
Cash receipts from repayment of advances and loans made to other parties	0	0
Cash payments for future contracts, forward contracts, option contracts and swap contracts	0	0
Cash receipts from future contracts, forward contracts, option contracts and swap contracts	0	0
Dividends received	0	0
Interest paid	0	0
Interest received	0	0
Income taxes refund (paid)	0	0
Other inflows (outflows) of cash	293,163,000	40,388,000
Net cash flows from (used in) investing activities	(2,848,280,000)	(4,718,280,000)
Cash flows from (used in) financing activities
Proceeds from changes in ownership interests in subsidiaries that do not result in loss of control	0	0
Payments from changes in ownership interests in subsidiaries that do not result in loss of control	1,184,020,000	1,292,438,000
Proceeds from issuing shares	0	0
Proceeds from issuing other equity instruments	0	0
Payments to acquire or redeem entity's shares	562,036,000	0
Payments of other equity instruments	0	0
Proceeds from borrowings	0	0
Repayments of borrowings	76,872,000	16,249,000
Payments of finance lease liabilities	101,634,000	107,694,000
Proceeds from government grants	0	0
Dividends paid	0	0
Interest paid	2,360,314,000	2,368,382,000
Income taxes refund (paid)	0	0
Other inflows (outflows) of cash	(5,250,000)	(10,488,000)
Net cash flows from (used in) financing activities	(4,290,126,000)	(3,795,251,000)
Net increase (decrease) in cash and cash equivalents before effect of exchange rate changes	(881,823,000)	(3,674,135,000)
Effect of exchange rate changes on cash and cash equivalents
Effect of exchange rate changes on cash and cash equivalents	(147,673,000)	(333,667,000)
Net increase (decrease) in cash and cash equivalents	(1,029,496,000)	(4,007,802,000)
Cash and cash equivalents at beginning of period	38,734,949,000	47,546,083,000
Cash and cash equivalents at end of period	37,705,453,000	43,538,281,000

 

[610000] Statement of changes in equity - Accumulated Current

 

 

 

[610000] Statement of changes in equity - Accumulated Previous

 

 

 

[700000] Informative data about the Statement of financial position

 

[700002] Informative data about the Income statement

 

[700003] Informative data - Income statement for 12 months

 

[800001] Breakdown of credits