Grupo Televisa : Fourth - Quarter and Full Year 2018 Results

INVESTOR RELATIONS 2/21/2019 4:30 PM

FOURTH-QUARTER AND FULL YEAR 2018 RESULTS

FOR IMMEDIATE RELEASE e

Full Year 2018 Highlights

• ➢ Consolidated Net Sales and Operating Segment Income grew 8.2% and 8.5%, respectively

• ➢ Advertising sales grew 2.1% during the year

• ➢ Double-digit growth in Cable MSO Segment Sales and Operating Segment Income of 11.0%

• ➢ Sky reached 92 thousand of broadband RGUs

• ➢ Televisa concludes its restructuring analysis with the decision to remain as a vertically integrated media and telecommunications operator

Consolidated Results

Mexico City, February 21, 2019 - Grupo Televisa, S.A.B. (NYSE:TV; BMV: TLEVISA CPO; "Televisa" or the "Company"), today announced results for full year and fourth 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 years ended December 31, 2018 and 2017, in millions of Mexican pesos, as well as the percentage that each line represents of net sales and the percentage change when comparing 2018 with 2017:

2018

Margin %

2017

Margin %Change %

Net sales Net income

101,282.3

100.0

7,615.3

7.5

93,586.2 6,026.4

100.0 8.2

6.4 26.4

Net income attributable to stockholders of the Company

6,009.4

5.9

3,973.4

4.2 51.2

Segment net sales

Operating segment income (1)

106,094.4 40,679.2

100.0 38.3

96,930.4 37,492.5

100.0 9.5 38.7 8.5

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

Net sales increased by 8.2% to Ps.101,282.3 million in 2018 compared with Ps.93,586.2 million in 2017. This increase was attributable to the growth in Content and Cable segments revenues. Operating segment income increased by 8.5%, reaching Ps.40,679.2 million with a margin of 38.3%.

Net income attributable to stockholders of the Company amounted to Ps.6,009.4 million in 2018, compared with Ps.3,973.4 million in 2017. The net increase of Ps.2,036.0 million, or 51.2%, mainly reflected (i) a Ps.4,015.9 million favorable change in other income or expense, net; and (ii) a Ps.3,323.0 million increase in income before depreciation and amortization. These favorable variances were partially offset by (i) a Ps.2,687.5 million increase in finance expense, net; (ii) a Ps.1,380.4 million decrease in share of income of associates and joint ventures; (iii) a Ps.1,329.5 million increase in depreciation and amortization; and (iv) a Ps.352.6 million increase in income taxes.

Full Year Results by Business Segment

The following table presents full year consolidated results ended December 31, 2018 and 2017, for each of our business segments. Full year consolidated results for 2018 and 2017 are presented in millions of Mexican pesos.

Net Sales	2018	%	2017	%	Change
%
Subtotal Content	36,490.1	34.4	33,997.2	35.1	7.3
World Cup rights	2,733.6	2.6	n/a	n/a	n/a
Content	39,223.7	37.0	33,997.2	35.1	15.4
Sky	22,002.2	20.7	22,196.6	22.9	(0.9)
Cable	36,233.0	34.2	33,048.3	34.1	9.6
Other Businesses	8,635.5	8.1	7,688.3	7.9	12.3
Segment Net Sales	106,094.4	100.0	96,930.4	100.0	9.5
Intersegment Operations(1)	(4,812.1)	(3,344.2)	(43.9)
Net Sales	101,282.3	93,586.2	8.2
Operating Segment Income(2)	2018	Margin	2017	Margin	Change
%	%	%
Subtotal Content	13,444.6	36.8	12,825.3	37.7	4.8
World Cup rights	1,410.5	51.6	n/a	n/a	n/a
Content	14,855.1	37.9	12,825.3	37.7	15.8
Sky	9,767.3	44.4	10,106.6	45.5	(3.4)
Cable	15,302.5	42.2	14,034.8	42.5	9.0
Other Businesses	754.3	8.7	525.8	6.8	43.5
Operating Segment Income	40,679.2	38.3	37,492.5	38.7	8.5
Corporate Expenses	(2,154.7)	(2.0)	(2,291.0)	(2.4)	5.9
Depreciation and Amortization	(19,834.2)	(19.6)	(18,504.7)	(19.8)	(7.2)
Other Expense, net	1,562.3	1.5	(2,453.6)	(2.6)	n/a
Operating Income	20,252.6	20.0	14,243.2	15.2	42.2

• 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

Fourth quarter sales increased by 0.3% to Ps.10,642.8 million compared with Ps.10,605.8 million in fourth quarter 2017.

Full year sales increased by 15.4% to Ps.39,223.7 million compared with Ps.33,997.2 million in 2017.

Millions of Mexican pesos	2018	%	2017	%	Change
%
Advertising	21,154.9	53.9	20,719.1	61.0	2.1
Network Subscription Revenue	4,814.3	12.3	4,058.1	11.9	18.6
Licensing and Syndication	10,520.9	26.8	9,220.0	27.1	14.1
Subtotal Content	36,490.1	93.0	33,997.2	100.0	7.3
World Cup rights	2,733.6	7.0	n/a	n/a	n/a
Net Sales	39,223.7	100.0	33,997.2	100.0	15.4
Advertising

Advertising fourth quarter revenue decreased by 3.7% to Ps.6,565.1 million compared with Ps.6,820.5 million in fourth quarter 2017. Fourth quarter decrease is explained by a substantial decrease in advertising sold to government entities. Full year advertising revenue increased by 2.1%.

