TV Grupo Televisa SA

Full Year Results by Business Segment

The following table presents full year consolidated results ended December 31, 2016 and 2015, for each of our business segments. Full year consolidated results for 2016 and 2015 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.

Corporate expense increased by Ps.247.1 million, or 12.6%, to Ps.2,207.9 million in 2016, from Ps.1,960.8 million in 2015. The increase reflected primarily a higher share-based compensation expense.

Share-based compensation expense in 2016 and 2015 amounted to Ps.1,410.5 million and Ps.1,199.5 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. The increase of Ps.211.0 million reflected primarily the increase in the market price of our CPO in prior years, and to a lesser extent a higher number of our CPOs conditionally sold to officers and employees in our Cable segment.

Other Expense, Net

Other expense, net, increased by Ps.2,808.9 million to Ps.3,137.4 million in 2016, from Ps.328.5 million in 2015. Other expense, net, in 2016 included primarily:

(i)	legal and accounting advisory and professional services during 2016 of Ps.833.6 million;

(ii)	a non-cash loss of approximately Ps.551.5 million on disposition of property, plant and equipment as part of the network upgrades in our Cable segment operations;

(iii)

a non-recurring severance expense in 2016 of Ps.912.2 million in connection with dismissals of personnel in our Content, Cable and Other Businesses segments, as part of a cost reduction plan; and

(iv)	non-recurring costs of approximately Ps.259.3 million incurred in connection with the cancellation of a contract for a new satellite in our Sky segment.

In addition, the increase in Other expense, net, reflected the absence of a non-recurring cash income of Ps.1,038.3 million (US$67.6 million) as a result of the early termination of a technical assistance agreement with Univision in the first quarter of 2015.

 

Finance expense, net, increased by Ps.9,409.2 million to Ps.9,532.1 million in 2016 from Ps.122.9 million in 2015. This increase reflected primarily:

(i)

an unfavorable change of Ps.7,558.1 million decrease in other finance income or expense, net, resulting  primarily from the absence of other finance income recognized by us in July 2015 in connection with our exchange of Convertible Debentures issued by UHI, the controlling company of Univision, for Warrants that are exercisable for UHI’s common stock, which included a cash amount of Ps.2,195 million (US$135.1 million) received from UHI for such exchange, and a Ps.4,718.2 million reclassification from accumulated other comprehensive income in consolidated equity in connection with a cumulative non-cash gain related to changes in fair value of such debentures;

(ii)	a Ps.2,258.5 million increase in interest expense, due primarily to a higher average principal amount of debt, finance lease obligations and other notes payable in 2016 and the impact of the depreciation of the Mexican peso against the U.S. dollar on such interest expense; and

(iii)

a Ps.64.3 million increase in foreign exchange loss, net, resulting primarily from the depreciation of the Mexican peso against the U.S. dollar on a higher average net U.S. dollar liability position in 2016, which was partially offset by a favorable hedge effect resulting from our higher U.S. dollar investment in UHI in 2016.

These unfavorable variances were partially offset by a Ps.471.7 million increase in interest income explained primarily by a higher average amount of cash equivalents and temporary investments in 2016.

Share of Income of Associates and Joint Ventures, Net

Share of income of associates and joint ventures, net, increased by Ps.1,104.2 million to Ps.1,139.6 million in 2016 from Ps.35.4 million in 2015. This increase reflected mainly a favorable change in our share of income or loss of UHI, the controlling company of Univision, as well as a higher share of income of Imagina Media Audiovisual, S.L., a communications company in Spain, which investment we began to recognize as an associate in third-quarter 2015.

Income Taxes

Income taxes decreased by Ps.3,460.0 million to Ps.2,872.2  million in 2016 compared with Ps.6,332.2 million in 2015. This decrease reflected primarily a lower tax base, which was partially offset by a higher effective income tax rate.

Net Income Attributable to Non-controlling Interests

Net income attributable to non-controlling interests increased by Ps.185.7 million, or 13%, to Ps.1,612.0 million in 2016, compared with Ps.1,426.3 million in 2015. This increase reflected primarily a higher portion of net income attributable to non-controlling interests in our Sky and Cable segments, which was partially offset by the acquisition of a non-controlling interest in Televisión Internacional, S.A. de C.V. (“TVI”), a company in our Cable segment, in first-quarter 2016.

Other Relevant Information

Capital Expenditures

During 2016, we invested approximately US$1,490.9 million in property, plant and equipment as capital expenditures. These capital expenditures included approximately US$984.2 million for our Cable segment, US$346.6 million for our Sky segment, and US$160.1 million for our Content and Other Businesses segments.

During 2017, capital expenditures are expected to reach approximately US$1 billion, including approximately US$550 million for our Cable segment, US$300 million for our Sky segment, and US$150 million for our Content and Other Businesses segments.

The reduction in capital expenditures in our Cable segment with respect to 2016 is of approximately US$450 million and results primarily from the conclusion of the main rebuilding phase in our cable systems, and to a lesser extent, the postponement of the rebuilding of the network in certain smaller markets as a result of the depreciation of the peso.

¹ As of December 31, 2016 and 2015, total debt is presented net of finance costs in the amount of Ps.1,290.6 million and Ps.1,387.9 million, respectively, and does not include related accrued interest payable in the amount of Ps.1,827.3 million and Ps.1,184.2 million, respectively.

² In connection with the acquisition of a non-controlling interest in TVI, our Cable segment subsidiary.

As of December 31, 2016, our consolidated net debt position (total debt, finance leases and other notes payable, less cash and cash equivalents, temporary investments, and non-current held-to-maturity and available-for-sale investments) was Ps.78,405.9 million. The aggregate amount of non-current held-to-maturity and available-for-sale investments as of December 31, 2016, amounted to Ps.6,792.2 million.

Shares Outstanding

As of December 31, 2016 and 2015, our shares outstanding amounted to 341,268.3 million shares and 338,468.4 million shares, respectively, and our CPO equivalents outstanding amounted to 2,916.8 million and 2,892.9 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 December 31, 2016 and 2015, the GDS (Global Depositary Shares) equivalents outstanding amounted to 583.3 million and 578.6 million GDS equivalents, respectively. The number of GDS equivalents is calculated by dividing the number of CPO equivalents by five.

 

 

About Televisa

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 Communications Inc. ("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 Univision Holdings, Inc., 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.

Disclaimer

This press release contains forward-looking statements regarding the Company’s results and prospects. Actual results could differ materially from these statements. The forward-looking statements in this press release 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 this press release 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.

(Please see attached tables for financial information data)

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Investor Relations:

Carlos Madrazo / Tel: (52 55) 5261 2445   /   cmadrazov@televisa.com.mx

Media Relations:

Alejandro Olmos / Tel: (52 55) 4438 1205 / aolmosc@televisa.com.mx

María Eugenia Zurita / Tel: (52 55) 52 24 63 60 / mezurita@televisa.com.mx

www.televisair.com