We concluded the negotiation of the upfront for a total amount of Ps.16.4 billion, in line with that of the prior year.

Network Subscription Revenue

Fourth-quarter Network Subscription revenue increased by 9.3% to Ps.1,251.6 million compared to Ps.1,145.1 million in fourth-quarter 2017.

Full year Network Subscription revenue increased by 18.6%. The full year increase is mainly explained by the new offerings of our networks which now includes additional rights that resulted in higher overall price. This came into effect in the fourth quarter of 2017.

Licensing and Syndication

Fourth-quarter Licensing and Syndication revenue increased by 7.0% to Ps.2,826.1 million compared to Ps.2,640.2 million in fourth-quarter 2017. Fourth-quarter royalties from Univision reached U.S.$88.0 million compared to U.S.$78.8 million in the fourth-quarter 2017. Royalties in the fourth quarter were negatively affected by a one-time U.S.$65.1 million revenue adjustment in Univision.

For the full year 2018 royalties from Univision reached U.S.$383.6 million. The full year increase of 22.2% in royalties is mainly explained by the step up in the royalty rate, partially compensated by lower revenues of Univision, primarily due to the loss of the carriage of Univision networks by Dish.

World Cup

This year, Content sales benefited from the sublicensing of certain broadcast and digital rights of the 2018 Soccer World Cup in Mexico and other Latin American markets, by Ps.2,733.6 million.

Fourth quarter operating segment income for our Content segment increased by 3.0% to Ps.4,036.7 million compared with Ps.3,919.5 million in fourth quarter 2017; the margin was 37.9%.

Full-year operating segment income for our Content segment increased by 15.8% to Ps.14,855.1 million compared with Ps.12,825.3 million in 2017. The margin was 37.9%.

Sky

Fourth quarter sales decreased by 1.9% to Ps.5,461.9 million compared with Ps.5,568.9 million in fourth quarter 2017. During the quarter, Sky lost 198,617 video revenue generating units, or RGUs.

Full year sales decreased by 0.9% to Ps.22,002.2 million compared with Ps.22,196.6 million in 2017. The number of net video RGUs decreased by 365,486 during the year to 7,637,040 as of December 31, 2018. Sky ended the quarter with 159,027 video RGUs in Central America and the Dominican Republic.

The loss of video RGUs is mainly explained by the disconnections of some customers following our transmission of the World Cup in the second and third quarters. On the other hand, during 2018, Sky added 92 thousand broadband RGUs.

The following table sets forth the breakdown of RGUs per service type for Sky as of December 31, 2018 and 2017.

RGUs	2018	2017
Video	7,637,040	8,002,526
Broadband	91,841	-
Total RGUs	7,728,881	8,002,526

Fourth quarter operating segment income decreased by 4.7% to Ps.2,214.6 million compared with Ps.2,324.1 million in fourth quarter 2017, and the margin was 40.5%. The decrease in margin is explained by the launch of the bundle packages of Blue Telecomm and Sky.

Full year operating segment income decreased by 3.4% to Ps.9,767.3 million compared with Ps.10,106.6 million in 2017, and the margin was 44.4%.

Cable

Fourth quarter sales increased by 10.8% to Ps.9,517.7 million compared with Ps.8,592.9 million in fourth quarter 2017.

Full year sales increased by 9.6% to Ps.36,233.0 million compared with Ps.33,048.3 million in 2017.

Total revenue generating units or RGUs reached 11.8 million including the acquisition of part of the residential fiber-to-the-home business of Axtel. Quarterly organic growth was mainly driven by 229 thousand of voice net additions. Broadband net additions were 81 thousand and video net additions were 6 thousand, for total quarter organic net additions of approximately 316 thousand.

Full year organic net additions were close to 1.2 million RGUs.

The following table sets forth the breakdown of RGUs per service type for our Cable segment as of December 31, 2018 and 2017.

(1)

RGUs	2018(1)	2017
Video	4,384,247	4,185,150
Broadband	4,479,017	3,797,336
Voice	2,978,508	2,121,952
Total RGUs	11,841,772	10,104,438

It includes 553,226 RGUs acquired from Axtel

Fourth quarter operating segment income increased by 9.1% to Ps.4,005.7 million compared with Ps.3,671.7 million in fourth quarter 2017, and the margin reached 42.1%.

Full year operating segment income increased by 9.0% to Ps.15,302.5 million compared with Ps.14,034.8 million in 2017. The margin reached 42.2%, in line with 2017.

The following tables set forth the breakdown of revenues and operating segment income, excluding consolidation adjustments, for our MSO and enterprise operations for 2018 and 2017.

MSO Operations (1)

Millions of Mexican pesos Revenue

2018 2017 Change %

32,279.8

29,067.9

11.0

Operating Segment Income	13,962.0	12,578.0	11.0
Margin (%)	43.3%	43.3%

Enterprise Operations (1)

Millions of Mexican pesos Revenue

2018 5,341.0

2017 5,218.5

Change % 2.3

Operating Segment Income	1,811.9	1,892.6	-4.3
Margin (%)	33.9%	36.3%

(1) These results do not include consolidation adjustments of Ps.1,387.8 million in revenues nor Ps.471.4

million in Operating Segment Income for 2018, neither the consolidation adjustments of Ps.1,238.1 million in revenues nor Ps.435.8 million in Operating Segment Income for 2017. Consolidation adjustments are considered in the consolidated results of the Cable segment.